Iggy’s Bread of the World is a traditional boutique company that has found success from delivering the highest quality baked products driven from the philosophy of organic home cooked food. It was founded by an enthusiastic husband and wife team who not only adhered to the strict guidelines of baking products, the conventional style, but also encouraged the direct involvement of employees in decision making process. This philosophy is evident by the fact that Iggy’s used the traditional Sourdough starter instead of Yeast and baked it for twelve hours instead of the usual three hours. Similarly, Igor Ivanovic challenged the existing human resource practices by hiring unskilled labor who didn’t know how to bake breads and transforming them into skilled efficient employees. The idea became a hit with customers and the business started to grow quickly.
Initially, Ivan and Ludmilla established the business with other partners but soon they opened up their own bakery, five miles from downtown Boston. Soon after opening, orders begin to flow in large numbers and Iggy’s became such a sensation that there were almost 50 kitchen workers from 20 different countries operating 24 hours seven days a week. At the time, both Igor and Ludmilla concentrated hard on baking the finest product and taking care of their employees by providing them an all round education which also included overseeing business operations, English language classes, functions and sports events. Four years after the opening of Iggy’s, the Ivanovics decided to open a large branch in Cambridge due to exponential growth. Such a move included a large kitchen space, seven new vans for delivery and additional staff.
This was also the time that Mathew McRae took position as a COO of Iggy’s. His job was to understand the business and gradually expand it on terms with the traditional Iggy’s philosophy. Nearly everyone in the company was excited that someone with professional business management experience became a member of the new team. Seeing this as an opportunity, Ludmilla went back home to take care of her two young children. In contrast, it will not be an oversimplification to suggest that hiring someone, who had not been a part of the original Iggy’s team, resulted in a rift between the management and the owners. The new COO didn’t take much time to hire more top management staff consisting of his former associates. The owners were concerned but saw this move as a part of the organizational skills of Mathew McRae. Basically, the traditional mindset of the employees at Iggy’s contrasted with the viewpoint of new management who were trying to establish rules based on the modern corporate practices. Soon after the introduction of new management team, the rift began to widen, promoting Ludmilla to rejoin the company. Just six months after Mathew McRae’s appointment, he asked for an increase in the monetary compensation and afterwards, offered to resign from his post, altogether.
As a consultant for Iggy’s who has been hired to iron out the problems, it is important to realize that the core issue is organizational change. According to experts, changes concerning people are hardest to manage and usually carry fear and stress along with it (Organizational Change). People who are well adept to a certain environment never like the change. Such a situation is apparent at Iggy’s Bread of the World. Most of the employees were well settled at their respective positions and liked their work. Sudden changes in the management provoked the emotions of these employees as most of them were not accustomed to American corporate hierarchy. Moreover, Igor had promoted the idea of freedom which to most immigrant workers fostered a vision of kinship and friendliness.
When Mathew McRae took over, his decision to put one of his associates in charge of probably one of the most significant department at Iggy’s, Human Resource, was a key element in escalating the problems. Previously, Mathew had made another significant decision by hiring people from outside the company instead of internal promotions. This may have been another major factor which would have caused a great dissent among the hard working employees of the firm who saw such an action as detrimental to their chances of promotions. This dilemma is explained by one of the managing partners at Heidrick & Struggles who insists that an external hire’s success is often dependent on the company’s forward looking human resource team which understands the company’s business strategy and proactively ensures that the new executives adjust to their new culture (Moore C). Unfortunately, in Iggy’s case, the human resource team was managed by someone who had just become a part of the team and whom the other team members merely trusted.
Besides external hiring practices, another important issue pertaining to the ongoing problem was the implementation of rules and regulations which were contrary to the brand image that was Iggy’s. Noticeable is the fact that a rift was imminent between the new management and the workers due to the differences in each group’s plan on how they would like to operate the company? Each group had different goals, philosophy and plans which were a reflection of their contradictory educational and cultural backgrounds. The employees blamed the new management for not having enough interest in knowing them nor taking time to learn the culture at Iggy’s. While it is logical to perceive that the new management cannot be solely responsible for all the mishaps, it is certainly apparent that the unique culture at Iggy’s was not a textbook example that is not found in other organizations therefore there should have been a definite plan to gradually introduce and induct the new management in the system. However unreasonable it may look but Igor and Ludmilla are in most part responsible for not introducing such a plan which ultimately made it difficult for their employees to confront their new managers. Such lack of communication resulted in demoralizing the employees who always felt comfortable in sharing their suspicions with Igor and Ludmilla. Ludmilla’s return to office is a proof that such conditions ubiquitously prevailed and her goal was to resolve such issues.
In order to stabilize the company, there was an urgent need to restore normality. First and foremost, the board had to pinpoint the factors contributing to such a chaos. As discussed, one of the main factors was new hiring and the human resource department. There were three important steps that had to be taken without disrupting the normal proceedings.
The Human Resource Department was to be operated under the direct control of one of the owners. It could be either Igor or Ludmilla. Ludmilla was a better option in the sense that this is one department that doesn’t need to operate after normal office hours. Such a decision would also make it easier for the board members to justify to CFO that it was an opportunity for her to solely concentrate on company’s financials. On the other hand, it was the perfect job for Ludmilla who understood the importance of new hiring as it pertained to the existing culture of Igor’s.
The company could not afford to loose bakers and other hard working employees therefore mid level managerial positions should only be filed by internal hiring which will certainly boost the moral of the employees. External hiring for top positions should stop with immediate effect until the company evaluates and plans for new positions.
The Human Resource Department should directly report to Igor.
There should be a formal business process orientation program for new employees because such a process has been a proven itself and has been a resounding success for such well known companies as Texas Instrument, Progressive Insurance and American Standard (Hammer, 1996).
Apart from the human resource issues, the brand image of Iggy’s was at stake. The board had to take a firm stand on keeping the image intact. The following proposals should prove useful in this regard:
There should be no compromise on the quality of bakery products. The management should also outline a practical framework to maintain the quality of the most important aspects of their business that they viewed as unique to Iggy’s.
To restore the friendly atmosphere, every high level executive should undertake responsibility of mentoring a set number of employees and try to resolve their personal and work related matters. These group of employees should be regularly be rotated among managers and executives to promote a sense of ethical responsibility and competition among the mentors.
New and existing managers should be given key responsibility of overseeing social events and tasks that involved the entire company. It can include arranging functions, negotiating between employees and helping the community. Such actions will allow managers to mingle and better understand their coworkers. Moreover, the better the employees know each other, the better they perform in a workplace environment (Social Events).
In spite of the above mentioned proposals, the imminent query was to find a solution to Mathew McRae financial demands and the impact of his resignation. The board should realize that without blaming anyone for the existing situation, the most important issue was to retain the culture that is Iggy’s. Therefore, the board should provide an unbiased offer to the COO based on the above mentioned principles accompanies by their own views. If this leads to Mathew McRae to leave his position followed by some of his associates, than it will effect the day to day operations but retain the Iggy’s image in the eyes of its customers.
To customers, it is the bread and products that represents Iggy’s and not the corporate philosophy. It is to be understood that successful word of mouth companies such as Muji and American Apparel doesn’t have a brand but just like Iggy’s these companies continue to prosper due to the quality of their products (Matt H). It is therefore imperative that Iggy’s board of advisors take steps to preserve the quality and eliminate any threats to company’s survival.
Hammer, M. (1996). Beyond Reengineering: How the Process-Centered Organization is Changing Our Lives. New York, NY: HarperBusiness.
Matt Heig, Brand Royalty: How the World’s Top 100 Brands Thrive and Survive, pg.216
Moore, C. “External vs Internal Hiring Decisions leave many companies perplexed.” Hiedrick and Struggles. Accessed from http://www.heidrick.com/NR/rdonlyres/A0E18AA4-9E5D-41BF-B81C-EFE199AB1BD4/0/HS_InternalExternalHiring.pdf
“Organizational Change.” Home. 21 May 2009 <http://www.strategic-conversation.com.au/html/organisation_change.html>.
“Social Events in the Workplace – Teamwork in Business – Resources for Entrepreneurs – Gaebler Ventures – Chicago, Illinois.” Entrepreneur Resources – Resources for Entrepreneurs – Gaebler Ventures – Business Incubator – Holding Company – Venture Capital (Chicago, Illinois). 21 May 2009 <http://www.gaebler.com/Social-Events-in-the-Workplace.htm>.