Gap Inc.

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GRADUATE SCHOOL OF MANAGEMENT

MASTER IN BUSINESS ADMINISTRATION

CASE ANALYSIS

ACE TECHNOLOGY

The meeting ran an hour overtime, and Bill was glad it did. The senior managers finally reached a consensus on the strategy for Ace Technology. The consensus was a critical milestone for the company and set the stage for a number of important change strategies. The task ahead was to make these plans a reality.

A critical topic in the planning session was the antiquated compensation programs. The senior managers agreed that the compensation programs were too complicated and they conflicted with the key themes of the company’s new strategy. The base pay program emphasized the hierarchy of the organization and was not customer focused. The incentive plans were tied to individual accountability rather than group effort. The recognition programs were too limited in both who was selected and who used them.

Change needed to happen quickly if Ace Technology was going to regain its market leadership. Bill knew that changing the compensation plans was going to be very challenging, but it was too important to be delayed.

As he entered his office, Bill thought, “What do I do now?”

Bill called his management team together to discuss linking human resources programs to the organization’s new business strategy. He reviewed the changing conditions in the business environment and the rise of new competitive forces. Although there were many opinions, few team members disagreed about the need to change.

Bill reviewed the mission, vision, and values of the company. Although his staff members had heard this before, Bill outlined the company’s strategy against the critical success factors. Bill’s team began to see the pay program in context of the new strategy. The team members were able to examine what programs support or defend the new goals. Their discussion consumed most of the three-hour meeting.

Other Ace Technology executives met and conducted intense discussions with their own staff as well. Afterward, Bill and the other executives met to discuss what they had found. Bill summarized the comments he heard from each executive and offered a set of “action themes” that would be important for focusing their initiatives. The executives were making real progress on developing concrete action plans and employees were becoming genuinely excited about the new direction. But, the executives knew the excitement would not be sustained unless the plans could be reinforced.

At the next meeting of Ace Technology’s senior management team, the firm’s new strategic plan was finalized. The executives identified several common themes in the firm’s strategy and established eight critical success factors, as follows:

• Be more responsive and valuable to our customers than our competitors. • Manage costs so that pricing can be lower than our primary competitors but also so that the firm remains financially strong. • Continue to seek ways to improve processes of the organization and transfer knowledge across all areas. • Create a work environment where people feel valued for their contributions. • Continue to advance the technology and capabilities of our products through research and development. • Give the customer the products and services they need, when they need them. • Provide such high-quality products and services that our customers have confidence in our organization. • Continue to seek ways to be more attractive in the marketplace.

These critical success factors summarized many management initiatives that were in place for years. In light of the eight factors, the executives saw that Ace’s success rested on shareholders, customers, and employees. Although these were not new concepts, the list strengthened the understanding of what the company needed to do.

Bill then led the executive team in a discussion about action needed. Once the group found key behaviours, Bill...
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