Globe Maintenance Pty Ltd.

Globe Maintenance Pty. Ltd. (Part 1)

Mr. Burns founded Globe in 1971 as a spin-off of a family company, taking a $120,000 client with him as part of the arrangement.  The contract with the customer called for the cleaning of ashtrays, waste-paper baskets and vacuuming offices and hall-ways.  The company expanded as a result of the hard work of Mr. Burns and a small, dedicated workforce.  Soon Globe offered additional services including window cleaning, gardening and mechanical maintenance of heating and air conditioning.  In 1980 Globe won a contract to provide ramp services for an airline in Globe’s home city.  This included the cleaning of aircraft while at the terminal, some baggage handling and other labour intensive non-mechanical services.  These ramp services accounted for half of Globe’s sales, and 60% of profit, due to fewer competitors, higher capital investment and higher risk. 

The company grew by taking advantage of any opportunity that came along.  By 1989 Globe was a medium sized maintenance company, employing 1800 people in various departments that all directly reported to Mr. Burns (i.e., sales and marketing, accounting and debt collection, personnel and training, equipment purchase and maintenance, scheduling, general cleaning staff, and specialist staff).  As a result of having grown without acquisitions or mergers, all departments and store rooms were on the same property.

Although a simple flat organisation in terms of structure, the operations were extremely complex and fluid as there was a great deal of two way communications needed between the departments to complete any one contract.  For example, sales needed to know what staff and equipment were available before selling contracts, equipment needed to know the types of sales anticipated as well as the training requirements of the cleaning staff allocated to use some equipment types, and personnel needed to know anticipated sales and current staff capabilities and levels.  As each department depended on the others, the barriers between the departments tended to break down.  This effect was heightened by the minimal number of rules Mr. Burns had put in place.  Mr. Burns instead felt that the “can do” attitude and strong work ethic, which had typified the employees, were more important in achieving Globe’s goals.

Mr. Burns had engaged two consulting firms over the past three years.  Each had spent days interviewing staff and management, and had recommended re-organisation of the company structure and processes, and had suggested that more sophisticated strategy, planning, budgeting and accounting systems were necessary.  Currently, pricing of services is done in line with the competition and profit is used to pay salaries and buy supplies and equipment.  The consultants also felt that there needed to be a clear structure with formalised work procedures, as well as the establishment of a formal system of interdepartmental information flow.  The managers of the departments had attempted to implement some of the rule and procedure changes, however, both times these efforts appeared to get lost in the more pressing aspects of business and in the resistance of the staff.  However, the resistance to change did not indicate underlying labour-management hostility as much as a lack of appreciation for the need to change.  The employees were quite proud of the company they had built and did not see the limitations on further expansion.  While the actual cleaners were unionised, the union had been cooperative during the past ten years and the staff felt their allegiance lay with Globe. 

In early 1993 Mr. Burns announced his retirement and the sale of Globe to a large conglomerate holding company.  The strategic planning unit of the new holding company studied Globe and its environment.  Although they concluded that the ramp service market was going to become more competitive, they thought that they had an advantage with their expertise and cost efficiency.  Although there were a number of small operators successfully competing on smaller jobs and a near monopoly of a few very big operators on the big jobs, the basic building maintenance market was tight but viable as well.  Therefore, they determined the following strategy was necessary to allow the long term survival and expansion of Globe:

  1. The firm is to be broken up into two divisions, Aircraft Ramp Services and Globe Building Maintenance. Aircraft Ramp Services is to be comprised of those staff already having expertise in aircraft servicing, while the rest of the staff will form Globe Building Maintenance.  An office will be maintained with resource staff to oversee and provide assistance to the two divisions.
  2. Ramp Services is to become as cost efficient and as quality conscious as possible to ensure continued renewal of its contracts, while also bidding for other contracts on a cost basis. Given labour is the major cost, most changes will need to be productivity based.
  3. Globe’s building maintenance operations will move to a speciality quality service focus which offers many extras such as porter/maid service, furniture polishing, carpet care such as spot treatment and shampooing, hand-towel and soap service, etc., for up-market offices such as legal chambers and consultancy offices. This is to be an efficient operation although the major emphasis is to be the provision of top quality services and the monitoring of customer needs and competitors actions to ensure Globe Building Maintenance retains its quality edge.  Thus, it is expected that Globe will constantly be innovating with new services and “extras” before the competition.  It is envisaged that Globe will move from a “business as usual” culture to a customer driven culture of quality performers and innovators.

Globe Maintenance Pty. Ltd. (Part 2)

Managing the Implementation

You have been hired to head the implementation of these changes during the next three years.  Globe is expected to be profitable at the end of this time.  You have examined Globe’s situation and agree that the recommended strategy is the best for the organisation.  The holding company has allocated 50% of Globe’s 1992 profits for this reorganisation (i.e., $250,000 – not including equipment costs, which are to be funded by the divisions).

You have been hired into the managing director position in the case.  You know that you have four main questions to ask yourself: (1) where are we?, (2) where do we want to go?, (3) how can we get there?, and (4) how will we get there? 

Since you have been given the answer to the second question (i.e., the strategic planning unit of the conglomerate holding company has outlined the answer to “where do you want to go?” in the three points above), your task is to address the remaining three points. 

Start out by assessing the answer to the first question, “where are we?”  What can you gather about the organisation, its strengths, weaknesses, positioning, resources, strategies, etc?  Then, address the third and fourth questions by roughly outlining the approach you would take to implement these changes, including critical considerations, how you influence your Division Managers, and what your critical milestones might be.  Be sure to focus on the content from week 6, and, of course, draw from weeks 1 through 5 where necessary.

You may find it helpful to address the following series of questions:

  1. How would you describe the organisational culture of Globe?
    • Is it likely to be clan (organic – inward), adhocracy (organic – outward), market (mechanistic – outward), hierarchy (mechanistic – inward)?
    • What might be some typical norms and values regarding work, money, family motivation, quality, etc?
    • Are people likely to be committed to the firm?
  1. What are the relevant characteristics of the organisational structure?
    • Is the structure hierarchical, formal, mechanistic or flat, less formal, more organic?
  1. Where might you begin to look for the opinion leaders?
    • How innovative are the employees likely to be?
    • Are there likely to be any groups of employees who will be much more flexible or inflexible than other groups?
  1. What are the key aspects of the firm and its people that need to be changed?
  2. On your first day at work, what is the most significant step you would take to implement your strategy?
  3. What strategic bets would you make if you wanted to apply some of the concepts of emergent/learning strategy? What how to, boundary, priority and timing rules might you try?
  4. What might you do to begin the process of “unfreezing” and preparing the organisation for change?
  5. Do you consider the scale of change necessary as being fine-tuning, incremental adjustment, modular transformation, corporate transformation? What style of change would you choose to compliment the necessary scale?
  6. How might different stakeholder groups perceive the changes? What are some of the most likely effects these changes will have on people at the “coal face”, on people in the “middle”, on “support” staff, on management?