MGT229\t-\tLesson\t2 \tCase\tStudy Waste Management Introduction to the Case Americans generate a quarter billion tons of trash a year, or 4.5 lb. of trash per person per day. Thanks to nearly 9,000 curbside recycling programs, one third of that is recycled. However, that still leaves 3 lb of trash per person, per day to be disposed. In the past, trash was incinerated, often in local neighborhoods. Waste Management, Inc., is the largest wastehandling company in the world. It has 20 million customers, 273 municipal landfills, 91 recycling facilities, and 17 wastetoenergy facilities. Waste Management generates 75%of its profits from 273 landfills, which can hold 4.8 billion tons of trash. But even as it dominates its industry, Waste Management faces serious changes in its environment. Both corporations and consumers are reducing the amount of waste they generate and increasing the amount of goods they recycle. Over the past few years, has been an overall gradual change in the sociocultural, political, and legal thinking of society has occurred in reference to waste management. These trends challenge Waste Management because the high cost of collecting and sorting recyclable materials means that Waste Management loses money when it recycles them. Discussed below are some of the key challenges faced by Waste Management, Inc. Changing External Environment External environments are the forces and events outside a company that have the potential to influence or affect its stability. As discussed in the textbook, organizations are influenced by two kinds of external environments: the general environment, which consists of economic, technological, sociocultural, political, and legal events and trends, and the specific environment, which consists of customers, competitors, suppliers, industry regulators, and advocacy groups. The sociocultural component of the general environment refers to the demographic characteristics, general behavior, attitudes, and beliefs of people in a particular society. Sociocultural changes and trends influence organizations in two important ways. First, changes in demographic characteristics, such as the number of people with particular skills or the growth or decline in particular population segments (marital status, age, gender, or ethnicity), affect how companies staff their businesses. Second, sociocultural changes in behavior, attitudes, and beliefs also affect the demand for a business' products and services. Subaru of America, for instance, has a zerolandfill plant in West Lafayette, Indiana, that hasn't sent any waste to a landfill since 2004. None! Subaru isn't in the only company to seek to be a zerolandfill company. Walmart, the largest retailer in the world, has also embraced this goal, stating, \"Our vision is to reach a day where there are no dumpsters behind our stores and clubs, and no landfills containing our throwaways.\" Like leaders at Subaru and Walmart, corporate leaders worldwide are committed to reducing the waste produced by their companies. Recycling Another significant change for Waste Management is that not only are customers reducing the waste they send to its landfills, they're also wanting what is sent to landfills to be sorted for recycling and reuse. For instance, food waste, yard clippings, and woodall organic materials account for roughly onethird of the material sent to landfills. Likewise, demand is growing for waste companies to manage and recycle discarded TVs, computer monitors, and other electronic waste that leaks lead, mercury, and hazardous materials when improperly disposed of. However, the high cost of collecting and sorting recyclable materials means that Waste Management loses money when it recycles them. Traditionally, recycling has been a breakeven or low profit business. The challenge for Waste Management and CEO David Steiner is to focus on sustainability services and be highly profitable. The question, of course, is how. The answer, he believes, is technology. Says Steiner, \"We don't want to play just in the picking up and delivering. We want to own conversion, too. We want to own the technology.\" Consequently, Waste Management has gone on an acquisition spree, purchasing companies with the technologies it believes can make it highly profitable in recycling. For instance, Waste Management purchased Garick, a Texasbased company that can turn a ton of food waste, which traditionally had no value, into $40 or $50 of compost and mulch. It also invested in Harvest Power, a Massachusettsbased firm that turns waste into highquality compost which can then be burned to generate electricity at a payoff of $60 to $80 per ton. Waste Management also bought Glacier Recycle, based in the state of Washington, which recycles construction materials into recycled wood products and biomass fuel. Finally, Waste Management has invested in Terrabon, another Texasbased firm that makes socalled \"green gasoline\" from waste paper and chicken manure. Perception, Image Issues, and Advocacy Groups Advocacy groups are an example of a specific environment as discussed above. Advocacy groups are groups of concerned citizens who band together to try to influence the business practices of specific industries, businesses, and professions. For example, groups such as the Sierra Club have been critical of Waste Management's landfill practices. The members of these groups generally share the same point of view on particular issues. For example, environmental advocacy groups might try to get manufacturers to reduce smokestack pollution emissions. Unlike the industry regulation component of the specific environment, advocacy groups cannot force organizations to change their practices. Nevertheless, they can use a number of techniques to try to influence companies, including public communications, media advocacy, Web pages, blogs, and product boycotts. For Waste Management as a company, the most common technique for responding to the criticisms of advocacy groups is to assertively and quickly counter their claims with factual evidence that demonstrates that the company is not acting unethically, as claimed by the advocacy groups. Often, that just leads to more intense accusations. Waste Management, however, has taken the unique strategy of working directly with advocacy groups to address criticisms of how it does business. One of the largest criticisms of Waste Management is that its 273 landfills represent tens of thousands of acres of contaminated waste land. To address that criticism, it began working with the Wildlife Habitat Council (WHC), a nonprofit organization, which works with \"with corporations and other landowners to create tailored voluntary wildlife habitat enhancement and conservation education programs on corporate facilities and in the communities where they operate.\" The WHC works with corporations to independently certify that their recovered lands are now suitable and sustainable for wildlife. To achieve the WHC's certification with wastefilled landfills is no small task. But, in 2007, CEO Steiner announced that Waste Management's goal was to achieve the WHC's certification at 100 sites amounting to over 25,000 acres by 2020. Debbie FiguerasCano, who runs the Wildlife Habitat Council program at Waste Management, said, \"I honestly thought at that point in time that getting to 100 of them would be a challenge, just because it's not a simple thing to do to get WHC certified. There's a lot of work that goes into getting these certifications.\" The WHC had only certified 19 sites in the previous 7 years. Furthermore, said Scott Kilkenny, chairman of the WHC, \"No single company has ever received 30 certifications in one year, and no other company has more than 100 certified programs.\" Nonetheless, today, just 3 years after setting its goal, Waste Management has 100 WHC sites protecting more than 25,000 acres. Of the 100 sites, 97 are former landfills. Waste Management's Kirby Canyon site, for example, has 600 acres for wildlife use that includes grasslands where two threatened species, the bay checkerspot butterfly and the California red legged frog, are now thriving. Source: Adapted from MGMT 6 Instructor Resources, Chapter 3, Cengage Learning, 2013. MGT229\t-\tLesson\t2\tManagement\tExercise Making a New Culture Home Depot stores used to be known for customer service. A host of friendly employees would help customers navigate a huge inventory, find exactly what they needed, and even provide detailed instruction. Those days seem long gone, though. Under the leadership of the former CEO, the company shifted its focus away from customer service to reducing inventory and cutting costs. Stores that once had an employee in nearly every aisle are now being manned by just a handful of employees, even during the busiest times. Customers who were used to getting helpful, personal attention can no longer find even a cashier, much less someone that can answer their questions on how to use a reciprocating saw. Marvin Ellison, promoted to CEO in 2008, saw the disastrous results of Home Depot's lack of attention to customers. In the last three months of 2009, the company lost $54 million. To make matters worse, the company's reputation took tremendous hits. For many years, it routinely ranked near the bottom of the University of Michigan's American Customer Satisfaction Index, which compiles consumer evaluations of all major retailers. Even after Home Depot recovered in these rankings slightly, it still lagged far behind competitors like Lowe's and Ace Hardware. He had to listen to countless stories of how consumers would drive an extra 30 minutes, even an hour, to avoid going to Home Depot. To turn things around, Marvin Ellison has committed to a new company visiona culture that is dedicated to meeting three goalsclean warehouses, stocked shelves, and top customer service. He wants employees to set aside a portion of their shift to do nothing else but take care of customers. He wants to revise evaluations so that employee performance is reviewed primarily on the basis of customer service. He wants to give financial incentives to employees who provide great service. He wants to reduce the number of messages that stores and employees get from headquarters so that they can focus on customers. In short, he wants to restore Home Depot's reputation for providing the very best in customer service. Source: Adapted from MGMT 6 Instructor Resources, Chapter 3, Cengage Learning, 2013