Leading Change at Simmons (A):
The Challenges of Leadership in Managing Cultural Change in Large-Scale Organisations
Introduction
This case study examines the challenges of leadership and how they manage change in large-scale organisations. This particular case examines Simmons, a 130-year-old manufacturer and distributor of mattresses; it highlights the challenges faced by the newly employed CEO, Charlie Eitel, who has been hired by major shareholders, Fenway Partners to overhaul the organisation’s operation and initiate a turn-around in Simmons’ performance (Casciaro et al., 2005). Based on his experience at turning companies around to improve their operational and financial performances, Charlie Eitel introduced a number of changes on starting to work at Simmons, and his two main objectives were: “...to create a kind of company where everyone want to get up and come to work in the morning”, and “...to create the kind of company that other companies want to do business with.”
Apart from change management, the case covers various management issues such as leadership, staff motivation, employee training, employee empowerment, team management, organisational change and adaptation, resistance to change, and organisational culture. All of these issues combine together to affect the performance of Simmons such that the organisation faced its toughest period ever since it was established. Another major challenge was the loss of three major customers due to bankruptcy, which make up roughly one-sixth of Simmons’ sales. Despite the recent loss of these three major customers, the new CEO, Charlie Eitel is considering an enormous $7.2 million investment in training program whose outcome is “encouraging but not definitive”, at a time when the US economy was facing a downturn due to the effects of the 9/11 attacks. Simmons’ owners, Fenway Partners are not particularly enthusiastic about the new CEO’s move in an uncertain economic environment highlighted by severe economic hardship. The CEO of the company Charlie Eitel will be referred to as Eitel throughout the analysis implemented in this case.
Describing the Current Situation
After joining the organisation, Eitel identified that its management structure was rather top heavy and its operations bureaucratic, the manufacturing plants regarded one another as competitors rather than co-operators who all belong to one organisation. Managers in some of the plants such as the Janesville Plant were so swollen-headed they were adamant that the plant would be union-free and resisted attempts by a previous management team to unionize the plant. This highlights resistance to change especially from both individual levels, while resistance at the organisational level results from a structural problem which is opposes the change strategies from a cultural perspective.
From individual perspective, the employees and senior managers are overwhelmed by fear of the unknown due to the uncertainty surrounding the outcome of the Great Game of Life training package. They feel threatened about the safety and security of their jobs especially given that Eitel had already implemented a re-organisation of the manufacturing plants as a result of his perception that the organisation is rather top heavy and bureaucratic to compete effectively in the market. The re-organisation led to the elimination of all general manager positions at the plants and was instead downgraded to plant managers with their responsibilities restricted to their plants; this led to an immediate mass resignation from some of them while others who could not continue resigned within one year.
Secondly, people have habits and according to the saying that ‘old habits die hard’, people will have preference for working in ways they have been used to. When asked to change to new ways of working, they are likely to insist on continuing to work in the way they are used to. Similarly, in the Simmons case, the workers perceived that the Great Game