Reviving a Mature Business: Leadership and Culture Change at PMF

Introduction: PMF's History and the Challenge Ahead

Poly-Metal Finishing, Inc. (PMF) has been my employer for the past eight years, and has my respect as a fine company. It has been in operation for over thirty years and has a combined experience in the anodized aluminum field of over one hundred fifty years. It has always been a world-class company in its dedication to preserving the environment and dealing in an honest and ethical manner. A number of its policies with regard to its clients are above and beyond the standards of the industry.

However, in spite of all these evident strengths, the original manager and founder was succeeded by a management team that adopted a totalitarian style of leadership. Gradually the confidence and cooperation of the employees began to erode, replaced with cynicism and negative attitudes. The company slowly became neither the best nor the most enjoyable place to work.

Within the last year, a new management team — of which I am a part — has replaced this unsuccessful structure. Now as one of the top managers, I have set myself the goal of seeing things turn around and the company becoming the world-class business it once was. The new management team and I share a vision of moving the company forward to a new and higher level. We are aware of the work and dedication this process will involve and know that pitfalls await us. However, we are encouraged by our commitment to a common goal and by our knowledge of the company's innate potential.

I am using this Independent Learning Project to explore ways in which the new management team can decide on strategy for PMF. Now is the time to determine what steps we will need to take to change the course of the company. With the impending retirement of the current president of PMF within the next few years, the task of running the company for the next few decades will fall on the shoulders of three of us. It is our goal to make PMF a strong, viable, long-lasting company — one that we will be proud to say we manage.

It is my personal goal to make PMF a company of choice. We all must work for a living, and since we must work, it seems obvious that those years would be better spent in a pleasant, stimulating, rewarding work environment — one that enhances our overall sense of purpose and pleasure in life. It is my goal to make PMF a company that will attract the best and brightest employees and give all of us a sense of accomplishment in what we do.

The current president and the three vice presidents share common ideals and visions, and it has been a satisfying process to work together and create a shared dream for PMF. One of our objectives is the empowerment of employees, in order to create a dynamic, powered-from-within organization. However, because of the prevailing negative attitude of the workers, we have realized that this change in atmosphere will be a challenge. We believe it is essential to overcome this cynical attitude, and we hope to effect a positive change so that the workforce can move on to a more meaningful and productive relationship. We have accepted that not everyone will choose to make the transition and that some employees will inevitably choose to leave PMF. If that is the case, we will have to have created a paradigm for finding and training new employees who will fit with the empowered and re-energized company.

With all these goals in mind, I have attempted to find a starting point from which the management team can begin the change. I have assembled our current system of beliefs as they are spelled out in our company literature, then researched current thinking about how successful organizations can and should be run, and what management's responsibilities are in facilitating a productive climate. These findings, along with a series of suggestions for how to implement the most relevant of them at PMF, are summarized in this paper.

These ideas will obviously be of great benefit to the new management team of PMF. In a sense, we are fortunate to have the company's successful history on which to build. The setback the company has experienced is not drastic by comparison with some, but it is serious enough to send a wake-up call and motivate us to try every means possible to recoup the strengths of the past — and hopefully even to surpass them. On the other hand, we are to some extent bound by the company's very success, and must preserve as much of its heritage as possible. Because of this, we are constrained to work with some existing systems, whereas a new company just starting up — although it would lack PMF's evident strengths — would also have the advantage of starting with a clean slate.

It is my thesis that there are many American companies in the position of PMF. They are mature and successful, yet somehow the honeymoon luster has worn off. There is some disillusionment and disgruntlement in the ranks. While there is no open revolt or strife, the team spirit is simply not there. No one presently employed at the company is directly to blame, yet all share a certain ennui — a TGIF attitude. The changes in world economy, and particularly in the wake of the events of September 11, will test the mettle of all companies. Those who are divided in purpose and not wholeheartedly involved in their business's success may find that division marks the difference between survival and failure in the years to come.

Therefore, I have attempted to keep the findings of this paper general enough to be useful for any company in PMF's position. I have researched the beliefs of many entrepreneurial and management thinkers, and summarized those most concerned with bringing about attitudinal change. I have tried to discover how successful leadership teams revive a spirit of enthusiasm and candor in their employees, and how these shifts in philosophy affect a company's relationships with its clients, suppliers, and communities.

Literature Review: Customer Service

In this chapter, I summarize my research into the writings of various entrepreneurship and management thinkers who have developed theories for effective leadership over the past two decades. Many of these authors have been chosen because of their field research, which was conducted on actual companies — some of which rose to the challenge and some of which failed to do so.

I have attempted to choose the most relevant studies to PMF's particular situation. In thinking about the strategic direction that PMF must decide upon, it seemed to me that the current situation involved three inter-related yet distinct factors: our relationship with our customers, the morale of our workforce, and the challenge of initiating cultural change in an existing business. I have divided my research accordingly.

Michael Mercer advises anyone wishing to please a customer to forget the Golden Rule. "The Golden Rule states, 'Treat other people as you want to be treated.' This idea does not go far enough." Instead, he advocates the Platinum Rule: "Treat other people the way they want to be treated" (Mercer, 1994, pp. 14–15). In the global economy, his point is well taken. Customers today come from a wide range of cultures and backgrounds, and every company has unique needs and wishes. Therefore, a successful company must not interpret what the customer wants based solely on its own experiences and values; it must determine from the customer himself exactly what he needs to make the transaction completely successful.

Atkinson attributes the success of Japanese business to their determination to target certain markets and then thoroughly do their homework to find out exactly what that market's customer wants. The automotive and electronics industries are examples of their success in overcoming the earlier stereotype of producing shoddy goods. More recently targeted and dominated sectors include banking and financial services, with pharmaceuticals appearing to be next. In each instance, the Japanese were ready to overcome cultural and ideological barriers to understand what the customer really wanted, then apply the Platinum Rule (Atkinson, 1990, pp. 3–12).

British Airways offers a compelling case study in customer service transformation. Robert Tucker relates how the airline had defined poor customer relations in the 1980s. New CEO Colin Marshall decided that the company was going around in circles trying to determine what customers really wanted, and he authorized a customer survey. The results revealed that customers resented the British staff's reserved manner and interpreted it as unfriendliness and hostility — a factor that weighed twice as heavily with them as décor and ambiance, which the airline had assumed would be more important. The company spent millions training its staff and is now ranked among the tops in service by the International Foundation of Airline Passenger Associations (Tucker, 1991, p. 168).

Tucker also gives the example of Nordstrom Department Store. As the retail industry attempted to compete with big-box stores on pricing, most retailers cut staff and made stores essentially self-serve. Nordstrom went in the other direction, stressing personal service that goes above and beyond, along with a wide range of free value-added services. Staff are the highest-paid in the industry and prices are higher than the norm, yet growth has been steady and positive. The public welcomed the chance to enjoy good service and were prepared to pay for it (Tucker, 1991, pp. 165–166).

Tucker also tells the story of Barry Fribush, founder of Bubbling Bath Spa and Tub Works, who was so frustrated with the poor service following his own spa purchase that he started his own company. He bought superior merchandise to minimize breakdowns and hired technicians who worked during the day for companies such as Xerox. These people, although expensive, had the expertise and people skills to handle computerized spa controls, and they were available in the evenings when most customers needed them. To reduce callbacks, he paid his technicians only for the first service call. Through these measures, he set a new standard of excellent service for the spa industry while keeping operating costs in line (Tucker, 1991, pp. 166–168).

Tucker offers seven suggestions for improving customer service:

1. Improve service from the top down. Management must genuinely believe in excellent customer service — not merely pay lip service to the idea — and must be aware of the basics of their own operation. 2. Set measurable customer-service goals. For example, what is the maximum number of times the phone can be allowed to ring before answering? 3. Recruit a customer-centered team, hiring on the basis of communication skills and demonstrated excellence in customer service. 4. Hire experience and then provide more training — as Home Depot does by hiring technical experts and then training them further. 5. Give incentives for excellent service: recognition, or an arrangement similar to the spa company's model of paying the technician to fix the problem the first time. 6. Empower the team to solve problems immediately, without excessive red tape — for example, a Cadillac dealership in Dallas that authorizes salespeople to maintain a per-customer budget for after-sale adjustments. 7. Encourage heroic acts. Provide special recognition and ensure that employees who go out of their way for customers become the stuff of legend (Tucker, 1991, pp. 169–176).

Tom Peters and Bob Waterman defined the new approach to the customer — the shaking off of complacency that began in the 1980s — as obsession: "This [obsession] characteristically occurred [in the excellent companies] as a seemingly unjustifiable overcommitment to some form of quality, reliability or service. Being customer-oriented doesn't mean that our excellent companies are slouches when it comes to technological or cost performance. But they do seem to us more driven by their direct orientation to their customers than by technology or by a desire to be the low-cost producer" (Peters & Waterman, 1982, p. 157). This ties in with the second of their eight essential principles that drive excellent companies: staying close to the customer's preferences — following the Platinum Rule.

Larry Wilson sees the most insidious danger to established, successful companies as the gradual erosion of that obsessive desire to learn the customer's wishes and then delight him by surpassing them. A comfortable market position develops and the early start-up desperation subsides. The company falls victim to "organizational arrogance"; it becomes "fat, dumb and happy" (Wilson, 1987, p. 41). It begins to repeat known patterns of success and the entrepreneurial spirit begins to atrophy. In order to wake itself up, it needs to take risks again, search for new answers, and recommit to quality in its internal workings and in its dealings with clients and suppliers (Wilson, 1987, pp. 41–51). He sums up the whole Platinum Rule as a variation of the baker's dozen — a value-added philosophy that gives "thirteen for twelve," constantly exceeding the customer's expectations and stretching the company's understanding of its own capabilities (Wilson, 1987, p. 200).