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Secret Meetings

by on March 2, 2010

This case study focuses on the issue of retaining top performers in a small start-up companies.

It is a challenge for small business owners who need to keep the balance of delegating enough power to employees in critical positions while maintaining solid control over the company as a whole. Sometimes, the employer becomes over-dependent on them and has to step back on certain critical decisions that benefit the company in the long run while having a negative influence on vested interests of these employees.

This case depicts a situation where David Jones, the CEO of APEX Recruitment, faces the dilemma when he requests his IT Manager, Steve Miller, to document an information system on which the company highly depends. Steve is the solo system architect and developer of the system. Rumors are spreading in the company that one of the largest recruitment companies in the United States is actively recruiting him.

Based on this context, David has to take some action to standardize his IT department for the long run while retaining Steve to keep maintaining the existing infrastructure and prevent his alliance with other partner companies from breaking down.

-Deepti Shah, Thomas Wang & Brian Chen

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From → Coursework

4 Comments
  1. Thomas Zhenhua Wang permalink

    Executive Response from BYRUM, Colleen | colleen@mindbloom.com | +1 (206) 949-5018
    Vice President of Customer Service at Mindbloom Inc

    David Jones has made several mistakes. He failed to properly scope the job for Steve to include ongoing maintenance of the system. He failed to maintain adequate communication with Steve about Steve’s job satisfaction. Perhaps both men are conflict averse and seek to avoid grappling with subjects with the potential for conflict. Perhaps Steve is duplicitous or callous about his obligations to the company. We don’t know, but more importantly, David Jones doesn’t know.
    Besides failing on the front end to scope the job and failing to maintain better visibility of the business risks around a key business operation, David has also delayed gathering more information even when his instincts told him something might be amiss.
    David’s best course of action is a frank discussion with Steve. He should schedule time with Steve to discuss his role in the company. I would be very frank about this, “Steve, I saw you having lunch with Ben Fox the other day. I’d like to talk about what that might mean for us both. You are a valuable employee and I’d like to understand why you might be considering making a move. I’d like to see what we can do to keep you here.”
    David should also immediately launch a search for David’s replacement, in the event he cannot save the situation from complete dissolution. The search will ultimately benefit the company regardless [see below].
    At the time of the meeting, David should establish a tone of respect and openness about Steve’s rights to determine his worth in the marketplace. And then with warmth, ask Steve to let him know how he feels about his role at APEX.
    There are at least good outcomes possible here:
    Steve clarifies his dissatisfactions and David is able to address them to Steve’s satisfaction, and they stay one big happy family. In turns out, Steve, in spite of his accomplishments at APEX, feels undervalued, particularly wrt discussions around business strategy, an area he feels he can make a substantial contribution. He would like to off load some of the programming duties, continue doing design, but spend more time on strategy. As the discussion evolves, David realizes Steve has much more to contribute than he’d realized. Moreover, David recognizes that he has overlooked his responsibilities to plan for “key man” loss in his business and addresses that; David also realizes he has also failed to properly assess business risk on other key areas of APEX and moves to correct that. In this scenario, Steve is tasked with writing a detailed outline for the documentation, a less onerous task than full documentation, and supervising another MIS hire [surfaced during the recently initiated search for Steve’s replacement] brought on to work under Steve for this and other work Steve will offload.
    Even though they were respectful of one another, Steve and David cannot reach a mutually agreeable conclusion and David gives his notice, to be effective upon documentation of the system. Using the only lever left available to him, David provides a financial incentive for Steve to manage the transition. All other implementations are delayed until a transition plan that ensures the health of the company has been implemented. In this scenario, Steve may be converted to a consultant, paid an hourly (higher) wage, to complete the project. His duties become very narrowly defined by mutual agreement.
    Of course, there is the dreaded third outcome, somebody loses his cool, or has long simmering resentments that cannot be managed. After this point it is just too ugly to contemplate. Steve leaves abruptly; Apex begins a hideous death spiral; David ends up panhandling.

  2. Thomas Zhenhua Wang permalink

    Executive Responses from FOU, Shuwa | shuwafou@gmail.com | +852 6685-6400
    Assistant Vice President at Mizuho Corporate Bank
    Former CEO at a local import/export company
    Here I would approach a small, family oriented business.
    The ideal situation, key component would be to communicate.
    Asking has positive side effects. The person you ask will feel cared about, valued and important. Just asking the question is a retention strategy.
    How and when do you bring up this topic? How can you increase the odds of getting honest input from your employees? There is no single way or time to ask. It could happen during a developmental or career discussion with your employees. In that context, you could simply ask: “What would make you want to stay here? What might lure you away?” Be understanding and listen actively. Does the person want a chance to grow and learn, or will a promotion and big title keep him with your company?
    After you listen, you need to respond. What you say is critical. Responses like “That’s unrealistic” immediately halt the dialogue. Maybe you are uncomfortable with the direct question. In addition, perhaps your employees are hesitant to answer. If so, ask in a more comfortable way. Try this: Think back to a time when you stayed with one organization for a long time. What kept you there?
    This question might be easier for some employees to answer because it avoids current needs and wants. What kept them before is most likely to keep them on your team today.
    The company can start to ask employees exactly what would keep them and what would lure them away. You can use external, third party consultants for this part. Employees might know what they want, and it might not always money.
    Employees usually say they want to do “meaningful work” after the project was completed, not return to what they had been doing. Some would want team experience. Others would want another challenge. Management is able to find those opportunities inside the company.
    Here are some points that employees would stay:
    1. Career growth, learning and development
    2. Exciting work and challenge
    3. Meaningful work, making a difference and a contribution
    4. Great people
    5. Being part of a team
    6. Good boss
    7. Recognition for work well done
    8. Fun on the job
    9. Autonomy, sense of control over my work
    10. Flexibility — for example, in work hours and dress code
    11. Fair pay and benefits
    12. Inspiring leadership
    13. Pride in organization, its mission and quality of product
    14. Great work environment
    15. Location
    16. Job security
    17. Family-friendly
    18. Cutting-edge technology
    Ask yourself which of these you can offer as a management. You will likely find that many more are in your control than you think.
    When it comes to price rewarding its seems like it doesn’t solve the problem, it only buys time.
    You need to find other substance that he enjoys in the company.

  3. Thomas Zhenhua Wang permalink

    Executive Response from ZHOU, Zhiran | zzhou11@gsb.columbia.edu | +1 (917) 767-9058
    2011 MBA Candidate at Columbia University
    Former Project Manager at Oracle Consulting Service
    Former executive level manager at Oracle according to my friend, detailed job title has been requested.
    Current MBA student at Columbia University
    Strategically, the first thing David should do is to get a clear understanding of what’s truly in Steve’s mind. Only by having accurate, crucial information can any commander-in-chief make the right choice.
    To do so, David can leverage his network in the industry to get a hint on what’s going on at Fox Recruitment and their intent on potential copy-cat of the Swordfish system. This is not gonna be difficult for an experienced, well-connected headhunter. Once he gets hold of what’s going on at Fox, he could have a clue on the most crucial piece of input in his decision-making: What is Steve looking for at this time?
    It may seem that Steve is pretty happy about his job on the surface. But there is no way he could secretly meet his boss’s biggest competitor without a reason. There must be something that he does not feel comfortable with currently at APEX. From my previous experiences, there could be following possibilities:
    1. Salary: the most common reason. If that’s the case, then it would be easy for David: simply negotiate with Steve openly. It’s pretty clear that David cannot afford losing Steve at this stage, so if money is the issue, it’s relatively easy for David to handle the situation – in the worst case, you lose some money, not your future business.
    2. Power/Position: this is also a pretty common reason why people seek other opportunities. Specifically in this case, I would say this could be the biggest possible answer to the current situation. In IT field, after years of work, people usually don’t get satisfied facing computers all day long, especially when they have somehow hit the glass-ceiling of their career path. They would always pursue something new, worried that their technical sharpness may not sustain as they become less competent in learning new skills. As with the case for Steve, he is already the IT manager for the company, a typical career end for IT guys in non-IT-business companies. Additionally, people like Steve who play such important roles in the core business process always tend to seek bigger responsibility/higher position in organization hierarchies; it is also highly possible that he can’t get his ideal career progress in Apex, thus turning to other options. If this is true and I were David, I would seriously consider granting him the position of CTO/COO or creating equivalent higher titled positions along with broader responsibilities. If the small-firm-alliance is critical to the thriving of Apex, promoting the one at the heart of this business model makes sound sense.
    3. Internal relationship/personal conflict: There’re could also be mismanagement of internal relationship between Steve and other peers. As David is overseeing the company on a day-to-day basis, he should show who to ask in order to get the underlying story.
    Besides the above recommendations, I would also love to comment on the importance of documentation, which is usually overvalued by people who look at the implementation business from outside. For the case of Apex, I would say staring documentation is necessary and David can start this initiative with their next release or critical updates, with his internal IT staffs who work with the firm for the longest time. But this should not serve as a ‘Plan-B’ for Steve’s leaving, because no documentation can ever record the thought process of combining business requirement with system design, not to mention the source of creative solution architecture. If Apex’s goal is to maintain the current system routine operation, well, the documentation may help a bit, but if they want to develop/optimize this system further, I don’t see much possibility of this without Steve.
    Human capital is always at the heart of every business.

  4. Thomas Zhenhua Wang permalink

    Student Response from Meng-Chi Lee and Po-Chun Liao

    First of all, we don’t think there is a huge and complicated system which can be developed by “Only one IT staff”. We have to point out that we are talking about the system which can also support another 8 companies. Even Steve is such an IT genius, it is impossible for him to develop a sophisticated information system. So, to clarify the complexity of the system, we will hire IT consulting company to evaluate the Swordfish system.

    Secondly, we will review the financial report of APEX and calculate how much money investing in Swordfish. Since the company has been very successfully from the development of Swordfish, we will talk to Steve and let him understand we would like to expand and create an IT department. With no doubt, Steve is the best candidate of CIO. We hope he can lead this new born department because he has enough experience on Swordfish. Keeping Steve in the company will be the best option for APEX and the alliance; however, in our mind, we believe any IT staff like him is replaceable. Meanwhile, the first goal of the creating the department is to document the standard of the Swordfish system.

    Thirdly, we will also hire a BI (business intelligent) or a law company to start investigating if there is any divulging trade secret. To ensure the safety of data from our alliance, resorting to the law is the best solution to protect the property right of Swordfish system.

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