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Case Study- Innovation:Handle with care!

by on March 1, 2010

Executive Summary

Some organizations do not identify their talent and fail to give it due recognition. Inappropriate remuneration affects employees’ performance and could impair the organization on a large scale. In this fictitious case study, we see a budding employee John whose innovative idea increases Netflow Inc.’s customer base and puts it on the map. The company does not effectively reward John’s expertise. John comes up with yet another innovation which could help Netflow to scale further heights. But now, he hijacks the company’s future by stalling his current project in exchange for his far-fetched demands. Robert, CTO of Netflow realizes John’s importance and wants to retain him. At the same time, Robert finds it difficult to overcome management’s resistance to meet John’s demand.

Keywords: Employee Remuneration, Innovative Employee, Motivation

-Ashish Malviya
-Gauravee Gandhi
-Swarnika Mehta


From → Coursework

  1. Gauravee permalink

    Executive Responses

    Name: Ken Deering
    Designation: Vice President, Marketing
    Organization: Ramp Technology Group LLC

    Innovation financial reward
    Netflow could create an innovation/cost saving reward program. All employees up to AVP level would be eligible for submitting ideas. The review committee would consist of the CTO, CFO and CEO. Beyond the plaque award the company would pay either a rising scale financial award $1,000, 5000, 10,000 and $25,000. Or can do it based on % of financial benefit the company achieves. Part of the justification an employee tells their spouse that the extra hours are worth it is that the company is acknowledging it via the Innovation financial reward. Often it is the spouse’s comment about “are you being recognized” that cause an employee to feel underappreciated at work. For most spouses, being able to point at a financial reward is sufficient.

    Change of Roles

    a) Chief Scientist :What some companies do with a person who is highly technical but lacks strong management skills or prefers not to manage staff. The position generally reports to the CTO of the company. The person is responsible for forward looking concepts and has a budget to look at new technologies and how they can benefit the company. Research into new ideas that the company can turn into products. The company needs to respect the role by acknowledging the person for their contribution to the new products that are developed from the Chief Scientist’s original research.

    b) Special Projects Manager: To test out and mentor John, Robert could challenge John that while he has developed valuable ideas for the company that anyone getting AVP role needs to have proven their management skills to a higher degree than John has demonstrated at NetFlow. Robert is creating the role of Special Projects Manager that would report to Robert. John would have this role for the upcoming project. John needs to understand that his potential promotion is directly related to how well he manages the project rather than the quality of the idea he came up with.
    The risk with this approach is that John may not perform his management duties well enough to justify the promotion to AVP. He may then feel embarrassed about this and decide to leave the company. Robert’s challenge is to give regular honest, specific feedback and encouragement to John such that if John does deliver the project while not demonstrating AVP level management skills that John is aware of his needed improvement prior to completion of the project. Robert could then offer John a follow-on project in the same role with the understanding that John is being provided continued growth opportunity such that he would be able to develop the skills needed for the AVP role.

    Name: Jamie Simmons
    Designation: Director of Technology Infrastructure
    Organization: Moss Adams LLP

    My response to this situation is based on the assumption that Netflow is a large company with many individuals responsible for the overall ongoing success of the organization.
    John is essentially holding the management, and the company, hostage in an effort to have his needs met. It would set a dangerous precedent by simply giving into his demands. I have to consider that if I bend to his demands now, it could mean additional unrealistic demands down the road. As it stands John is putting existing customer relationships and the organization overall at risk.
    With that said, understanding that John is a key to current innovations and future potential business growth, the situation deserves some additional effort to retain John.
    I would meet with John to reiterate that I and the company are indeed appreciative of his contribution and fully understanding of the value he is providing. I’d explain that while I am sympathetic to his feeling of not being duly recognized, I can’t simply promote him into a senior level management position based on his demands. I’d explain that it wouldn’t be fair to the larger organization and would send the wrong message. I would however commit to him that we’d articulate a career path into management and give him opportunities to demonstrate aptitude in this area going forward if that is the career direction he desires. I’d also commit to facilitating a dialogue with his direct manager to ensure he is given opportunities to present on his work product and ultimately finding ways to ensure he is appropriately recognized for his valuable contributions.
    Ultimately for the good of the organization as a whole, and in the long run, I’d be willing to lose John as an employee if his demands persisted and his performance continued to suffer. At the end of the day, I believe it would be a poor management decision, and result in negative long term impact, to allow a particular employee to strong arm management into doing something that is ultimately not right for the organization as a whole.

    Name: Heidi Hollenbeck
    Designation: VP, Billing Ops & Frontline Technology
    Organization: T-Mobile USA

    It’s a fine line between an employee’s best interest and the company’s best interest. They don’t always match and this case is a typical situation that is found in corporate America today. Executive leadership makes decisions that impact employees and the future of the company. Therefore, they must be considerate of setting precedence, treating all employees fairly, and providing career growth across the company.
    John in the Netflow case study has unreasonable demands and some misguided values. He is a great innovator and important to the company but he doesn’t acknowledge that it takes a “team” to successfully run a company. His immediate supervisor, Alan, needs to better understand what kind of recognition John prefers, public vs. private, as well as what motivates him. Then management would be more successful at reward & recognition and making John feel like his deliverables are valuable and appreciated in the company.
    The next thing I would recommend is that Robert give him a promotion, but not to AVP, but rather the next step in a management progression. I am assuming this position would be a Sr. Manager position which is an equivalent to Alan. This would show John that the company is serious about a career path and value his work. It would also send a message that issuing ultimatums is not a mature, professional way to approach this situation. The risk is that John could easily walk away from the company, so they just need to be prepared for that reality.
    By giving a reasonable promotion it better meets the employee expectations as well as company expectations. If John stays with the company he needs some coaching on corporate values and equality management. Ask him what if one of his employees comes up with the next great idea? Should they get promoted to Director/VP? Or would it more effective for the employee and company to do a single step promotion (to Manager, Sr. Manager, and Director)? This allows a career path to accomplish other leadership competencies while rewarding the great innovation. Good leadership is about striking a balance between driving employee satisfaction and company goals together to make it a win-win. It has to be equally administered throughout the company in order to drive the right culture. It allows stretching people to achieve more, rewarding them for accomplishments (financial and titles), and building a “super bowl” team.

    Name: Rajiv Shetye
    Designation: Former Executive Director
    Organization: Spryance India Pvt. Ltd.

    Problem Diagnosis:
    – The company does not seem to have appropriate structure to focus on New Developments and the services business.
    – All significant activities seem to be critically dependent on John, whether it’s problem resolution of City Bank or development of new products. Clearly, there seems to an expertise gap. This is a bigger problem than John leaving the company. Even if John were not to leave, there would always be a possibility of his being indisposed.
    – The company doesn’t seem to recognize the business value of IPR (Intellectual Property Rights).
    – The company needs HR function to better understand the aspirations of its employees, identify and counsel achievers work out rewards systems and provide another channel for managing grievances.
    – John’s attitude and/or exit may cost company dearly.
    – Keeping John satisfied might result in others getting upset.
    – City Bank, a major customer, is not happy and may pull the plug.

    Corrective Actions:
    There will have to be Short Term and Long Term corrective actions.
    The focus of Short Term actions will have to be
    – Retaining City Bank custom
    – Getting John motivated while ensuring that the fallout is minimal.
    Long term actions will ensure that company does not remain person dependent.

    Short Term Actions:
    – CTO and CEO should call on City Bank personally to assure them their complete attention.
    – Identify person other than John who could manage the problem, in case of problems with John.
    – CTO should ask CEO to personally speak to John. Meeting with CEO will help John get the sense of importance that he has been missing. He will also be more convinced about getting his due reward when the following assurances are given by none other but the CEO. It will also not upset the other employees significantly, since nothing is being done out of turn as a knee jerk reaction to John’s demands.
    o John’s contribution will not go unnoticed and will be rewarded at the regular appraisal time.
    o He will immediately launch a management initiative to evaluate the business value of innovations and appropriately compensate the innovators when their ideas are accepted by the company.
    o Will have CTO participate in the oversight of the new developments to ensure that John’s ideas will not be summarily altered by the project team.
    o City Bank is an important customer and he would appreciate John providing immediate attention to their problem.
    – Management initiative should be launched to define a system to evaluate new ideas and appropriately compensate the employees by modeling the impact of the new ideas and innovations on the bottom-line. This should, of course, exclude improvements that are considered as normal expectations from the employees while performing their job.

    Long Term Actions:
    – Separate the New Developments and Services functions. Evaluate John if he has the ability to lead/manage the New Development function. If yes, give him the charge.
    – Hire, develop, train more people to manage the services business and build redundancy to ensure that supporting relationships does not become person dependent.
    – Set up system to reward people out of turn for exceptional contributions and make all the employees aware of this mechanism. People do get less disturbed when the criteria are more transparent.
    – Set up HR function to address the problems identified above.

  2. Gauravee permalink

    Student Response

    Names: Mervin Johnsingh; Aditi Sundarraman; Sanjeevi Sturges

    John’s relationship with his immediate supervisor, Alan, is very problematic. John is no doubt talented and has excellent technical expertise; however his attitude towards Alan is very unprofessional. Instead of opening a communication flow and discussing his expectations, he kept quiet and then resorted to jumping the organizational hierarchy and approaching Robert directly. Going through the case study it seems like John felt slighted because he wasn’t allowed to present his ideas, so if John had taken an effort to highlight his eagerness to Alan, things might have worked out much better.
    Unfortunately, there is nothing that can be done now to change what has already happened. In the present situation, it is clear that John’s handling of the City Bank crisis was unprofessional and unacceptable. His dissatisfaction with his recognition should not have bled over into jeopardizing one of Netflow’s client relationships. He has demonstrated an inability to be a team player and there is no guarantee that his demands won’t continue after becoming a VP. What if he demands to be the CTO next?
    In our opinion, he needs to be terminated immediately. To give him a probation period would only give him the opportunity to take out his frustration on other clients. Awarding him a VP position when he lacks the managerial experience and Board support would also be a disaster. It will also send out a signal that his recent inappropriate actions are a successful tactic for getting promotions.
    No matter how brilliant his ideas are, the company cannot move forward with an individual who holds them hostage with such extravagant demands and refuses to do his work in the meantime. Perhaps they can hire him again one day when he has matured and learned to keep his bruised ego from impacting his work performance.
    At the same time, we recognize that Alan may have had an impact in creating John’s frustration. Robert should spend time discussing the situation with Alan and offer him the opportunity to take classes on communication and management to prevent a similar conflict from occurring in the future.

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