Growing Pain

Topics: Marketing, Marketing plan, Harvard Business School Pages: 23 (8496 words) Published: July 21, 2011




Should Maher give his star performer star rewards—or risk her leaving? Six commentators offer expert advice.

Growing Pains
by Robert D. Nicoson

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Waterway’s CEO is rethinking his compensation policies. Maybe he should be rethinking his business strategy.


Growing Pains
by Robert D. Nicoson


“I’m challenged and motivated where I am, and I like the company. You know that. But I’ve got to say I’m interested in the opportunity you’re describing because of the money and the equity position. For those reasons alone, it’s tough to pass by. Let me think about it some more and call you in the morning. Thanks, Les.” That was the extent of the conversation Cyrus Maher, CEO of Waterway Industries, overheard when he came around the corner just outside of Lee Carter’s office. She must have been talking with Les Finch, Maher thought. Here’s trouble. Of course, it didn’t necessarily mean anything, Maher told himself as he passed the office, waving to Carter. Finch, a well-connected marketing consultant, had been the matchmaker between Carter and Waterway Industries to begin with. With the company in the fourth quarter of its best year ever, he certainly

wouldn’t be encouraging her to leave. Would he? Maher got a cup of coffee in the company’s first floor kitchenette and deliberately took the long way back to his office, through the design room. As always, the atmosphere was upbeat, but these days he also thought he could detect a sense of purpose that had never before been a part of Waterway’s organization. Founded in 1963 in Lake Placid, New York, Waterway had started out as a small, highquality canoe maker. Over the years, it had built a good reputation all through the Northeast and had acquired a base of customers in the Pacific Northwest as well. By 1982, Waterway was comfortably ensconced in the canoe market nationwide, and it had maintained a steady growth right up until 1990. Then, at the insistence of a friend who was the head of a major dealer and expedition company, Maher had decided to venture into kayaks. His friend

HBR’s cases, which are fictional, present common managerial dilemmas and offer concrete solutions from experts.

harvard business review • july–august 1996

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Growing Pains •• •HBR C AS E S TUDY

Robert D. Nicoson is the director of human resources for the Pioneer Group, a financial services and natural resources company based in Boston, Massachusetts. He is responsible for all domestic and international humanresources services, including executive compensation design and administration.

had said that kayaks were the next big trend and that Maher would be a fool not to sign on. Maher had done some checking and found the prospects promising. So by the end of 1992, Waterway had begun selling its own line of compact, inexpensive, high-impact plastic kayaks. Within one quarter, Maher had known that the move had been a smart one. Almost all of Waterway’s existing canoe customers— mostly wholesalers who then sold to liveries and sporting goods stores—had placed sizable kayak orders. A number of private-label entities had also inquired about Waterway, and Maher was considering producing privatelabel kayaks for those companies on a limited basis. For the most part, the staff had adjusted easily to the company’s faster pace. The expanded business hadn’t changed Waterway’s informal work style, and people seemed to appreciate that. Maher knew that most of his employees were avid outdoor types who viewed their jobs as a means to an end, and he respected that perspective. On days when the weather was particularly good, he knew that the building would be pretty empty by 4 P.M. But he also knew that his employees liked their jobs. Work was always completed on time, and people were outspoken with new ideas...
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