The Wallace Group Company Case Study Company Overview The Wallace Group consists of three different operation groups, which are Electronics, Plastics, and Chemicals. The founder of the company and owner of 45% of its shares, Harold Wallace is also the president of the Wallace Group. Latest financial reports indicate that the Electronics contributed 50% of annual sales, Plastics group contributed 29% and Chemicals group contributed 21%, all group sales combined totaled 70 million dollars in annual net sales. In effort to target a greater income from production, the Board of Directors decided to broaden its range of products and the company acquired the Plastics and Chemical groups. This was only possible due to a public stock offering, which led the attraction of investors bringing shares to the company. Due to all these new changes and acquisitions, the company started to experience a series of problems affecting the synergy among all groups, including employees who felt so unhappy that they wanted to force Mr. Wallace to resign. This led to Mr. Wallace needing to take actions by means of hiring Frances Rampar, a management consultant to help him get the company back on track. Identification of Key Issues As clearly indicated in the case overview, the Wallace Group was facing a number of problems related to the operation of the business. Some of those key problems pertain to the evident lack of a corporate governance that guides the decision-making process in the company. This emerged as a result of the absence of success in transitioning from a small company to a more diversified and complex company. Among the issues emerging from the necessity of corporate government are the absence of vision and mission statements as well as the fact they do not count on a strong corporate strategy to lead the company. The Wallace Group Company Case Study Another key issue affecting this company is concerning human capital management. Apparently, the company lacks a proper system of selection and recruitment of employees as well as the appropriate manner in which to process the promotion of its employees. Examples of this is the fact that technicians are promoted to management positions without receiving the adequate training. Besides, for engineering positions, the remuneration is not meeting the standards required by the industry. Aside from abovementioned issues, it is essential to indicate that there is not an integrated system among the working groups, which weakens the organizational structure of the company. This produces double work since different groups will demand to obtain information on the same activity, causing inefficiencies and redundancies in the collection and presentation of data. Regarding the financial filed, the company is also inefficient in terms of cost reduction, which is another issue facing the company. The Electronic group is required to buy from the Chemical group, encountering higher prices and a more expensive production. However, there are other suppliers on the open marker that can provide cheaper raw materials. High material costs in any of the groups will decrease competitiveness and, therefore, profitability. Many employees have described the general style of management exhibited by the president of the company as an authoritarian one. Most employees state that Mr. Wallace’s approach to management is simply centered in and around himself. All this leads to employees feeling placed aside and not being given participation in the company’s decision-making process. This contributed negatively to the deterioration of employee morale and perception of the company’s management style towards its employees, leading to one manager proposing the resignation of Mr. Wallace. The Wallace Group Company Case Study Recommendations In order to address the Wallace Group’s problems regarding the governance management issue, it is suggested that upper management establish a clear vision and mission statement for the company. This will contain the goals and objectives of the company in the long term. Also, all three groups should be aiding management in this direction in order to achieve the companywide vision. Once a strategy has been devised with the objective of establishing the vision and mission statements, then it will only be required to follow them and put them into practice. A strong company governance management model helps enable the performance of governance responsibilities at all levels. In relation to the point corresponding to the human capital management, the company should develop a program which contains the guidelines to be followed in order to appropriately carry out the recruitment and promotion of employees. This should include a revision the description of position standards, minimum qualifications, job competencies and salary structure. Also, there should in place a training program aimed at providing sufficient training to promoted employees who take over new positions they are not fully familiar with. The organizational structure of the company has to be revised and re-evaluated. An integrated system is a must in a company when trying to accomplish effective support processes, use resources efficiently and increase the integration of all areas. Along with the new organizational restructure, it should be developed a well-defined description of the scope of job responsibilities and rights to give to employees the orientation they need while maintaining a certain level of autonomy. There should also exist different ways in which employees can express their concerns and ideas about any give issue related to the company The Wallace Group Company Case Study organizational structure must be opened for employees on all levels to express their concerns and ideas. The next recommendation would be to establish a competitive analysis concerning the corporate policy for transferring pricing. Wallace Group should develop a supportable transfer pricing policy, maintain appropriate documentation, and establish internal review processes that allow for a better functioning of the business. Planning and implementation of this policy will guarantee that both parties take advantage of this mutual arrangement. The most important strategy here should be aimed at reducing costs in order to increase the profitability of the business. Groups should be given the autonomy to select the providers or suppliers of raw materials which have the best combination of both good quality and low prices. Lastly, Wallace Group should operate more effectively by giving equal importance to all groups instead of prioritizing only the president. The issue of Mr. Wallace being perceived as an authoritarian and totalitarian president is obviously affecting the well-functioning of the company. This leads to unhappy employees and a low company performance and profits and it powers struggles among managers. The company needs to put in effect policies to guide organizational behavior to ensure that all abovementioned issues pertaining to management imbalance be resolved successfully. Also, it is recommended to carry out periodic board meeting in order to make sure everyone is equally informed regarding the guidelines of the company. Moreover, these board meetings are a great source of communication and uniform decisionmaking process. In these meetings, members can voice their concerns and address any specific issue that needs to be resolved. Wallace Group should follow all these recommendations in order to properly resolve the issues encountered in this company. This will guarantee a successful revival of their business.
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