Business Case Study – CLEM GRANT

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CLEM GRANT*

Clem Grant was Manager of the Ottawa branch of the Milcroft Concrete Forms Corporation (Milcroft
Corp.). Milcroft Corp. was established in 1932 and based in St. Anthony, Newfoundland, with branch
offices in several major cities across Canada. The Ottawa branch was their most successful, having been
a consistent moneymaker until last January, when Clem Grant was brought in as Manager of the Ottawa
branch. Clem came from the Vancouver branch office of a competing Canadian concrete firm,
CementWorks Inc. (Cl).

Up until his retirement in January, the Ottawa branch was managed by Bartholemew (Bart) Stallone.
Stallone was born and raised in Ottawa and was a graduate of the University of Ottawa’s School of
Management (then known as the Faculty of Administration). He had worked for Milcroft Corp. first as a
student during his time at university, and after graduation, signed on full-time, working his way up to
become manager of the most successful branch of the company. It was, in fact under Stallone’s
leadership that the Ottawa branch eventually became the most successful branch of Milcroft Corp.
During Stallone’s thirty years as manager of the Ottawa branch, the’branch had never fired or laid off a
single employee, and staff turnover was well below industry standards.

Stallone was a very confident and likeable person, and believed strongly in developing an environment
in which his employees would become self-motivated. He encouraged everyone to have a voice and
strongly preached that if employees worked hard, the company would take care of them. He was
charismatic and believed in, and demonstrated delegation and empowerment. He was regarded as a
cautiously optimistic risk-taker who earned employees respect and loyalty by sharing his knowledge and
showing them how to do things.

Clem Grant was the second-in-command at the Vancouver branch of Cl. As with the Ottawa Branch of
Milcroft Corp., the Vancouver branch of Cl was also very successful – the branch had experienced ten
consecutive years of growth and profitability, and was regarded as the most successful branch of Cl.
As second-in-command in Vancouver, Clem was responsible for managing all the construction workers
employed at the branch. He was task-oriented, actively assertive and was accustomed to exercising
control and influence. He was also strongly motivated to “make the numbers” given to him by the

Vancouver branch manager in terms of revenues, expenses and people. While staff turnover at the
Vancouver branch of Cl was considerably higher than the industry standard, for the past 10 years he
“made the numbers” — often with margin to spare.

Clem had worked “in concrete” for over fifteen years and like Bart Stallone, had worked his way up in
the same company since graduating from a Canadian west coast university in civil engineering.

One of the reasons frequently cited for Milcroft Ottawa’s success was the shrewdness of Bart Stallone in
recruiting division chiefs of different cultures, given Ottawa-Gatineau’s multicultural environment. It
was this management team that Clem inherited when he accepted the job as Manager of Milcroft
Ottawa. This management team was made up ofYoshi Mundansha, Chief of Engineering, Susan
Comfort, Chief of Sales and Marketing, Wilhem Thiele, Chief of Finance and Administration, and Jacques
(Le-grand) Fromage, Chief of Quality Control. Clem also had an Executive Assistant, Martin Campbell,
whom he recruited from his old office in Vancouver.

Yoshi Mundansha was born and raised in Japan where he earned his undergraduate degree in civil
engineering from the University of Tokyo. He subsequently completed a master degree in architecture
from Carleton University in Ottawa, Canada, and was recruited by Stallone five years ago to head up the
engineering division of Milcroft Ottawa. With forty persons reporting to him, Yoshi was responsible for
engineering, construction and transport.

Susan Comfort was born and raised in New York City and held earned degrees in business administration
and marketing management from the State University of New York. After working for ten years as a
marketing manager for a major American construction and development company, she married a
Canadian from Ottawa and moved north. Her first job application in Canada was successful-Stallone
hired her, impressed with her credentials and successful work record-and instructed the Milcroft
attorneys to ‘take care of the citizenship thing post-haste’. That was seven years ago. Comfort had a
staff of twenty employees, ten of whom were salespersons paid on commission.

Wilhelm Thiele was born, raised and educated in Munich, Germany. He held an undergraduate degree
in Accounting Science and a Master degree in Finance from the University of Munich, and had worked

for 10 years as an Accounting Manager for a major public accounting firm in Munich. Three years ago
while on vacation in Canada and driving a rental car from Slick Rick’s Rentals, Wilhelm had car trouble on
highway 417 in Ottawa and the good Samaritan that stopped to help was none other than Bart Stallone,
who was driving a cement mixer at the time. Stallone needed an experienced finance and
administrative manager to replace the current manager who was retiring in three months, and given the
credentials and experience of Wilhelm as well as his cultural background that Stallone thought would
enrich his current management team, Stallone hired him. Wilhelm’s staff consisted of a senior assistant,
four accounting clerks and a secretary.

Jacques Fromage was an internationally recognized expert in quality control. Born and raised in Lyon,
France, Fromage held the French equivalent of an undergraduate and master degree in quality
engineering from the Universities of Paris and Marseilles. He had worked for 10 years for two major
quality assurance consultancy firms in France. Stallone met Jacques at a conference in Nice-Jacques
was looking for a change of scenery and Bart was looking for expertise in quality control and assessment
for his management team. Jacques joined Bart six years ago and now headed a team often inspectors.

Clem’s policy was to have a management meeting every Monday morning at 7:OOAM. This morning’s
meeting was extremely important because Wilhelm had recently tabled his financial reports, showing
that for the first time in years, the Ottawa Branch of Milcroft was losing money. Also, in the past six
weeks, six persons had resigned. Further, Sales and Marketing reported earlier in the week that several
long-term Milcroft commercial contracts worth $500,000 had been lost to the newly established Ottawa
branch of CementWorks Inc., apparently due to “less than competitive pricing.

Clem was deeply concerned about these recent developments and, at the staff meeting, brought these
issues forward in his usual forceful manner.

“People, you have put me in the very awkward position of having to explain to St. Anthony why, after all
these years, this branch is costing them money. Now I want to get to the bottom of this, and I am
prepared to sit here all day if necessary. Thiele here, has provided his financial report which clearly
shows a quarterly operating loss of $125,000. I assume the figures are correct, but I’ll have Martin check
the arithmetic just to be certain. And I hope there are no errors, Thiele! As for the rest of you, do you

have any suggestions, comments or care to shed some thoughts on these financial problems?”

Susan Comfort spoke first. “Mr. Grant, the impact of losing the commercial contracts has undoubtedly
caused this operating loss. As I indicated in my report, the loss of these contracts was simply because a
new entrant into the Ottawa-Gatineau market is willing to suffer a short-term loss, performing these
jobs at less than cost, in order to break into the market. It is very difficult to compete against this type
of predatory marketing, and…”

“Look Susan,” interrupted Clem, “I really don’t give a hoot about all your fancy marketing explanations.
The bottom line is that you’re paid as a sales and marketing professional to figure out how to combat
any type of marketing tactic. I want solutions that will work, not a pile of theoretical gobbly-gook. I
want you to fix the situation NOW, and don’t allow this company to lose any more contracts. Do
whatever is necessary.” Clem stared hard at Susan, shook his head and gazed toward the ceiling lifting
his arms over his head and said, “Look, you wanted a man’s job, you somehow broke through the glass
ceiling-good for you, congratulations! Now deliver!!”

Yoshi couldn’t resist a wide smile. “You know, Mr. Grant,” began Yoshi, “these are difficult economic
times. Perhaps it would be in the best interests of the company and this management team to take a
lower margin on certain contracts and at least generate some revenues, as opposed to maintaining our
regular prices and losing additional contracts. We have to think about what is best for us, for our
team…”

“So now, in addition to being an engineer, you are also an expert on pricing, sales and accounting!”
Clem leaned across the table within about six inches of Yoshi’s face and said, “Look, Mundansha, I pay
you to worry about transporting concrete and building structures so they don’t fall down. We’ll let
Thiele over there worry about the bean-counting, and sweet Sue can worry about the sales and
contracts. You just make sure my structures don’t fall down!”

Yoshi folded his hands on the documents in front of him and looked down and away from Clem, without
saying anything.

Monsieur Grant, I would like to raise a concern I have regarding the number of recent resignations,” said
Jacques Fromage as Clem leaned back in his chair.

“Look, Fromage, I really don’t think this is an appropriate time to discuss this issue. We are facing
serious financial problems, un catastrophe as you would say in your country! The fact that a few people
have resigned might actually save us enough money to offset this operating loss!”

“But Monsieur Grant!” continued Jacques undaunted, but with a somewhat raised voice, “these were
long-time staff members who knew the company and whose daily contributions cannot be replaced
merely by reassigning tasks! And as far as replacing them, you will know there is a considerable learning
curve…”

“LOOK!” roared Clem Grant, “I am not interested in hearing any more bleeding heart stories or
dimestore psychobabble. Everyone is replaceable, including you Fromage, and every other member of
this country club so-called management team. Now the bottom line is this-before the end of the day, I
want each of you to prepare a report on how you will operate your respective sections after I impose a
20 percent staff reduction. I want written suggestions on what I should tell head office. I want all of you
to understand-your careers are on the line and you’re betting your pay cheque on your suggestions! I
am not happy with the performance of this team. From what I see around this table I don’t know how
they manage even to get water flowing down hill in Germany, Japan and France, but I do know that THIS
is how I manage in Canada, and if I have to change this team and replace everyone with Canadian
managers, I will!”

“Now look people, we have work to do. We’re all in this together. If you need any further direction,
come and see me. My door is always open….”

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