Crown Point Carpintry

1. What was the situation pre'93 and what were the fundamental changes introduced by Brian?

Crown Point Cabinetry, founded in 1979, supplies high-end custom kitchen cabinets throughout the US market taking on the principles of quality and service. This family owned business, under the leadership of its founder Norm Stowell, was achieving growth in revenues despite the fact of competing in a highly fragmented industry (over 5,000 manufacturers) and a very strong reliance of the extensive dealership network. However, even though revenues were growing the company’s bottom line was not performing as wanted. Furthermore, other factors related to the business were seriously compromising Crown Point’s capability to perform at the desired levels.

At this point in time (prior to 1993) Crown Point’s working environment had much to improve. The relationship of management with the employees was described by many of the latter as “horrible”. The effects that this relation had were devastating. 300% annual employee turnover and out of control absenteeism on the employee side. On the management side all the measures put in place to solve the issues were counter productive and as these kinds of penalties tend to do, they killed creativity from the workforce. This environment encouraged the employees to do the bare minimum. These tensions all translated in the biggest problem of all. The company was being unfaithful to its core principles as poor in-process quality control was augmenting.

It was in 1993 and with this situation that Brian Stowell took over his father’s position as CEO of the company. Brian immediately realised that changes needed to be done in order to be able to guarantee the success of the company. Several were the priorities that had to be taken in hand in order to manage to make the change viable. Firstly, and most importantly there needed to be an alignment between employee’s behaviour and the company’s core principles. This would be rewarded by making Crown Point a desirable place to work in; one which its employees would take pride in. Secondly Crown Point had to experience a turnaround in order to be financially strong.

With this in mind, Brian implemented some generic guidelines to follow and measures that were fundamentally intended to regain the employees’ trust and increase their motivation through a combination of monetary, psychological and social benefits. Penalties were also present (Backorder Penalty/Reward System) but they were accompanied by positive actions, which allowed a better acceptance from the employees’ side.

2. Identify at least five management control changes introduced by Crown Point management and discuss how they contributed to the company's turnaround.

1. More power to the employees: The implementation of the Team-Based Management was an enormous step forward in building the relationship between the employees and management. Management (as the principal) realised that the employees (as agents) had a deeper knowledge on how to fulfil the day-to-day manufacturing tasks. For this reason they decided to empower the workforce with personnel and management decision-making responsibilities. Such responsibilities included: Deciding which of their peers was worthy of being kept at Crown Point, suggest work improvements and schedule production through organized daily meetings, evaluate peers and recommend salary increases and have voice in the HR decisions that concerned hiring and firing teammates. With the sensation of being taken into account and knowing that they contribute greatly in the success of the company the employees were from this point onward highly motivated. The employees also saw their area of influence increase through the safety program implemented in 1994.

2. Sharing benefits: In order for the turnaround to be effective management could not only focus on motivating the workforce. There had to be some financial compensation to go along with the increase in decision-making power. For this reason, after instituting an incentive system intended to reduce labour costs, Brian proposed sharing this benefits with the workforce. This measure is a complementation to the competitive salaries offered to the employees. As a monetary incentive this measure will have an immediate positive effect on the workforce, which will slowly decrease and become a “given” through time. At this point in time it was essential to provide such an incentive.

Furthermore, a retirement plan was created to motivate the employees to pursue a lasting career at Crown Point.

3. Competitive salaries: With the mission to be as competitive as possible in this industry salary wise Crown Point decided in 1998, 2000 and 2001 to increase the employee’s wages. Management’s