OBR 250 W24 Group Assignment 2 (15%):

Case The Case of Two Senior Leaders at each other's throats.

In this case, the CEO of a sports garment manufacturer is faced with an ongoing conflict between two of his top executives. Specifically, the head of sales and the CFO are at each other's throats and the tension is having a ripple effect on their teams and the rest of the organization. The CEO, who tends to avoid conflict himself, is struggling with how to respond. His options include changing the company compensation scheme to encourage better collaboration, firing the two leaders, getting them each a coach, and doing more team building activities. The feedback in the 360-degree reviews was supposed to be anonymous. But it was crystal clear who'd made the negative comments in the assessment of one executive. Henry Castello, the CEO of Castello Garment Co., was meeting with Jane Paretto, the company's general counsel, who also oversaw human resources. It had been a long day at the company's Atlanta, USA, headquarters, and in the early evening the two were going over the evaluations of each of Henry's direct reports. Henry was struck by what he saw in CFO Ernie Segal's file. Most of the input was neutral, which was to be expected. Though brilliant and well respected, Ernie wasn't the warmest of colleagues. But one person had given him the lowest ratings possible, and from the written remarks, Henry could tell that it was Joe Divine, Castello's head of sales. One read: "I've never worked with a bigger control freak in my life." "These comments are pretty vicious," Henry said. "You're surprised?" Jane asked. "I guess not," Henry acknowledged. His CFO and his sales chief had been at loggerheads for a while. Joe's 360 also contained a few pointed complaints about his working style no doubt from Ernie. Henry sighed. Five years earlier, when he'd stepped into his role, he'd been focused on growing the company that his father, Davidthe previous CEOhad founded. Castello licensed the rights to put sports 2 leagues' logos on merchandise and partnered with large brands to produce it for retail markets, and when Henry took the company over, its revenues were about $100 million. Soon after, he'd landed the firm's biggest partner, Nowell. Negotiating the deal with the global brand had been a challenge, but it increased business so much that Henry and his direct reports still felt they didn't have enough hours in the day to get everything done. They certainly didn't have time for infighting like this. "So, what do we do with this info?" Henry asked. Jane shrugged. "This is the first time I've been through this process myself." "Right. Clearly, I've got to do something, though. I know that Joe and Ernie aren't mates, but I do expect them to be civil." Jane nodded, but Henry sensed she was biting her tongue. "You can be honest with me, Jane. I need your counsel." "Well," she said tentatively, "I think that's part of the problem. The expectation is that we're civil, but that doesn't translate to collaboration. We all trust you, but there isn't a whole lot of trust between the team members. "So, does everyone think Ernie is awful?" he asked, pointing to the report. Jane shook her head. "It's not just about him. You can see from the feedback that Joe isn't a saint either. He picks fights with Ernie, and the tension between themand their teamshas been having a ripple effect on the rest of us. You see the finger-pointing. It seems like everyone is out for themselves." Although Henry hated hearing this, it wasn't news. He'd just tried to convince himself that the problems were growing pains and would sort themselves out. After all, sales and finance were often at odds in organizations, and the conflict hadn't had a big impact on Castello's revenues. They'd grown 22% the previous year and 28% the year before that. Of course, none of that growth had come easily, and opportunities had certainly been missed. Castello had dropped the ball on inquiries from several retailers interested in its products by failing to coordinate getting them into the company's system quickly. Now, Henry realized that might 3 be a sign of more fallout to come. He needed to fix this. "My dad always wanted to do one of those team-building retreats," he said, smiling. This had been a running joke among Castello's executives for years. Whenever Eric had sensed tension, he would mention the idea, but he never followed through. Jane laughed. "Unfortunately, I think we're beyond that." The next morning, Henry was in his office when he got a text from Komal Nath, the head of product and merchandising: Can you talk? Knowing this couldn't be good, Henry called her immediately. Skipping the formalities, she launched in: "You need to get them on the same page." Henry didn't have to ask who "them" was. "Joe has promised samples for the new line on the Dickson account, but his order exceeds the limits accounting set, so we need Ernie's sign-off, and he won't give it." This was a recurring fight. Joe accused Ernie of throwing up roadblocks and using his power to undermine the sales department. Ernie retorted that Joe was driving Castello into the ground by essentially giving products away. Henry went back and forth on whose side he took, depending on which of them was behaving worse. But he didn't want to intervene again. Why couldn't they just find a compromise? Practically reading his mind, Komal said, "They'll stay in this standoff forever if you let them. It's as if they're in their own little fiefdoms; they act like they're not even part of the same team." "Have you talked to them about this?" "The holdup with Dickson? Of course, I have. But it doesn't help. This situation is a mess." The last comment stung. The team wasn't perfect, but it was still operating at a pretty high level. "It would really help if you talked to them," Komal gently pleaded. Henry thought back to the last time he'd sat down with Joe and Ernie. Each had brought a binder filled with printouts of the e-mails they'd exchanged about a missed sale. Henry had marveled at how long it had probably taken each of them to preparenever mind the wasted paper. 4 "Let me look into it," Henry said. This had become his default response. "Can I tell you what I'd do if I were in your shoes?" Komal said. "Fire them both." Though Henry had always appreciated her straightforwardness, he was taken aback. "Just kidding," she added hastily. "What about having them work with a coach? I mean, we could all benefit from having someone to help us talk through how we handle conflicts and from establishing some new norms." Henry wondered if the firing comment had really been a joke, but he let it pass. "I did talk to that leadership development firm last year," he said. "They had some coaching packages that seemed appealing, but we all agreed we were too busy with the new accounts." "Well, maybe we should make time now," Komal replied. After they hung up, Henry was still thinking about the idea of letting Joe and Ernie go. Terrifying as the thought was, it might also be a relief. He'd heard of CEOs who'd cleaned house and replaced several top execs at once. He could keep Komal, Jane, and a few others and bring in some fresh blood. It would be one surefire way to reset the team dynamics. Doing Just Fine Later that afternoon, at the end of a regular meeting with the finance team, Henry asked Ernie to stay behind. "I heard there's a holdup on the Dickson samples," he said. "The usual. Sales needs to pare back the order. As soon as Joe does that, I can sign off," Ernie said calmly. "It doesn't sound like Joe's budging." "He will." Henry decided to wade in. "Is everything OK with you guys?" "Same as usual. Why? What's going on? The numbers look great this quarter. We're doing just fine." 5 "I agree on one level, but I have concerns on another. It's taking six months to onboard new customers at a time when everyone is fighting for them." "Is this about those 360 reviews? I tried to be fair in my feedback," Ernie said a bit defensively. "The input is anonymous, so I don't know who said what, but the tension between you and Joe is obvious." "Of course, it is. I'm the CFO and he's in charge of sales. If we're both doing our jobs well, there's going to be conflict. And that's what I'm doing: my job. I'm the keeper of the bottom line, and that means I'm going to butt heads with a few people." Henry had heard him say this before, but Ernie took it one step further this time. "Your discomfort with conflict doesn't make this any easier." They both sat quietly for a minute. Henry knew that as part of this process he'd need to examine his own leadership. Indeed, his 360 had been eye-opening. His people had described him as a passionate entrepreneur and a visionary, but they'd also commented on his preference for managing one-on-one instead of shepherding the team and on his tendency to favor big-picture thinking over a focus on details. "OK. I hear you on that," Henry finally said. "That's on me. But you also need to think about what you can do to improve this situation. There's a difference between productive and unhealthy conflict, and right now it feels like we've got too much of the latter." "Have you considered one of those team-building retreats?" Henry's father asked when they spoke that night. "I know you all never took me seriously" Henry chuckled. "Because you never booked it!" "but I still think it's a good idea," Eric continued. "No one really knows how to have a productive fight at work. It's not a skill you're born with. You have to learn it." "I'm considering it, Dad. But I'm not sure it would be enough at this point." "What about the comp?" This was another thing Eric had brought up routinely. During his tenure as CEO he'd realized that the C-suite compensation wasn't structured to encourage collaboration. Bonuses 6 were based on individual, functional-unit, and company performance at respective weightings of 25%, 70%, and 5%. "Maybe it's time to bump up that 5% to at least 10% or even 20%," Eric said. "I'd like to make those changes, but I need Ernie's help to do it, and he's swamped," Henry said. "Besides, lots of experts say that too many people view comp as a hammer and every problem as a nail. CEOs expect comp to fix anything, but usually you need other tools. I may have to do something more drastic." "You're not considering firing anyone, are you?" Eric had personally hired all the senior executives now on Henry's team and was almost as loyal to them as he was to his own family. "To be honest, it's been on my mind. I'm not sure what I would do without Joe or Ernie. They're an important part of why we make our numbers each year. They help us win. But I look back and wonder how we did it playing the game this way. I need a team that's going to work together to reach our longer-term goals." When Eric had retired, he and Henry had set a target of reaching revenues of $500 million by 2022. "This group feels as if it could disintegrate at any moment. And our vision might crumble along with it." "I'm sorry," Eric said. "Do you feel like you inherited a pile of problems from your old dad?" "No, I feel like I've somehow created this oneor at least made it worse." "Well, one thing is certain: You're the boss now. So, you'll have to decide what to do."

Problem Analysis - Now use your understanding of the Theoretical concepts to analyze the Problem. In other words, which theory/concepts explains the reasons, causes, triggers, catalysts of the identified Problem.