Management Case study – Haymans Electrical Capalaba
The following case reflects a real-life management scenario. The case details are based upon personal interviews conducted in January 2012 with members of the organisation and observations (i.e. field notes) taken during on-site visits.
Haymans Electrical is a subsidiary of Metal Manufactures Limited (MML), a privately registered multinational corporation based in the Unit States. At the start of 2012 the organisation has 232 distribution outlets scattered throughout Australia.
Recognised as a major operator in the electrical merchandising sector, Haymans service a range of electrical contractors and customers from sole-business operators through to industrial and government clients. They have in-house specialists who keep up-to-date with the latest developments in electrical merchandising around the world. The business specialises in distributing the following electrical and electronic parts and components:
• Construction & Power Cables
• Mining & Elastomeric Cables
• Communication & Data Cables
• Mining & Flameproof Accessories
• Electrical Test Equipment
• Conduits/Ducts/Supports • Commercial & Industrial Lighting
• Wiring Accessories
The team at Haymans Capalaba
Manager - Tim Blomfield
Assistant Manager - Rod
Sales Representative - Andrew
Purchasing Officer - Gary
Customer Service - Paul
Customer Service - Shaun
Warehouse Manager – Cameron
On a wet and blustery morning in late January 2012, Tim Blomfield stood at the staff entrance of Haymans Electrical in Capalaba, fumbling slightly for the right key to the door. It wasn’t the bad weather or early 5:30am start that made this task more challenging than usual but rather, it was the weight of multiple management issues that dragged heavily upon his reserves of concentration.
‘Perfect Queensland weather, my arse!’ he grumbled to himself while glancing up at the grey sky. The thought of being struck by lightning quickly entered his mind, along with the shrill words his wife uttered that morning as the alarm rudely interrupted their slumber. ‘Why don’t you get one of the other workers to open up the office,’ she bellowed from under the doona. ‘You’re the boss aren’t you?’ she continued; the implication being that such an early start wasn’t really necessary. Tim had to admit, it was a logical suggestion and one that he had considered many times over the past 12 months. However, for reasons that he himself could not explain, Tim found the idea very difficult to act upon. After all, opening the office had been one of the key responsibilities he had delegated to himself when first stepping-up to the role of office Manager 8 years previously.
Tim eventually found the right key and stepped quickly inside. He paused momentarily to scan the loading bay and adjacent warehouse area with its maze of neatly arranged shelves that contained thousands of individual electrical products. In less than an hour this section of the business would be a hive of activity with electrical sub-contractors and other customers dropping-in to collect purchase orders made the previous day. At times this was a chaotic scene as multiple drivers jostled their vehicle into position so that goods could be loaded as quickly as possible. Overseeing this process was Cameron, the warehouse manager, and Dave, a recent (albeit unofficial) addition to the Capalaba team. Dave is a 17-year old local TAFE student who approached Tim before the Christmas break about gaining some hands-on work experience two mornings per week to compliment his training in small business management. Tim had agreed to the request and as a start, Dave was assigned to help Cameron with various warehouse-related duties.
From the warehouse Tim passed into the sales area which consisted of a showroom floor and customer service counter. Behind the counter, obscured slightly by a product display stand, was the entrance to his ‘door-less’ office. ‘Doors create a divide between management and the staff they are responsible for,’ his management mentor ‘Barnaby’ had once told him many years ago.
By itself, removing the office door on his first day as manager had the potential to be seen simply as an empty symbolic gesture. However Tim had backed-up this action by always making himself available to his staff, whether it involved a problem at work or at home. Tim’s ultimate objective was to achieve a ‘team’ approach to all facets of the business. ‘We are more than the sum of our individual contributions,’ he would often recite at the beginning of their monthly staff meetings. ‘Collectively we are able to achieve so much more than we could as a group of individuals.’
Sliding behind his desk, Tim flicked the computer on and proceeded to print out copies of the main business reports for review. This included the sales for his top 10 customers from the previous day and the margins on each product. Such reports were an important method for monitoring and controlling the 2011-2012 business sales strategy. Given that his top 10 customers accounted for 60% of all sales, any fluctuation in their spending would have a significant impact upon projected revenues.
As Tim looked over each report he wondered for the hundredth time whether there might be a better way of monitoring sales and their related margins. The computer program he used to prepare the reports had been in place since his first day as Manager and the system generally continued to meet all his needs. However, he couldn’t help but feel that there must be a new and better way of doing things. His mentor Barnaby had also advised many years ago that a process of ‘continuous innovation’ was the key to long term business success. If he wasn’t being innovative in the key areas of his business, such as the preparation of sales reports, did that mean he was falling behind his competitors?
Thinking of his competitors, Tim peered out through the window of his office, across the small parking lot and fixed his gaze upon the brash neon sign which identified the Capalaba branch of ‘All Lighting and Electrical (ALE).’ Along with ALE, two other direct business competitors shared the same industrial location as Haymans. Yet it was the presence of ALE that bothered Tim the most. Over the past 3 months, new management at ALE had embarked on an aggressive discounting strategy in order to draw market share away from Haymans.
Like each of their main competitors, Haymans were part of a large multinational enterprise which provided substantial buying power from different manufacturers. This ensured that they were able to offer favourable discounts to key customers. Unlike his competitors however, Tim had also sought to effectively position the business by offering exceptional customer service. While recognising that price was an important factor in the purchase decisions of his customers, Tim also recognised that what they greatly valued is service quality.
Two key service features formed the basis of Tim’s strategy for exceptional service quality. Firstly, he recognised that electrical contractors sought suppliers who were able to provide good advice through their strong product knowledge. As part of Tim’s strategy, this outcome was achieved by reinforcing to his staff the need to be aware of new products as they enter the market. Where possible, Tim also sought to have staff attend new product demonstrations.
The second feature of Tim’s service quality strategy is to ensure timely product access. This is achieved by stocking a large and extensive inventory on-site. Although these features increase the operational running costs, Tim feels strongly that ‘time’ is an important commodity for his customers. Nothing would frustrate his customers more than having to wait an extra day for an important product to be shipped from another branch. In combination, both high product knowledge and ready access contribute to what the organisation describes as their ability to provide customers with the lowest “Total Cost Overall” value proposition.
Good years and bad
Over the past 8 years this positioning strategy had served Tim and the Capalaba office of Haymans Electrical very well. But times were tough and who knew what impact the Global Financial Crises (GFC) was yet to have on the Australian economy. The possibility of not meeting projected sales targets presented Tim with a major problem for several reasons. Most pressing of all, lower sales would mean a smaller bonus for his staff at the end of the financial year. While all staff are provided with a base salary consistent with industry standards, the organisation also provided a generous ‘Profit-share’ scheme as part of a comprehensive remuneration package. Tim fully understood the motivating impact of the bonus on staff performance. It was an important component of his strategy to develop a customer-centred approach among his staff. With positive sales revenue in recent years, staff had become accustomed to a sizeable bonus. ‘What impact would a lower bonus have on staff motivation?’ Tim pondered.
This train of thought had Tim considering alternate motivation methods. ‘What was it that Barnaby prattled on about?’ Tim asked himself. ‘Something about the level of an individual’s “Organisational Commitment” being commensurate with productivity?’ Tim put this principle in the context of his own situation and recognised that commitment to the organisation could be driven by more than income alone. ‘But what are those factors that contribute to Organisational Commitment and are they different for other staff members?’ he whispered quietly to himself. The answer did not immediately come to mind and reflecting the importance of the question, Tim quickly wrote it down on a Post-it-note and attached it to the edge of his computer screen.
As he attached the note, his attention turned towards the computer screen and his list of emails. One message in particular caught his eye with the subject line – “New Work Health and Safety requirements”. Arghhhh, Tim bellowed. Holding his breath he managed to quell the rising frustration as he quickly scanned over the message. It was a directive from Head Office reminding him about the recent changes to both Federal and State workplace safety legislation and the need for Office Managers to develop a comprehensive workplace safety policy. ‘As if I don’t have enough to do,’ he grumbled and slumped down into his chair.
Tim glanced up from his desk just in time to see Garry walk behind the service counter. ‘Morning boss’, he bellowed cheerily. ‘Beautiful weather isn’t it’? ‘Grrrr’, Tim muttered. ‘Grrr’.
The Case Questions
Each group is to prepare a report which:
• Identifies and describes three key management issues that Tim is facing. Groups should draw upon relevant management principles or theory covered in the unit to support their discussions. (300-500 words per issue)
• Nominates and justifies why one particular issue should, from a management perspective, take priority above all others. (300-500 words)
• Details a particular course of action that Tim might follow to address the nominated issue. Groups should incorporate relevant management theory and published research to support their proposal. (approximately 1000 words)
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