Organizational Health Case study 11-11 P.R.I.S. CONSULTING, LLC. 2017

Executive Summary

In this study, we assess a home furnishings retailer operating 18 U.S. stores with a total of 500 employees. The company was suffering from steadily declining sales, high attrition rates at the mid-manager level, poor online reviews from employees about their work environment, and poor online reviews from customers. Executive level managers completed an Organizational Health Assessment which showed the overall health of the organization to be at 47%, when optimal organizational health would be at 100%.

Subsequently, 150 employees were interviewed, with full confidentiality, answering questions regarding the leadership, the climate and their overall happiness within the company. The interviews confirmed areas of weakness acknowledged by senior management, and exposed additional hidden issues symptomatic of the organizational health. The data collected from those 150 employees was compared and contrasted against 100 other similar organizations (based on employee numbers, inventory management systems, delivery expectation, and on-line and in-store purchase practices) within the industry. The results showed that the subject organization’s overall health scored 20% below the benchmarked average level of 67% among peer companies in the same or a similar industry.

 

Client’s Challenges

Internal Challenges: For two consecutive fiscal years, our client experienced high turnover rates at the mid-manager level. While frontline employee attrition rates did not seem higher than average at that level, there were negative online reviews of the company by the frontline employees. Our task was to understand why front line employees were staying despite negative reviews and why managers were leaving, given the higher pay and leadership responsibilities.

External Challenges: During that same period of two fiscal years, online customer reviews were typically below a 60% satisfaction rate, and tied to a variety of complaints. Since this client receives about 40% of their business from online sales, the negative customer reviews directly affected their sales, resulting in a 10% decrease in overall sales during the two previous fiscal years.

Initial Responses to Declining Sales: In an effort to reduce expenses, our client attempted a 10% reduction in employees across a variety of departments in the corporate office as well as individual stores. To drive sales, the production team tried diversifying their inventory to attract new clients. With these two strategies, they were able to recover about 3% of sales, but the online customer and employee reviews remained negative.

Senior level managers found themselves aware of several symptoms, but were unable to determine the root cause. From their perspective, it seemed as though various groups were working well independently and meeting targets related to production. However, as a whole the company was losing employees, sales, and reputation all of which were negatively affecting their brand. The senior management team understood—following continued negative online reviews below target growth, and continued employee attrition—they had identified the wrong causes for their loss in revenue and needed assistance.

 

Our Diagnostics

We reached out to former employees for anonymous interviews, and also conducted anonymous interviews with 150 current employees: 100 at mid-level and 50 frontline.We determined that the root cause for the poor organizational health started with a lack of introductory training for mid-level managers. In addition, more than 50% of the mid-level managers were hired into their positions from external firms rather than promoted from within the organization. Those new hires, in leadership positions, were expected to perform higher than initially suggested, in a challenging environment, with little to no formal training around the nuances and specificity of the company.

  • Using the Leadership Compass assessment tool, we determined that a leader at the mid-level management needs to be an Influential or Optimal Leader. An individual who encourages and mentors the frontline employees to higher positions when available.

Among the frontline employees, we learned that while new employees entered the firm from a variety of backgrounds in design, engineering, sales, and supply chain management, the lack of leadership and knowledge from the mid-level managers quickly led to frustration among frontline employees. Although many had the hopes of moving from a frontline position to a manager position, senior managers were not promoting professional growth opportunities from within the firm.

  • Using the Leadership Compass assessment tool, we determined that the company’s ideal leadership style at the frontline should be an Aspiring or Optimal Leader. These are individuals who are eager to learn and not content with just being competent.

 

The Compass Model


As we used the Compass Assessment tools, we found that while frontline employee dissatisfaction was demonstrated by complaints about the management, the true dissatisfaction  was tied to lack of career progression, strengths of employees mismatched with job function, and an incredibly homogenous workforce which took away from creativity in ideas among employees. Employee dissatisfaction presented itself externally to customers in the form of mistakes in orders, lack of attention in the retail stores, missed delivery deadlines, and imperfect pieces being delivered.

The Compass Assessment tool for the mid-level managers revealed that senior managers made assumptions around the transference of skills and industry knowledge in their new mid-level managers. Additionally, the onboarding process lacked clear goals and objectives for further growth which accompanied by micro-managing and lack of independence within various departments led to a feeling of constriction among the managers to do what was best for their individual teams.

With people at the core of any business’s health and prosperity, our humanistic approach to building healthy companies focuses on your most valuable asset; your employees. Our model for discovery and analysis is the Compass. Recognized globally as a method for defining the best route from point A to point B, we find it a useful tool to navigate both current positions and strengths as well as desired future outcome.

Health is the state of complete physical, mental, and social well-being of people. As every human being needs to be healthy to survive and perform his/her human tasks, an organization also needs to be in a good operational condition in order to achieve its defined goals. If organizational health or any portion thereof is not provided, the conditions in which organizations can achieve their specified goals are undermined.

Businesses are not terribly different. We analyze the overall health of an organization, the health of operational functions, and the leadership development of an organization respectively and congruently. We collect data from hundreds of organizations and individuals to serve as a our benchmark, and then deploy our experts to design solutions tailored for each department, each level of employment and each company. By focusing on people and their strengths within their organization, we enable them to have higher performance than expected, or even higher than their competitors. By focusing on the health of an organization as a whole, through its greatest resource, a business can be transformed into a productive, flexible, and brisk entity when it is in its best condition.

 

Client’s Solution

  • Developed a Career progression map to encourage frontline employees to remain in the organization and when given the opportunity for promotion they can be ready to perform as expected.
  • Developed a cost effective tiered leadership education program for the organization
  • Established an online review monitoring section within the customer service department to respond to negative reviews and propose solutions to the reviewers.
  • Developed a 1 year plan with a monthly monitoring report established between PRISCON and the organization via the Ambassador program.

Results and Professional Development Plan

Following the direction and action items from our assessment and plan, the client was able to make significant improvements internally and externally. In the following 18 months, their improvements were noted as:

  • Scored an average of 90% on the Organizational Health Assessment
  • Increased sales online and in-store by 20%
  • Decreased mid-level manager turnover by 50%, and saw the first group of front line employees promoted to manager position.
  • Reduced the annual negative online review count by 50%
  • Increased first time buyer annual count by 45%

Implementation Cost

  • Career progression program: Less the .1% of total revenues
  • Leadership development program: 2.25% of total revenues
  • Online reviews monitoring program: 1% of total revenues