Figgie International

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Figgie International

Wong Sai Chung
Student Number: 3173485

Case Study
GSBD6120 – Managing Organisational Change
Due: 20th August 2012

Lecturer and Course Coordinator: John Nolan

Table of Contents

1. Executive Summary…………………………………………………………………………………………….3

2. Introduction…………………………………………………………………………………………………….....4

3. Leadership style of Harry Figgie, The Founder……………………………………………………..4

4. Leadership style of Dr. Figgie, the Successor………………………………………………………..5

5. The failure of the transformational change………………………………………………………….6

6. Recommendations………………………………………………………………………………………………8

7. References…………………………………………………………………………………………………………..9

1. Executive Summary

This case study examined Figgie International’s failure of transformational change. The key issues are the leadership style of the Founder, Harry Figgie and the Successor, Dr. Figgie. The decision of Dr. Figgie to hire management consultants caused eventual downfall of Figgie International. Thousand jobs of employees, millions of dollars invested by shareholders and long-term relationships with customers were lost. The conflict of interest of the management consultants chasing after enormous fees greatly overwhelmed the results of the actual work done carried out by the consultants and employees of Figgie International. Qualification and experience of consultants, specific scopes of work and objectives, cost benefit analysis of consultancy services, control of the transformational change by the organization managers, creation of powerful enough guiding coalition within organization and good communication of vision were among the lessons that could be learnt in this case study.

2. Introduction

Harry Figgie created Figgie International, an Ohio manufacturing conglomerate, in December 1963 and publicly listed in 1965. Figgie International climbed to number 286 on the Fortune 500 worth year-end revenues of $1.31 billion and $63 million in profits by 1989 for its 10,887 shareholders and employed 17,000 people around the world. Since 1963, Figgie had acquired small companies and merged them into Figgie International that had 36 divisions with lots of unrelated businesses from manufacturer of emergency oxygen masks to insurance business, which was one of the bad acquisitions that lost $13.5 million between 1985 and 1988.

Harry’s core strategy was “nucleus theory” developed while working as management consultant in Cleveland, to build his conglomerate. He was excellent at acquiring a company, cut its excess costs from operation and improved its profit. However, he faced a key problem of outdated business systems and aging equipment that relied on high-priced labor. He deferred long-term investment in order to generate short-term profits. He realized that he had to purchase new plants that required a huge investment which would greatly affect the profit of Figgie International.

3. Leadership style of Harry Figgie, The Founder

The leadership style of Harry Figgie was 9,1 Authority-Compliance according to Leadership Grid (Blake and McCanse, 1991) with charisma-visionary (Robbins and Coulter, 2005). His personality’s principal psychological function was Enneagram Type 3: The Achiever (Russo Hudson Enneagram Type Indicator RHETI, version 2.5). Harry was status-conscious, highly driven for advancement, workaholic and deteriorating into cutting corners to stay ahead. He was famous for being one of America’s toughest bosses. However, this planted the seed of failure as Grid style like 9.1 was unlikely to elicit the cooperation, involvement and commitment of those who were expected to complete the task (Blake and McCanse, 1991). He fired hardworking staff if they could not meet the profit expectations. Despite these facts, Harry got his unparalleled knowledge of the company that even his ex-staff still praised and respected as a businessman and leader. Harry could have so much power...
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