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Campbell and Bailyn`s Boston Office:

Managing The Reorganization

Instructor: Prof. Timm L. Kainen

Group members: Azar Aliyev, Ekapop Ongsri, Trang Tran

Executive Summary

As a result of the recent meltdown in mortgage-backed securities market, Campbell and Bailyn

changed its internal processes in order to rebound competitively and enhance its market share.

Two key changes occurred: the creation of a Key Account Team (KAT) and the restructuring of

the division-wide performance management system. Along with these sudden changes, there are

three main problems which are career prospect of former Generalists, potential lower

compensation due to lower evaluation from new appraisal system and customers dissatisfaction

with more complicated process. Our recommended solution to the problem is “Effective

communication and training” which will solve all major problems related to the new systems,

and help to build new collaboration culture, get more buy-ins, and serve customers better. Good

job.

Situation AnalysisAccording to the Campbell and Bailyn’s Boston Office: Managing The Reorganization, the

financial industry is more competitive than the past. Due to an increase of number of competitors

and new product, the entrance of low-service, and low priced products, the brokerage firms’

commissions were starting to flatten out. Moreover, Ken Winston, regional sales manager for the

Boston office, pointed out that the company continued losing its market share because of the

lacking of expertise in the product detail.

Besides, the management level would like regional sales people to cooperate more closely with

the product managers, traders, and researchers in NY about the detail or knowledge of product.

In doing this, it would have their employees focus more on higher-margin products. Because all

of above reasons, the company launched the two phenomenal changes to fulfill its purpose which

were KAT and a new division-wide performance management system (PMS) for regional sales

people. KAT would have employees focus more in specific segment, while the PMS would made

employees collaborate more closely to other departments.

However, after the new two systems were implemented, many issues were arising, in which there

were three major problems. Firstly, the former Generalists, now in KAT, did not want to share

their customers and felt that their skills were limited in only one segment which may impact on

their career in the future. Secondly, about half of the customers were not satisfied with the

change due to more complex process. Lastly, employees were afraid that the new PMS with its

more complicated evaluation process would potentially decrease compensation due to a lower

performance review.

Well done, good detail and discussion of the main factors.

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Problem DiagnosisIt has been always surprising to know how change can create resistance for employees and that

leads to great problems even though the purpose of change is making employees better off by

improving overall company’s competitiveness. In this case, we see how two new introduced

systems, KAT and PMS, are beneficial to company by building teamwork between all

employees, increasing overall connection between regional offices and main office, and

improving customer satisfaction base by implementing specialized base offerings. However, the

new systems receive some resistance from generalists who think that they can influence their

salary, career, and customer base prospects, and from half of the customers who prefer “big

picture” way. The systems work well (now they have more profit than last year) and they proved

that they are useful to the company. As article “Fair process: managing in knowledge economy”

(Kim & Mauborgne, 2003), suggests, it is not always the outcome people are looking for but the

process. Here, we see that even though the change happened with assistance of generalists

(team), it created problems because it did not involve their input to really reflect the purpose

behind. Yes, excellent use of citation and application to this situation. Also, here we face

another problem about performance, as generalists resist the change, maybe they are right in their

“against” choice since they are given wrong position rather than the ones they are trained and

gained experience for. Resistance from employees is symptom of the problems which we should

examine by using multiple approaches and gathering one main problem. However, we should

first examine the root of problem. As we can see from the case, the management is using the

“traditional path to performance” or “distributive justice” to allocate resources, incentives, and to

practice old way structure (structure should have changed to reflect the desired new culture). As

it is said before, no input was taken by generalists which creates trust issue to the new systems

(in fair process, managers should listen to employees to count their inputs and that way make the

new systems as created by employees). Since, everything is based on old structure but

expectation is based on “new culture” we are facing the problems following.

As we can see from the exhibit, we are facing some possible issues that create a common setting

problem which underestimates the effectiveness of the new systems. The situational analysis

section introduced the setting for three different problem settings but all related each other: KAT,

PMS, and customer related problems. KAT introduced some challenges to generalists: Less

career prospects, shared customer base, PMS: Created a problem of one side performance

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evaluation, lowered salary; about one half of customers now don’t favor the new systems since

now multiple trades which involve many people will lead to more complicated process . Without

effective managing change strategy, these problems might lead to serious consequences which

are losing competent employees, the first one would be John Oates, and losing core customers to

the company`s competitors. Change is always a difficult choice but a must. However, this should

not create too much dissatisfaction from the job performers which we see in the case. The art of

managing change is reflected in the input by employees (not always input from employees is a

way to change but listening their input is must). As a final word, we always see the culture as a

main source of resistance but when we think, and realize at the end that it is just a reflection of

the structure that without change cannot provide the culture we want to have.

Well done! This is an excellent and thorough analysis, exhibit is helpful in mapping out the details.

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Before change After change Possible issues Causes Consequences

Task

Generalists focus on general trades and

the customer relationship

Specialists act as head of specialized product lines Customer base is

shared among KAT team

Former Generalists may not have

sufficient specialized product line skills to

head their line of business.

Potential career limitation

Generalists are big picture specialist.

Dissatisfaction with the specialized way of

doing things. Eagerness to leave the

company.

CollaborationCollaboration left to the good will of the

Generalists

Collaboration and team work is favored though

KAT and new PMS organization

Process becomes more complex and

slow for multiproduct trades

Generalists don’t have proper team work

skills and they don’t want to pool their

customers.

Lowered value in the new systems.

Decision Rights

Decisions are mostly taken by the Generalists

Decisions are taken within the KAT and

need to be simultaneously agreed

with other KAT for multi-product trades

Possible conflict of sharing

customers

Time and effort for building customer relations was not

valued and it was just “ordered” to pool their

customers.

Generalists have good relationship with customers which

makes half of customers not favor

the change

CultureIndividualist culture. Generalists hold the

power

Collaborative culture. Power is shared among

team members

One half of customers are

dissatisfied and former Generalists

are resistant to change to new

culture

The management kept old organizational

structure and didn’t reflect in the new

culture.

Customers may switch to competitors

Generalist may leave the company

Performance management

system

The bonus was solely based on

annual sale volume and the regional

sales managers own assessment

Including feedback from traders, product managers, researchers

in NY

Employees are afraid of Potential decrease

in compensation

In new PMS: employees are

evaluated on multiple aspects (eagerness to

learn new products…)

Employees will do what they are told. And they will not provide their true

“input”.

Exhibit 1: Problem Diagnosis

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Alternative SolutionsThe first solution for the company is to create separate Business Segment for each fix-income

product line. Each Segment will be headed by a Specialist in KAT and will comprise all

specialists and all customers in its line of business. For example, Paul Callahan will be the leader

in High Yield Segment which also includes other specialists such as Mandy Cantor, Donald

Tabor and Sally Ventura. To align with the new change, the new performance management

system would make assessment based more on the performance of each specialist in their

Segment, and on their teamwork efficiency. The advantage would be to foster specialization. The

KAT specialists will become leaders, which means being awarded with higher salary and being

leaders might motivate them to focus and cherish their specialized field. ConThe issue is that it

would make collaboration among Business Segments more complex to tackle.

The second alternative is to make effective communication and training. At the beginning of

change, Winston as the manager should gather all members in Boston Division clarify everything

and motivate them. This involves picturing the ideal situation for the company after the change is

implemented, conveying this vision clearly to everyone involved in the change effort. Also by all

means fostering the culture of teamwork with emphasis on effective communication among

members where effective communication involved open mindedness, active listening and ability

to focus. In this situation, communication and cooperation within the team is essential where the

all Specialists in KAT are willing to share information with other members about their

knowledge and they can cooperate to get work done by giving support and ideas.

As stated in the case, “while the possibility for a decrease in their compensation existed, so did

an enormous upside if they were able to increase the sales of their new specialty products”

(Donnellon & Grifford, 2008). Implementing with care and training to enable KAT not only can

develop their own careers but also can deliver better service to customers. You might want to

save this for your recommendation section. Hence, the advantages are enormous since it can

solve all problems diagnosed above; the shortcoming is that it required a lot of time and effort of

both managers, leaders of company and employees who participate in training. Also, training

will require additional funding from company. Apart of that, after everything is done, the

company and people will cherish new culture of collaboration and gain more satisfied customers

Be careful to make your solutions equal in terms of time and attention and not favor one over the

other until your recommendation section.

The last possible solution is to hire new professional specialists who have experience and are

competent in the fields; for example, in future, option contracts. This alternative helps solve the

problem about career prospect of Generalists. These Generalists now can keep their work routine

like before and provide service to customers who get used to the old system and new Specialists

can serve customers who prefer more in-depth knowledge of the products. By that way, this

solution can also deal with customers` issue with KAT idea. Additionally, new Specialist team

may bring with them new customer base for company, which help company to increase market

share as well as the bottom line. However, there are several caveats with this alternative since

new people mean they don`t have company`s customer base. It will take time for them to get

familiar with new environment, new customers. Furthermore, Generalists might not like this idea

because they have to share customers with new guys, that means still limit their commission.

Also for company side, cost associated with hiring new people will arise such as salary and

commission.

Suggested solution Advantage DisadvantageBuild separate Business Segment for each product line

New structure fosters new cultureEnhance specializationIncrease job satisfaction among leading specialists

More complex collaboration among Business Segments

Communication and training

Solve all possible problemsBuild new collaboration culture and more buy-insBetter serve customers

Take time and effortAdditional fund for training

Keep Generalists and hire new savvy Specialists

Solve the problem of current generalists who want to work broadly with all product lineMeet all customers` preferenceCan bring new customers to the company

New people don`t have customer baseDifficult to recruit bond salespersonNew problem of sharing customers among Generalists and new SpecialistsCost associated with getting new people

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Exhibit 2: Suggested solution: advantage and disadvantage

Good job on solutions but be careful not to favor one over the other.

Recommended SolutionWe decide that the second solution which is effective communication and training is the best

solution since it can solve all possible problems while these other two can virtually deal with

some issues and could not address the roots of the problem

In this case, the problems arise because the company wants to create new culture and new

evaluation process without effectively communicating with its employees and customers. In the

article of “Fair process”, Kim & Mauborgne (2003) alleged that “people care about the decisions

you make, but they care even more about the process you used along the way”. In that process

which addresses human need to be valued and respected, communication plays a crucial role. As

stated in the article, “Fair process” includes three main principles which are engagement,

explanation, and expectation clarity (Kim & Mauborgne, 2003), and all these three elements are

achieved by effective communication. The first step would be engage, invite Generalists` input,

and encourage them to openly talk about their problem; then lastly, clarify all the vision, goal

behind the final decision of company to implement KAT and new management system.

Regarding the Generalists` worry about their potential career limitation, clear communication

should be made by the top management of Campbell and Bailyn regarding the Generalist and

Specialist career Development. Specifically, they could provide personal development trainings

to KAT team to improve their specified skills and motivate them further by showing them more

future career pathways and opportunities in their fields. By that way, people will understand the

importance potential bright future in specialized field. Good communication coupled with

training also can help Generalists acknowledge the vital roles of teamwork and work more

productively in team; hence, resolving the issue of sharing customers between KAT members.

Additionally, fostering teamwork culture also means working more efficiently with customers,

reducing complexity; hence, better serves customers.

Regarding the problem associated with the new performance management system, we suggest

the managers and leaders of the company to add some more components to the evaluating

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process, which are multi way feedback mechanism for all the team across the organization as

well the feedback from customers. The multi way feedback will enable salespeople to give

feedback they have about the NY team; hence, lessen KAT members` fear of their feedback.

This should have been included in your solution above. This attribute is a positive addition to the

performance management system since it is useful tool to let the management understand the

main issue of the salespeople and customers and they could fix the problem immediately and

keep the customers happy. Moreover, rewarding the salespeople who get the many good

feedbacks from customers will motivate them to do their best in their jobs and at the same time

gain customer satisfaction. Base pay which is “skill based” compensation is also a valuable

suggestion for the new system. Base pay guaranteed that their base skills are well respected and

there is an incentive for people to learn new things and embrace their new specialized field.

This communication and training solution is also in alignment with managing structure and

culture to control performance theory by Kainen (2010). According to this theory, in order to

attain the desired performance, managers have to communicate the specific goal of the KAT and

new PMS, and then design the tasks for everyone regarding their skill and fit to the task. In this

case, as former Generalists may not have sufficient product line skill, managers should create

training program and ensure all generalists get mandatory product line training at New York

office. Our solution about the adjusting PMS by adding multi way feedback, rewarding feature

and base pay also are supported by the control performance theory as the theory emphasizes on

reward (salary, promotion, training) as vital part to motivate employees.

As a result, effective communication and training with more supported amendments is the best

solution for Campbell and Bailyn Fixed Income Division as general and Boston Office as

specifically. It is not only address and solve all problems but also can help company to go on

right track, retain its customers and get the collaborative culture that stick people together,

creating so called family spirit.

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Possible issues Solution ImpactTask Former Generalists may

not have sufficient specialized product line skills to head their line of business.Potential career limitation

Training program: Insure all Generalists have mandatory product line training at the New York OfficeCommunication & based pay initiative

Provide greater quality services to the customersHelp employees have good career planning in their field as well as cherish their specialized skill

Collaboration

Process becomes more complex and slow for multiproduct trades

Provide a single point of contact for the customer

Facilitate working process with customers

Decision Rights

Possible conflict of sharing customers

Make team work assessment as one of the component in PMS, rewarding and training

Motivate staff to work more collaboratively

Culture One half of customers are dissatisfied and former Generalists are resistant to change to new culture

Training teamwork skill to better serve customersEffective communication: important and benefit of teamwork

Create collaborative cultureGain customers` satisfaction

Performance management system

Employees are afraid of Potential decrease in compensation

Multi way feedback and review mechanism across all the team and customersReward employees who have the most good customers` feedback

Adapt to the new PMSProvide better service to customers

Exhibit 3: Specific solutions and impacts

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Implementation Steps

The management should clearly inform the reason why the new PMS should be

implemented. What the criteria are? What the employees should do to receive the best

assessment? Also, give them the opportunity to ask questions about the new system. This

method would have employees understand what and why the new system should be

implemented and be benefit for them.

The management level should support the culture of teamwork among the company.

Promote the important reason and incentive via company system such as intranet or

posters in order to make employees realize the necessity of closely collaboration and

incentive they will receive. This action will encourage employees to follow the new PMS

with fully understanding and willingly work with others.

At the beginning of the training program, tell them the purpose and the goal of this

activity and also ask the employees’ opinion about what they think the new training

should be held to maximize their efficiency. From this activity, the employees would feel

that they are part of the very beginning and suggest in which courses they feel interested.

The PMS should be implemented not only for salespeople, but also for the entire of the

company. In doing this, all employees will feel equally fair.

The management should create explicit career path. If the employees focus on only this

segment, what they will develop and receive in the future, including salary based. After

that, inform their employees all alternatives they can choose to be. Making obvious

career path and incentive will relive the employees’ concern. Also, they can decide their

future easily what they like to be in the future by themselves.

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In KAT, one person would be assigned as a center of customer contacting. If the

customers would not like to contact multiple calls, they could talk with this person who

can answer every question. However, the customers could talk with their old salespeople

if it is their preference.

Solution ImplementationTask Training program:

Insure all Generalists have mandatory product line training at the New York Office

- inform the purpose and the goal of this activity- hold training courses to improve their knowledge- the employees can suggest what they would like to learn

Collaboration

Provide a single point of contact for the customer

- One person would be assigned as a center of customer contacting.

Decision Rights

Make team work assessment as one of the component in PMS, rewarding and training

- Promote the important reason and incentive via company system such as intranet or posters- Based evaluating on this factor

Culture Training teamwork skill to better serve customersEffective communication: important and benefit of teamwork

- The management level should support the culture of teamwork in the company.- Communicate the benefit of teamwork and set criteria to measure it.- Based evaluating on this factor.

Performance management system

Multi way feedback and review mechanism across all the team and customersReward employees who have the most good customers` feedback

- The management should clearly inform the reason why the new PMS should be implemented. - Clarify the criteria of an assessment and reward.- Provide easily access to rules and criteria such as intranet in case the employees would like to review

Exhibit 4: Implementation steps

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REFERENCES

Casserly, M. (2012). The Secret Power Of The Generalist -- And How They'll Rule The Future.

Forbes. Retrieved from http://www.forbes.com/sites/meghancasserly/2012/07/10/the-

secret-power-of-the-generalist-and-how-theyll-rule-the-future/

Kainen, T. (2010). Managing Structure Culture to Control Performance. Motivating Behavior &

Managing Performance, 9.

Kim, W. C., & Mauborgne, R. (2003). Fair Process. Harvard Business Review, 1-12.

Kotter, J. (2002). Organizational and personal change management, process, plans, change

management and business development tips. Change management. Retrieved from

http://www.businessballs.com/changemanagement.htm

Lawler III, E. E. & Worley, C. G. (2006).Winning support for organizational change:

Designing employee reward systems that keep on working. Ivey Business Journal, 70, 1-

5.

Wischnevsky, J. D. & Damanpour, F. (2006).Organizational Transformation and

Performance: An Examination of Three Perspectives. Journal of Managerial Issues, 18,

104-128.

Overall this is an excellent analysis. Be careful to include all relevant data in your

solutions section before making a recommendation. A little more work in

balancing how you presented the 3 solutions, rather than favoring one would have

made this stronger. You did a great job bringing in supporting data and applying it

to the case. Exhibits were well done, with good detail that enhanced

understanding of the complexities of the case.

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