SOURAV SARKAR

SEC- B
ROLL-261112

Galvatrens Organizational Hierarchy

Arch Carter-Lead Director Sheila Cruse-Chairman(Board Audit
Committee)

Chip Brownlee-CEO Harry Mart- COO

Terry- Senior VP(Sales) Dale Wilis-Senior VP(HR)

Dan Richardson-Corporate Sydney Baydown-

Mike Fields- Divisional Sales Greg Wilson-Divisional Sales Governance Committee General Counsel
Manager Manager
CASE OVERVIEW
The case revolves around Galvatrens,a USA based company with core business in Home Health Care and personal beauty.The company was
going through a bad phase,both in terms of business and also its reputation owing to its erstwhile CEO Walter
Nikels strategy and management style.The autocratic style of running the firm was incongruent with the new generation MBA graduates and it
was failing to attract new talent. The directors finally stepped in and replaced Walter with Chip Brownlee.
Chip,who previously led Paloreq,a pharmaceutical and medical devices and was credited for its tremendous growth.Chip comes as a breath of
fresh air.He diversifies the products of Galvatrens with nutritional and wellness products,medical diagnostics and devices,products for infants
and home.The market responds positively and share price rose steadily .Companys COO Harry Mart,who was lured from Galvatrens
competitor by Chip laid emphasis on supply chain,manufacturing efficiency and capacity.With increased focus on listening and learning from
employees and customers,there was a paradigm shift.Having Sydney Baydown as the counsel member,Galvatren undertook several measures
like open-door policy to make the company more employee friendly. Marred by sudden attrition in the Sales department and a lawsuit against
Galvatrens by a former employee,the company is facing a crisis and the board members along with the management tries to resolve the matter
by bringing everyone on the same page.The case primarily deals with corporate governance and the loopholes which might exist in a complex
organizational structure.

Situation Analysis
A former divisional sales manager,Mike Fields has filed a lawsuit against Galvatrens accusing them of inflating sales and his wrongful
termination. He accused one of his colleague,Greg Wilson of channel stuffing to few of his bigger customers to meet his quarterly sales
target.He tried to reach out to the COO by leaving a voice mail but the COO,Harry never followed up and passed the buck to Terry,Mikes boss.
Mike had personal issues to be resolved and subsequently his performance dipped in that period.He was pressurized by Terry,owing to his poor
performance and threatened with demotion.Prior to that,Chip Brownlee,the new CEO, had brought few organizational changes with focus on
employees and a transparent system.Under his guidance and SydneyBaydowns initiative,Galvatrens took steps to upgrade its procedure for
uncovering misconduct,solving conflicts and a policy for specific ban on retaliation.The lawsuit raises questions on the existing procedure at
And raises serious concerns for the lead director Arch Carter.Arch,consults with the board members and Sydney Baydown,who briefs her
regarding the lawsuit and they decide wait for more facts to emerge.It was evident that Mike did his best to raise the alarm about Gregs
scheme but he was treated harshly. The existing system of reporting misconduct is not fault-proof and he board weighs their option.

Identification of Problems
1. Communication gap between executives and their subordinates.
2. Systematic corruption at hierarchical level.
3. Dysfunctional channel of reporting misconduct.
4. New policies implemented without proper training and feasibility analysis.
5. Trust deficit between management and board of directors.
6.CEOs ineptitude in implementing certain policies which lays emphasis on ethics and Corporate Governance.
7.Individuals goal over collective goal.

Analysis of Problems
1. When Mike left a voicemail for COO(Harry),he passed the buck to Mikes boss without analyzing the gravity of the issue.Had Harry looked
after the issue,the situation wouldnt be so adverse.The top management is unaware of misconduct in the sales department,possibly due to
lack of vertical communication.
2. Though Chip tried to reform the existing hierarchical style in place but the termination of Mike speaks volumes about misconduct at every
level.As pointed out by Chip,the turmoil in the Sales department and attrition is just not a mere coincidence. Greg was asked to resigned
and everything was done in silent mode.Subsequently,Terry resigned after few weeks.It is highly unlikely that Greg was the lone wolf.Even
Dan,the boards corporate governance committee member highlighted this when he said I cant help wondering if others in Sales knew about
it,no matter what the report says.
3. Had there been an effective channel of reporting misconduct, Mike could have reported with anonymity. It is evident that Terry was more
harsh regarding Mikes performance after he came to know about Mikes allegations.He was offered demotion and transfer which was difficult to
accept.Chip himself admits that as a company,we made it easier for Terry to retaliate.
4. The open door policy and hotline for reporting misconduct pertaining to ethics hasnt been working.Prior training to the executives is
prerequisite to ensure successful implementation of such policies.Task masters may not be efficient when it comes to dealing with people and
complex situations.
5. Arch and Sheila were not totally convinced with Chips elucidation of Harrys role.They exchanged skeptical looks. While Arch was concerned
about how fruitful Chips policy on Corporate Governance was,Sheila looked more concerned about Harrys role in Mikes
termination.However,the management was not informed and the directors were forming their opinions independently.
6. As the CEO of Galvatrens,it is Mikes responsibilities to implement whatever is necessary for the goodwill of the company.However,he failed
to do so.When two recommendations were suggested by consultants,one of an ombudsman and the other of a Director of Ethics,he failed to
implement them due to Dale Willis objections.It shows him in poor light.
7. What encouraged Greg to adopt unfair means to achieve his target is a big question.Greg adopted unfair means to fulfill his target neglecting
the impact it might have on companys reputation.The collective effort of group is not taken into consideration.

Generating Alternatives
1. Develop team-building exercises to strengthen intra-office communication.
2. Tying department and companys objective into performance appraisal.
3. Hire an ombudsman to act as a medium between employees and higher management.
4. Delegation of job roles and responsibilities.An ethics committee comprising of directors to provide oversight.
5. Feedback from employees on the new policies implemented which directly affect them.
6. Focus on listening.
7. The board and the management must ensure transparency and convey each others concern. They must take each other into confidence.
8. Rewarding employees who report misconduct.
Evaluating Alternatives
1. High-performance teams become more cohesive over time as they gain experience working and communicating with each other.Intra-office
communication plays a key role in the overall growth of the company.Here,the sales department was treated in isolation and there was no
vertical communication.
2. One of the key challenges for any organization is to instill a sense of belongingness among the employees.An employee looking for only
personal gains might adopt unfair means to achieve target.
3. The ombudsman would allow people to report issues anonymously and could offer a range of informal means for helping them resolve
issues.It would also eliminate any bias whatsoever.
4. The board needs to look after the issues pertaining to ethics and give suggestions for the same.This would ensure that the management is
more focused on achieving operational excellence.
5. Feedback from employees is of utmost importance.It helps to measure the morale of the employees and the effectiveness of new policies
adopted.Two way communication helps to establish good relationship.
6. Some people are inherently more social than others, but anyone can learn and practice effective communication skills to increase personal
effectiveness on the job. Listening helps to mitigate problems at an earlier stage and thus reduce its impact.
7. The objective of the board and management should not be parallel to each other.Its the management which implements policies and there
should not be any misunderstanding.
8. Rewarding loyal employees and whistleblowers ensures active participation of employees in Corporate Governance.The employees knows the
loopholes better than the management and could help to identify the culprit.