Johannes Linden HBS Case Study

Topics: Management, Motivation, Term Pages: 7 (3274 words) Published: November 3, 2014

Executive Summary
An analysis of the gradual growth and expansion obstacles of Fluss Washer and Dryer, after Fluss AG (Swiss parent company) earned profits of $15 billion in the fiscal year 2010. Following the meeting of the Global Executive Committee on 1st February 2011, the report summarises the issues, analyses causes and effects and provides recommendations on resolving the problems to focus on business development in the fiscal year 2011. The report concentrates on three issues affecting the Global Executive Committee of Fluss Washer and Dryer; the organisational structure hindering growth, leadership efficiency and motivation of employees. The analysis covers centralisation vs decentralisation of the organisational structure and how effective communication and information sharing is. It covers the core issue of employee bonuses, which the Regional Directors unanimously insist should be based on the figures agreed three months ago and how the rise in sales targets and bonus achievement will affect motivation. It considers the leadership style of the Company Director and relationship versus target based conflict resolution. The report provides realistic and prioritised recommendations based on a time and cost effective implementation plan. Introduction

Fluss Washer and Dryer (hereinafter referred to as FWD) is a Swiss household appliance company of its parent Fluss AG, founded in Switzerland in 1947. Fluss has expanded across the globe through establishment of geographic divisions and currently has over 51,000 employees with revenues of $15 billion recorded in the globally troubled financial fiscal year of 2010. The CEO of the company is Mr. Hans Kehrar and the Director Mr. Johannes Linden reports to him based on the performance of the six regional divisions, each headed by its own Regional Director. The directives of the CEO are to focus globally on expanding during 2011, as the world economy is expected to witness a slow recovery after deep financial crises, despite which the company managed an exceptional financial performance during a sluggish economy in 2010,. The Director, Mr. Linden is pleased to inform his Global Executive Committee (GEC) of a renegotiated contract with their supplier of steel, which immediately helps cut manufacturing costs by 10% to 15%. In addition to increased profit margins, the lower cost allows FWD to take on its competitor RiverTech by offering attractive prices to gain market share. The concerns of the Director, Mr. Linden, are greater than cost saving and gaining market share over competitors, as steel prices remain volatile and the profit margins will eventually fade. Mr. Linden is concerned whether the vision of the GEC will help drive FWD into the future and expand. He wants a solution to assist him in bringing the GEC on a consensus of growth to be driven his way. The most important issue to be addressed remains the revision of annual sales targets and the bonus structure of senior executives linked to them, a change that all GEC members to the Director’s surprise have resisted. Organisational Structure

In theory, FWD has a flat (decentralised) organisational structure with limited layers in the organisation [refer to Figure 1]. The Country Managers report to the Regional Directors, who report directly to the Director, Mr. Johannes Linden. It is important to have structure and consistency at work but a business model can only work when allowed to function in the capacity it is intended to. 0199390Figure 1: Organisational Chart of FWD

Figure 1: Organisational Chart of FWD

3200400104775Figure 2: Hierarchy (Pyramid) Structure
Figure 2: Hierarchy (Pyramid) Structure

While the structure of the organisation remains decentralised in terms of operation, the tension arises due to the decision-making at FWD happening in the style of a pyramid structure [refer to Figure 2]. To ensure corporate control remains only at the higher level, decisions are imposed on a global scale....

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