Leadership challenges at Fritz Publishing Linda Ronnie Lerato Sithole gazed wistfully out of the window at the courtyard below. What had Linda Ronnie is Senior happened to the camaraderie at Fritz Publishing? It seemed the organisation was losing its Lecturer based at very soul. Staff were demoralised and managers seemed disinterested. "What would 2016 Graduate School of hold?" she wondered. Recently there had been talk of a consultant being hired to conduct Business, University of a restructuring exercise. "Restructuring?" she thought, "What was leadership thinking?" Cape Town, Cape Town, John Chirundu, head of her department, who was always so amenable, had become South Africa. withdrawn and refused to be drawn on the subject. Lerato had worked as a senior Commissioning Editor at Fritz Publishing for almost 8 years. She remembered when old Mr Fritz had been in charge and the feeling of community that had been so pervasive. Fritz Publishing Fritz Publishing was established in 1960 by Nick Fritz. Old man Fritz, as he later came to be known, was a stickler for customer service and prided himself on knowing each customer personally. An independent book publisher, the company published the best in various contemporary and relevant areas for the scholarly and professional communities throughout the African continent. At Fritz Publishing, quality content was delivered at reasonable prices. Nick Fritz believed n leveraging the latest publishing technology to deliver superior quality and quick delivery This was coupled with fair pricing, excellent service and products for the benefit of its customers. With decades of publishing experience, Fritz Publishing understood and anticipated the needs of customers, authors and other relevant partners. The company continuously challenged its employees to provide the highest level of products and service. Employees at Fritz Publishing enjoyed a sense of empowerment and autonomy through organisational practices of accountability and transparency. Key decisions were taken in consultation with affected staff and information on performance and business strategy was regularly circulated to all employees. The company was known throughout the industry for providing excellent orientation processes and continuous training and development to their staff. Consequently, employees felt valued and appreciated and this translated into the provision of excellent customer experiences. Handing over the reins When old man Fritz retired in 2009, his son Martin assumed the reins. By this time, Fritz Disclaimer. This case is written Publishing had grown to 135 employees. Together with the CFO, Colin Ferguson, Martin solely for educational purposes and is not intended created a working environment that was unrivalled in the industry in terms of employee to represent successful or commitment and performance. Customer satisfaction was also rated as best on the African unsuccessful managerial decision-making. The authors continent. As Martin Fritz had declared in one of the monthly staff meetings, "At Fritz, we are may have disguised names; firmly committed to the business and to providing the foundations for extensive, sustainable financial and other recognizable information to development. What's more, Fritz Publishing has always been characterised by its protect confidentiality. DOI 10.1108/EEMCS-04-2016-0049 VOL. 7 NO. 3 2017, pp. 1-17, @ Emerald Publishing Limited, ISSN 2045-0621 | EMERALD EMERGING MARKETS CASE STUDIES PAGE 1respectful, honest organisational culture. Our company is well-known on the African Rumours started circulating among staff that many of those employed were known to be continent for its reputation as a recognisably quality publisher. This is all possible due to friends of or connected to the head of the e-book section, Laurent Greve, an IT professional our tremendous team spirit". who had recently relocated from France, who also enjoyed a close relationship with the In 2010, Martin Fritz decided to sell the business after receiving a very tempting financial CEO. A further complication was that most of those hired in senior positions had failed to offer. Although he had spent many years in the publishing industry, Martin's heart was meet the employment equity requirements set by the government and subscribed to by never truly in the business and he and his family relocated to their farm in the Cape major publishing houses in South Africa, including Fritz Publishers. winelands to start a new business. As a long-serving executive of more than a decade, Colin Ferguson seemed the likely Unexplained appointment successor but the Prys Group - headquartered in Berlin, Germany - that ended up buying A further anomaly had occurred in the appointment of Olga Arshavin. Kate Kelly, Head of the company had other ideas. They wished to appoint their own candidate. Consequently HR, IT and Operations, had bumped into Lee Owens in the corridor and shared the news after a global search, a Russian CEO was appointed. The Prys Group was keen to exploit with him. "Did you hear about the appointment of the boss' wife?" she asked Lee. Fritz the South African market. They wished to leverage the current customer base, branch out Publishing had a best-selling series of children's books and Olga had been invited to join o other offerings and thus reach a wider clientele. the author panel in the capacity of Consulting Editor despite a lack of experience in the role The matter had come to Kate's attention through one of her staff, the Royalty Administrator, New leadership who had needed the authors' existing royalty apportionments to be reduced to accommodate Olga. Vadim Arshavin had an outstanding pedigree. He held a degree in Economics from St Petersburg State University and an MBA from a top UK Business School. His exceptiona Every employee was keenly aware of the children's series as it had won several publishing success as head of the Australian division of the global company Chance Publishers had awards. In 2014, Fritz Publishing decided to bring out new editions of the books. In keeping paved the way for the appointment. The financial results during his three-year tenure in with the need to be more demographically representative, the author panels had been Sydney, Australia showed a fantastic turnaround despite rumours of a tough leadership altered to be reflective across race and gender. During this process, Olga Arshavin had style. Arshavin was a charming individual, always exceptionally well-dressed, and known to nexplicably been invited to be a consulting editor. Kate Kelly added "What do I say to staff focus on getting results under difficult circumstances who are perplexed about this appointment, Lee? This makes little sense. In addition, we have an Employment Equity plan to complete and the racial profile of our employees is Arshavin arrived at Fritz Publishing to take up the CEO role in February 2011 to much becoming increasing skewed. How do I resolve this?" Lee Owens could provide few fanfare. Although the Fritz staff were initially somewhat dubious, it was difficult to argue with answers to her questions. the obvious accomplishments of the successor. Colin Ferguson had managed to convince all the senior managers to remain with the organisation. Sales and thus performance were still outstanding at the end of that financial year. New products Towards the middle of 2015, Fritz Publishing decided to produce dictionaries for schools and universities in three African languages because this was seen as a tempting financial Changes opportunity. Vadim Arshavin was elated as he this brainwave at a recent conference Resignations and appointments This will be an excellent way to improve the company's financials, gain further national Over the next 18 months, several changes took place. The first was the sudden exit of exposure, and respond to growing calls to decolonise the curricula", he had communicated Ferguson. This was followed by the resignation of three members of the senior team. Lee n a company-wide email. Market research had not been undertaken, he said, as this would Owens, a member of the senior executive team, had expressed his disappointment quite delay the process. openly but was told if he did not like the new dispensation then he could find alternative The company rapidly employed a host of language practitioners and spent millions on employment. "My family has just expanded", he told Lerato. "There is no way I can lose this getting the project up and running. However, because of the haste of implementation, many job or find myself out in the job market, not given the scarcity of jobs in our sector". typographical and type-setting errors were found only after printing. Compounding this A flurry of new appointments was made (See Exhibit 1 for Organisational Chart). Many of problem was that the distribution was not completed in time to meet the start of the these appeared ad hoc and failed to follow formal processes. In 2013, a Human Resource academic year and initial orders were cancelled. It was the first time in the history of Fritz consultant was hired on a permanent basis. By this time, staff turnover had peaked at 17.2 Publishing that this had occurred per cent. "We've never had so many people leave us", said Lerato to Lee Owens. "We've not had this many join in such a short period either", he replied. Reactions Because most of the management team were new and had been recruited under A new division Arshavin's leadership, dissent was minimal, although there were murmurings in the The e-book market was relatively unexplored and untapped in South Africa but the sudden corridors. Lee Owens and a few others felt that the management itself was becoming establishment of the ebook division at Fritz in February 2014 took staff by surprise. "Have increasing poor in certain areas because of lack of positive role models. we consulted anyone on the need for this?" asked a staff member. "Who exactly are we The frontline managers were almost continually harassed about working late to meet what trying to reach, given the country's challenges?" queried another. Soon, the e-book they considered unrealistic targets. Lee recalled a situation in the Production Department. departmental staff complement was up to 20 people, all employed on fixed term contract, The constant pressure had caused a spike in absenteeism, especially long-term another first for Fritz Publishing. absenteeism where two supervisors were booked off work because of stress and burnout. PAGE 2 EMERALD EMERGING MARKETS CASE STUDIES VOL 7 NO. 3 2017 VOL. 7 NO. 3 2017 EMERALD EMERGING MARKETS CASE STUDIES PAGE 3As a result, the morale of the affected teams was at a real low and would need some Lee Owens and Kate Kelly had attempted to raise the issue of attending to staff grievances intervention to restore it to earlier levels. Steve Curran, a Scottish national who had recently as a first step but this was soon shot down as an alternative by several colleagues and been appointed Production and Publishing executive, was overheard to say "It's high time Arshavin. "If people are unhappy here, they should just leave", he said. The meeting had people at Fritz realise it's a new world and they need to shape up or ship out. We don't have ended on a very sour note. time for endless employee consultation and people need to follow the rules. The company needs flexible employees, not people who want to specialise at tasks. Sometimes you need Decisions: What is to be done? to move around and we can't always predict where you'll be next month". erato's reverie was cut short by a knock on her door. Lee Owens popped his head in: While Fritz employees were initially receptive to Arshavin's attempts to introduce new Another disastrous management meeting!" he exclaimed. "I'm losing any enthusiasm to processes, products and systems, his demanding and uncompromising approach created carry on, Lerato. What is to be done?" resentment, resistance and sometimes fear. His insistence on doing things "the proper way - the internationally accepted way" created much unhappiness and discontent. As Lee looked at Lerato and sighed. "Fritz used to be such a flat structure and we were all Kate Kelly put it: "Most employees had a level of agreement on the need for change but nvolved in decision-making and kept up to date with most developments. Nowadays there they did not like way the way Arshavin had gone about 'forcing changes down our throats" is so much hierarchy and decisions are only communicated after the fact. No wonder staff are disengaged! The older members of the management team, the ones who remember Kate Kelly was one person with whom many of the staff shared their frustrations, what it was like before, are feeling side-lined. Any thoughts of the high performance culture uncertainties and fears. She recognised the importance of acting sensitively and we were once so well known for, and prided ourselves on, have disappeared" sympathetically in dealing with the apprehensions of employees. Kate was furthe frustrated by the lack of response from Arshavin when she had tried to bring these Lerato remembered how Colin Ferguson had spoken of the Machiavellian nature of Arshavin before Ferguson had left Fritz Publishing. She had not really understood at the concerns to his attention. ime but now the employees appeared increasingly disgruntled, she wondered if what She felt that that he had little understanding of both the context within which Fritz Publishing Ferguson had said was true. He had also warned of the dangers of fawning acolytes and was operating and the needs of its South African employees. These employees had been cautioned her to be mindful of the company's recruiting processes. "He'll bring in those accustomed to personal interactions with leadership, involvement in decisions that affected who won't challenge him", he'd forewarned. Lerato considered whether this might have e Keywords: them and needed to feel that their efforts were adding value to Fritz Publishing. As Kate told been the reason Ferguson had left Fritz Publishing. Organizational behaviour, Lee Owens: "Arshavin does not even appear to listen. He never remembers the names of Human resource staff, even people he deals with several times. More importantly, he does not seem to be "In two weeks, Hugh Brown from the Prys Group will be visiting us", Lee Owens said. "How management, able to appreciate the necessity of dealing with certain situations and circumstances can I put on a brave face? Many of us think the problem lies with leadership, but how can Management/executive we raise the issue?" education differently". The January 2016 management meeting Lee Owens was growing frustrated. The management meeting had finally started more than 5 min after the scheduled time. Staff had spent that time consuming lunch and catching up with colleagues. The new CFO, Jeffry Marsh, who was chairing the meeting, ineffectually tried to assert himself but eventually had to wait for Arshavin to arrive for the meeting to commence with its agenda The main item of business was a report back from Arshavin on the global figures of the Prys Group. He noted how South Africa's currency woes had impacted on costs for Fritz Publishing. Everyone listened attentively to plans for the coming months. The yearly roadshow by the Prys Group was due to be rolled out in South Africa and the Executive in charge of Global Markets, Hugh Brown, was due to arrive at Fritz Publishing in the next fortnight. Many challenges were facing the business. These included a recent employee survey that revealed low levels of morale and employee engagement, perceptions of bullying and recruitment concerns (Exhibit 2). A customer survey had also just been completed with current customers indicating that Fritz Publishing was no longer meeting their expectations or past quality standards (Exhibit 3). Longstanding customers complained that they had to deal with various employees rather than any senior executive and that often Fritz employees did not understand their requirements or their needs. Arshavin was furious: "We cannot afford to lose any more customers", he insisted. "Perhaps we need to get rid of the slackers and employ some new staff". He had ranted against what he termed "the highly inconsistent feedback" and considered the survey measurement suspect. The timing of both surveys was also questioned. PAGE 4 EMERALD EMERGING MARKETS CASE STUDIES VOL. 7 NO. 3 2017 VOL. 7 NO. 3 2017 EMERALD EMERGING MARKETS CASE $Exhibit 1. Fritz Publishing organisational chart Exhibit 3. Customer feedback survey (December 2015) Figure E1 Figure E3 CEO adim Arshavin My staff resent having to deal with a multiple We've lost the leftry Mars number of staff at Frit personal touch I would say instead of a dedicated we enjoyed with the service is person the Fritz family adequate or Executive: E-bo Distribution duction & Publishing Laurent Grove pe Owens Steve Curran Peter Naidoo & Operation Departmental staff Distribution team Production tea Marketing team perations team months the To be honest, we are quality of some of the thinking of moving to It appears there is a lot of products has another publisher "flash'at Fritz now. I'm not sur definitely next year we are getting any benefit Exhibit 2. Fritz Publishing staff survey (December 2015) deteriorated from that Figure E2 Highest and lowest scoring questions My fellow employees are committed doing quality mediocre. We got what wet What our company is concerned We have been loyal I have the materials and equipment I we're not sure if Fritz will be able about is that some of the Fritz need to do my work we're not sure if to deliver to our requirements ees appear completely for 15 years so we there wo wo my WORK. he mission or purpose of my company makes me feel my job is important next time disinterested in our queries should be afforded service above the norm At work, my opinions seem to In the last 7 days, I have received gnition/ praise for doing good work ty supervisor seems to care about me as ca person 40 70 About the author Linda Ronnie is a Senior Lecturer in Organisational Behaviour and People Management at the University of Cape Town's Graduate School of Business. Linda Ronnie can be contacted at: Linda.ronnie@gsb.uct.ac.za PAGE 6 EMERALD EMERGING MARKETS CASE STUDIES VOL. 7 NO. 3 2017 VOL. 7 NO. 3 2017 EMERALD EMERGING MARKETS CASE STUDIES PAGE 7