Reference no: EM133254852
CASE STUDY: The History of PCSS
The Pacific College of Sports Science (PCSS) commenced operations in 1995 and is in Sydney Australia close to the major sporting facilities and transport hubs of the city. With the ability to deliver a broad range of business, sports management and sports science qualifications, there were more than two thousand (2000) students enrolled and approximately 115 staff in 2014. The majority of staff had been with PCSS for more than seven years while all the senior executives had more than ten years with the institution. In 2014, PCSS was purchased from the original owners by a consortium, SGIAR, which specialized in venture capital investment. The consortia's strategy sought to purchase average-performing organizations and through change management, build the gross revenue and decrease the costs thus dramatically increasing profits before selling the business to another organization. These business-building strategies and activities tended to have a project span of 24 to 36 months.
The Founders - Sara and Sebastian Chivu
The founders of PCSS had established and built the business using a strong philosophy of relationship management and partnerships. Following their respective individual sporting careers culminating in representing Australia at two Olympics, siblings Sara and Sebastian Chivu established the college to assist in the education of other elite athletes. Through their extensive range of contacts and relationships with the sporting industry they soon had enough students to commence operations. Seeing the power of their sporting network, they paid close attention to establishing and maintaining positive relationships with all stakeholders, especially their staff, who were very active in the training and development of professional sports persons. On several occasions, Sara and Sebastian attempted to measure the costs of maintaining their external business relationships. It was deemed not as a cost but as an investment.
Performance and management - Sara and Sebastian Chivu
The performance of PCSS was evaluated by Sara and Sebastian through a range of informal and irregular measures. Since its opening PCSS had maintained continuous growth in student enrolments and profitability. A compounding factor in the lack of priority for financial performance was that since 2008, when it acquired new premises, PCSS had experienced increased rates of profitability due to a lower fixed cost base. The increasing profitability further decreased the need for financial performance evaluation. Similarly, staff performance and evaluation were completed informally and on an irregular basis. As many of the staff were athletes, their personal self-discipline was seen as a major attribute. Staff selection was always done using the business networks and relationships and only on rare occasions did PCSS advertise open positions. The introduction of new staff tended to be informal and included only the must-know features of the position and organization. The orientation was focused on the transference of tacit knowledge and the 'immersion' of new staff in their positions. A result of this was a limited understanding of staff KPIs, professional development and people management. The informal nature of staff performance evaluation and low priority on financial performance ensured staff loyalty and the development of a family organizational culture.
Structure
PCSS used a traditional hierarchical organization structure, as shown in Figure 1, which was not formally published, Sara and Sebastian were joint Chief Executive Officers who actively participated in the day-to-day operations of the business and shared an office. Reporting to them were the management team of Operations Manager, Finance Director, Registrar, College Director, Marketing Manager and Human Resources Manager and from these positions cascaded out another four tiers of the organization.
Figure 1. Informal
Tenure of Staff
The minimum length of employment for the senior management staff was 1 year for the Finance Director, who had previously held a similar position with a global IT company while the other senior executives ranged from a minimum of seven years through to fifteen years with PCSS. Each manager was responsible for their department; however, Sara and Sebastian enforced an open-door policy ensuring that any decisions were made with their consultation. A key feature of the management team was the strength in their collegiate and group behavior, sometimes to the point of not exploring alternative options for the departments and College. Staff meetings were irregular, and discussions were dominated by Sara, Sebastian, and the Academic Director.
The Takeover SGAIR- The new CEO Dominic Johns
Immediately following the takeover, Sara and Sebastian left the organization - there was no transition or handover period. As part of their commitment to staff, each senior executive and manager was given a reward of 3 months' salary for loyalty and performance.
SGIAR selected and appointed a new CEO, Dominic Johns, who had over 20 years of experience as a senior corporate executive and most recently had led the commencement of two start-up ventures and three strategic business turnarounds. All five of these projects involved the rapid building of the business's cash flow and profits and then the sale of the businesses to new owners. In each case, Dominic focused on maximizing revenue through aggressive marketing and sales activities and minimizing costs, especially in human resources. In the case of PCSS, the owners of SGAIR had contracted Dominic to do the same, should the target of doubling PCSS value in 24 months, he would receive 12 months' salary as a bonus. Publicly, Dominic always professed the value of quality high performing staff but pragmatically expected senior executives to lead and aggressively drive their people.
Dominic's First Task
As Sara and Sebastian had completed the handover by providing a few files and notes, the first task was for Dominic to establish an understanding of the business and its people. One-on-one senior executive meetings/ discussions were organized. There was a broad range of conflicting opinions on business processes and policies. There was no company handbook or policies, position descriptions or performance reviews. The justification for employing people was based upon the perspective of the manager and could the budget afford to pay the people. Staff attendance at the office was voluntary and unless required for meetings or teaching activities, staff would 'telecommute' or work from home.
Week 4
At the start of week four, Dominic arrived at to meet with a collection of staff who had requested a meeting. The four staff were a collection of long-standing and trusted senior female teaching staff. Each one of the four staff discussed the need for change and a fresh start including a different management style and inclusive approach to decision-making in the academic department. The decision-making process was described as unilateral and directive, furthermore, when alternative suggestions and recommendations were presented, the Academic Director would state: 'I am the Academic Director, that is my decision and that is what you will do.' Upon further investigation and discussion with the four staff members, there was an inference of key positions being awarded to friends and family of the Academic Director.
The start of Change Management Three months into the CEO role
The challenges and unique characteristics of the organization commenced appearing during the three-month period. Having completed his due diligence on the business, change management needed to commence with the largest department - the academic.
Academic Department
Allocating three hours for a meeting with the Academic Director, Dominic commenced a review of the organization structure, position descriptions/responsibilities, and performance reviews. The Academic Director commenced by explaining the department structure had been designed by him on an ad hoc basis as the department had grown. Further investigation identified that in numerous instances there was either overlap or duplication of tasks that had not been addressed as there was no need to disrupt staff morale.
Performance and Development
When the discussion transitioned to position responsibilities and performance reviews, it became apparent there were only ten formal position descriptions, for the seventy-plus staff, and that staff performance reviews had not been conducted for more than four years.
Salary reviews
Salary reviews had been awarded at the sole discretion of the Academic Director. At this stage of the discussion, the attitude of the Academic Director changed to defensive and aggressive.
CEO Requirements
Dominic turned the discussion to the future and need for:
i. a complete departmental review,
ii. formal position descriptions for all staff and
iii. formal performance reviews within eight weeks.
At this point, the Academic Director stated, that he had no idea how to undertake this task as he had never been trained in his position. Following further discussion and pressure applied by Dominic, the Academic Director became aggressive, attempted to intimidate, and threatened to resign.
6 Months as CEO - Report to the Board
After six months in the position as CEO, Dominic was required to present to the board his actions to date, conclusions, and future plans. At one-quarter of the way through the planned acquisition and future sale of the PCSS, the Board of SGIAR were anticipating significant inroads in changing the business and the foundation set for future growth of profits. The presentation commenced with the following key facts:
- The marketing department embraced change and developed a five-year strategic marketing communication plan. Although 50% of staff had left the department, the new staff were highly qualified and eager for success
- Human Resources had been rationalized with two staff being made redundant, Efficiency had been increased by the development of formal HR policies
- Operations and Registrar departments did not need change as the respective workloads had increased and staff had operated with close supervision and informal performance evaluations
- Finance department staff numbers had been reduced from nine to five staff through automation and the introduction of ERP software.
- The Academic Department remained the challenge, the Academic Director was resistant to change, due in part to his impending retirement in five years, and the personality and traits of the individual - Myers Briggs ESTJ with traits of the 'dark triad' It (refers to three distinct but related personality traits: narcissism, Machiavellianism and psychopathy).
Board Challenge Concessions
- At this point of the presentation, Dominic was challenged by the chair of the Board. There had been a delegation of staff who had met with several directors and discussed the rate of change being implemented. The Directors acknowledged the impact upon the business and the staff but failed to inform the delegation of their strategic intent to sell the business in 18 months' time.
- A further concession was that at the next board meeting these matters would be raised with Dominic and a solution found.
CEO Commitment
Dominic replied to the chair of the Board, that he was CEO, he was being paid to turn the business around, and that he would do all he could to achieve his bonus. The meeting ended abruptly.
Now, answer in details:
Discuss the management of PCSS
Discuss your perception of the culture of the organization
Identify your first OB issue for change
What is the mission of the consortium SGIAR?
How would you classify the communication?
Was Dominic John's agenda positive?
Did John's agenda match the consortium?
What was John's focus?
Would it be successful?
Identify your three changes for the business to turn the culture around.
(Assume the company will be profitable and sustainable and not be sold on completion of your changes.)