regional player in the retail industry, the company has

hundreds of stores in the upper Midwest. Unfortu

nately, a sharp decline in the region$$s manufacturing

economy has put management in a serious financial

bind. Revenues have been consistently dwindling. Cus

tomers spend less, and the stores have had to switch

their focus to very low$-$margin commodities, such as

milk and generic drugs, rather than the high$-$margin

impulse$-$buy items that used to be the company$$s bread

and butter. The firm has closed several locations,

reversing its expansion plans for the first time since it

was incorporated.

Because this is uncharted territory for the com

pany, Jim Claussen, vice president for human relations,

struggled with how to address the issue with employees.

As the company$$s fortune declined, he could see that

employees were becoming more and more disaffected.

Their job insecurity was taking a toll on their job atti

tudes. The company$$s downsizing was big news, and

the employees did not like what they were hearing.

Media reports of Morgan$-$Moe$$s store closings have

focused on the lack of advance notice or communica

tion from the company$$s corporate offices, as well as

the lack of severance payments for departing employ

ees. In the absence of official information, rumors and

gossip have spread like wildfire among the remaining

employees. A few angry blogs developed by laid$-$off

employees, like IHateMorganMoe.com $,$ have made the

morale and public relations picture even worse.

Morgan$-$Moe is changing in other ways as well. The

average age of its workforce is increasing rapidly. A

couple of factors have contributed to this shift. First,

fewer qualified young people live in the area because

many families have moved away to find jobs. Second,

stores have been actively encouraged to hire older

workers, such as retirees looking for supplemental

income. Managers are very receptive to these older

workers because they are more mature, miss fewer days

of work, and do not have child care responsibilities.

They are also often more qualified than younger work

ers because they have more experience, sometimes in

the managerial or executive ranks.

These older workers have been a great asset to the

company in troubled times, but they are especially likely

to leave if things get bad. Suppose these older workers

start to leave the company, taking their hard$-$earned

experience with them. In that case, it seems likely that

Morgan$-$Moe will sink deeper toward bankruptcy.

The System

Claussen was not sure how to respond to employees$$

sense of hopelessness and fear until a friend gave him

a book titled Man$$s Search for Meaning. The book was

written by a psychologist named Victor Frankl, who

survived the concentration camps at Auschwitz. Frankl

found that those who had a clear sense of purpose, a

$668$

Comprehensive Cases

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reason to live, were more likely to persevere in the face

of nearly unspeakable suffering. Something about this

book, and its advocacy of finding meaning and direc

tion as a way to triumph over adversity, really stuck with

Claussen. He thought he might be able to apply its les

sons to his workforce. He proposed a new direction for

management to the company$$s executive committee,

and they reluctantly agreed to try his suggestions.

Over the past six months, stores throughout the

company have used a performance management system

that, as Claussen says, $$gets people to buy into the idea

of performing so that they can see some real results in

their stores. It is all about seeing that your work serves

a broader purpose. I read about how some companies

have been sharing store performance information

with employees to get them to understand what their

jobs really mean and participate in making changes. I

thought that was something we would be able to do$.$

The human resources $($HR$)$ team came up with five

options for the management system. Corporate allowed

individual managers to choose the option they thought

would work best with their employees so that manag

ers would not feel too much like a rapid change was

being forced on them. Program I is opting out of the

new idea, continuing to stay the course, and provid

ing employees with little to no information or oppor

tunities for participation. Program II tracks employee

absence and sick leave data and shares that informa

tion with individual employees, giving them feedback

about things they can control. Management takes no

further action. Program III tracks sales and inventory

replacement rates across shifts. As in Program II$,$ infor

mation is shared with employees, but without providing

employee feedback about absence and sick leave data.

Program IV$,$ the most comprehensive, tracks the same

information as Programs II and III. Managers commu

nicate it in weekly brainstorming sessions, during which

employees try to