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Case answers to Stone Finch Inc.: Young Division, Old Division. Comprehensive discussion of the case for managing organizations.
Case Analysis Stone Finch, Inc.: Young Division, Old Division Managing Organization Copyright: Taranjeet Gill MBA 1 Question 1: Assessment of Jim Billings performance. As president of Stone Finch, assessment of Jim Billings’s performance will be done by comparing his style, achievements and leadership skills in his previous company (Gold finch Technologies) and Stone Finch Incorporated. The style, achievements and leadership skills are summarized and elaborated below: Goldfinch Technologies Stone Finch Inc. Energetic/ Risk taker Visionary and growth driven High potential leader Innovative but radical change Belief in his leadership by Rewards for motivating but unfair subordinates scheme Decentralized the authority Misplaced faith/trust Beth Suarez Financial mismanagement (funding) Mixed up priorities (forget core business) In Goldfinch Technologies, Jim Billings was identified as energetic, risk taker and high potential leader as this was admitted by Richard Stone (CEO of Stone Finch). Stone decided to acquire Goldfinch primarily because of Billings. Billings is a transformational leader in which he demonstrates all the characteristics of transformational leader. Jim Billings had performed exceptionally well to gain the trust of his employees. This belief in his leadership was proven when over 80% of employees followed him when the company was acquired by Stone Finch. In this sense, the employees ‘respond to influence tactics of leader’ because of his expertise and charisma. In Stone Finch, Billings remained visionary and growth driven as the company revenue increased 74% in 4 years. He brought in the culture of innovation by promoting the subsidiaries strategy for business growth. The organizational change in Stone Finch which he introduced was radical although there was no major reason for it. Radical changes are generally prompted by environment, performance decline or significant personnel turnover. But none of these were seen in the case of Stone Finch. Billings introduced radical change in implementation of subsidiary concept. In implementing the changes, Billings followed the Vroom-Jago Leadership Model ‘decide style’ as he decided on the concept of entrepreneurial subsidiaries and then sold the idea to the team. In terms of motivating employees, Billings accept the fact that money motivates to keep the best people as evident by the ‘officer concept’. But his concept is flawed as he focused on his ‘falcons’, creating dissatisfaction among other employees. According to equity theory, fair treatment of all employees can have positive effect on employees. 2 Before acquisition of Billings company; Goldfinch, the operation was highly centralized with standard functional organization. The authority at that time lies with the Stone family as they are major stockholders until the surprise acquisition of Goldfinch. But with Billings as CEO, he continued the concept of decentralization with Saunders at Water Product and Suarez at Solutions after the acquisition of EnzaClean which was headed by Suarez. Decentralization is good because the decision can be made faster without much red tape. The appointment of Beth Suarez to manage Solutions Division revealed Billings’s weakness in assessing people. Despite Suarez doing well in EnzaClean, Billings should have acknowledged if Suarez is capable of handling a bigger group and the relevant training and development program should have been arranged for her. As the CEO, Billings is responsible to plan a better funding system for his subsidiaries concept as to not deprive other divisions of their growth (in this case, the Water product Division). This can ultimately result in personnel turnover because of lack of challenge, motivation and low morale. Again the theory of equity is important in ensuring employees motivation. The core business of a company is reflected in the company’s vision and therefore it is of utmost importance to focus on the core business (Water Product) at the same time the innovation takes place. Overall, we believe Jim Billings did not perform very well as CEO of Stone Finch! Leadership style of Jim Billings Leadership style of Jim Billings is according to Vroom-Jago Leadership Model. He evaluated situational factors and then decided how to behave. In the first situation, he used ‘decide style’. This was evident when a few of his ‘star’ employees who wanted to leave the company and commercialize a product. From this he decided on the subsidiary concept himself by collecting the information from others, deciding and then selling the idea to the board. In the second situation, prompted by an e-mail from Saunders of the high turnover and unhappiness of employees, Billings used the ‘consult individually style’ through the intranet ‘jam’ to find out problems and ways of solving problems. This type of style requires ideas and suggestion from employees to respond to the issues. Our group in general feels that Jim Billings should have used the Situational Leadership® Model as the style used should match with level of readiness of the followers using task behavior and relationship behaviour. 3 Question 2 Assessment of the entrepreneurial subsidiary concept Assessment of entrepreneurial subsidiary concept will be done according to advantages and disadvantages summarized and elaborated below: Advantages Disadvantages Entrepreneurial culture promotes Loss of focus on core business innovation, risk taking and dynamism Risk and uncertainty in investment Motivate and retain employees Foster corporate entrepreneurship o Flexible Organization Design o Autonomy o Competent/ talented people o Incentives/reward 20% Cash flow within organization Corporate entrepreneurship is development, promotion and implementation of innovative initiatives in established firms for purpose of generating growth and profits under conditions of risk and uncertainty. The adva
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