Case Analysis 1

Case Analysis - Iggy's Bread of the World

Scott J. Schultz

Drexel University

LEBOW College of Business

Organizational Business 625

 Case Analysis 2

Communication

The communication process at Iggy’s Bread of the World changed from the informal

channels of the Ivanovics’, as defined by slide 16 of our “Communication” lesson, to very formal

channels when McRae’s team started to manage the firm. Ludmilla and Igor, the founders of

Iggy’s, had a fairly defined objective of the type of communication network they aspired to

create in their growing company. As the case study outlines, the mission statement clearly

emphasized that the owners wanted to cultivate a very communicative and caring environment

and they tried to accomplish this objective in an informal manner. The following excerpt from

that mission statement illustrates many wonderful characteristics designed to achieve that goal;

“Our priority is to learn to work well together, and to create an environment that fosters

communication and personal growth. Honesty, mutual respect, sharing and caring for the people

and the planet are the values on which our business is based.” Both of the founders had a passion

for their business and wanted to recreate this enthusiasm in their workforce. They believed in

demonstrating positive energy and partnering with the staff by instilling confidence as the

precursor to a trusting relationship.

Ludmilla was genuinely interested in assisting her employees and used many methods to

advance each one of them both professional and personally. Ludmilla also understood the prior

histories of her employees and showed extraordinary empathy for the staff’s personal journeys.

She had her own version of an employee assistance program to try to prevent any negativity to

seep into the company or their product. The Ivonovic’s also made sure that there was sufficient

interaction between the co-workers and shift-workers both on and off the clock and that cross-

training was not only encouraged, it was Ludmilla’s “ultimate goal” as noted on page 6 of the

case study. She also educated the workers pertaining to the entire process of the business so that

they could understand the importance of their efforts and feel proud of their accomplishments.

The case study does not mention if the interaction between the staff and the owners changed after
 Case Analysis 3

Ludmilla left to raise her children, but I have to believe her absence in conjunction with the

addition of new employees had to have had some negative effect on the staff.

Immediately after the new management team was hired the communications at the

company changed drastically and quickly became much worse than before the team was

assembled. The new executive group was attempting to organize the communication of the

corporation in formalized vertical silos with each department oblivious to the actions of the

other. Matthew McRae, the recently-hired COO, is quoted in the case study as stating that he

understood that the Ivanovics’ had “respect for their employees” but he did not demonstrate this

as a part of his management style. The Ivanovic’s fear of losing the uniqueness and value system

they tried so hard to establish was becoming a reality due to McRae and his team’s management

approach. Whereas Ludmilla or the other managers made themselves available to the employees,

even for personal problems, the staff felt secluded from the new management personnel. The

existing workers did not agree with making so many changes so quickly and also questioned if

the new group appreciated the distinctiveness of Iggy’s. We learned in Slide 7 of

“Communication” that taking the time to “reflect” on yourself for the purpose of analyzing if

your style of communication is increasing or decreasing your influence, can be very powerful

and is a necessity for effective communication.

I am assuming since McRae was very successful in his leasing business and he is

instructing his new team to use a direct approach at Iggy’s this is because he is comfortable with

this technique. Without regard to the style that the Ivanovic’s used, McRae’s team was

endeavoring to introduce this method at Iggy’s and this approach is being resisted not only by the

hourly workers but by the existing management and owners. The employees of the firm,

particularly the seasoned workers were accustomed to being able to make their own decisions

and having a more independent work environment. The workers were also familiar with

exchanging their ideas in “informal channels” as we learned in class from slide 17 of

 Case Analysis 4

“Communication” instead of the “formal channels” that McRae’s new team was designing to

follow a “hierarchal chain of command”. The Ivanovics, although not formally educated in

managerial leadership, realized that with their multi-cultural team members an indirect

management style would grow the production output and would raise the morale and motivation

of the workers. When McRae’s team tried to change this dynamic, especially as soon as they

entered the corporation, their method backfired and was resisted by all of the employees and

confidence in the leadership continued to decrease in the firm.

McRae originally accepted the position with Iggy’s as a consultant to help develop the

organization. The fact that less than a year later he decided to bring in an organizational

consultant to mediate communication issues with the Ivanovics would have caused me to doubt

his business abilities. This option itself was suspect and I personally would not have trusted

McRae’s choice of consultant since I would have already felt some hesitation concerning

McRae’s hiring competence that he had demonstrated thus far. The number one essential

ingredient to all relationships is trust and although the Ivanovics perhaps gave that trust blindly

to McRae, I feel that he not only abused his responsibility to them and their company, I feel that

he did not return any faith or confidence in their abilities.

I would be very wary of a business professional that presented so many problems in such

a short time predominantly in the fundamental area of communication. McRae’s team members

tried to overrule Ludmilla’s efforts to bring back cultural aspects and were very insensitive in

their delivery of their new procedures.

McRae did not seem “…committed to providing a nurturing and respectful environment

at our workplace that fosters cooperation, communication, and a sense of accomplishment for all

employees.” which is clearly stated in the mission statement regarding communication for the

company.
 Case Analysis 5

Power

The power structure of Iggy’s was transformed from a “Referent” style when the

Ivanovics were managing the organization to a “Coercive” arrangement when McRae’s team

assumed leadership. Igor was a very empowering owner when it came to decision making

because he only wanted to focus on the quality of the products and product issues. Igor did not

have any education that would assist him in being a manager and from the information in the

case I believe that he was not comfortable in this role. Both founders did encourage their

employees to make their own decisions and learn everything they could about the entire

operation. Igor’s younger brother, Nikola, earned a business degree in Economics and was

trusted with the business side of the organization. The Ivanovic’s even entrusted their “board of

advisors” to contribute in making large decisions affecting the growth of the business. Ludmilla

wanted to ultimately focus on the mission statement and aspired to be out of the daily operations

and felt bringing in McRae would fulfill this ambition.

McRae did not understand the Ivanovic’s conscientiousness when it came to the welfare

of their employees. He and his team were trying to impose a more “Coercive” authoritative

structure as we learned in class 06, “Power”, into the company. McRae’s team built a system

with rules and procedures without input from the rest of the team, and seemingly, concern for the

wishes of the Ivanovics.

Diane Coleman attempted to use the “Legitimate” basis of power, which the “Power”

slides describe as a source of power used in which the “Follower believes the person with a

specific title has the right to influence him/her.” Coleman used this technique since she believed

having the title of Vice President of Sales and Marketing gave her the right to influence Ludmilla

which further complicated the issues McRae’s team was trying to institute. Coleman did not

respect Ludmilla’s title of President of the company and Coleman’s suggestion to Ludmilla was

very disempowering and contradictory to the organizational atmosphere that the Ivanovic’s
 Case Analysis 6

aspired to create.

While reviewing my “Scoring Key”of II-C-2, “What’s My Preferred Type of Power” I

realized that the only method of power I really prefer not to use is “Coercive”. I really liked

reading about Iggy’s because the employees were never lead by a fear-based manager. The case

study alludes to the horrible history of intimidating and fear based techniques that the immigrants

working at Iggy’s were probably exposed to in their past employment histories. Our textbook

explains how cultural influences may be important factors in dealing with human emotions,

(Neck & Manz, 2007, pp. 65-66), and even though this aspect is never raised in the case study, I

feel that McRae and his team should have a least made an effort to understand this major cultural

difference in this particular company before making any changes.

I believe the Ivanovics’ were building on, “Inspiration based” power currencies during

the entire time they ran the company. As the slides explain, both founders employed this

currency with Igor for his passion for quality and Ludmilla with her vision and social mission.

Ludmilla also thought being, “Relationship based” was of great importance as well. The

employees felt there was a lack of these two currencies from the new management team and as a

result, morale was quickly disintegrating. I believe the Ivanovics were correct in their assessment

that the situation was worsening in their company and they were correct in taking action to

address the negative changes.

McRae’s Team

I was appalled at the team that McRae hired. The case study does not elaborate on

McRae or his team’s educational or professional experience but it is very hard if not impossible

to believe that the most qualified candidates to fill the positions at Iggy’s were McRae’s family

and friends. I was not surprised at three of the categories of positions that were filled by McRae

since having a Distribution Manager, a CFO, and a Human Resource Manager are the

designations needed in any growing organization of this type and size. I cannot feel comfortable
 Case Analysis 7

that the CFO and Human Resource positions could be adequately filled by one person in a

company the size of Iggy’s - particularly for a rapidly growing organization. The one position

that wasn’t necessary at this time was a Sales and Marketing Vice President since Iggy’s had

more demand than they could supply. As Chief Operation Officer McRae’s first concern should

have been the operational structure and determining more efficient and productive ways to

satisfy the customer demands, especially the customers they had to turn away. The immediate

need of the organization was to build a management structure that supported the rapid growth

that they had realized. Hiring a person with limited experience to focus on sales should not have

been a priority in the first six months. I feel the Ivanovics were naïve and desperate and did not

have the experience to discern between business professionals and amateurs and McRae took

advantage of this gullibility. The only person we have employment background information on is

Coleman and she clearly is not qualified to be a Vice President of Sales or Marketing. This

obviously seems to be an example of “cronyism” when a person in charge appoints friends to

positions of authority.

In class 07, “Team Leadership” the definition of a team defines a group “…who are

committed to a common purpose…” and I think McRae’s team may have missed this very basic

but necessary first step. I believe that the new management executives dismissed the fact that

there were many, many talented people already employed at Iggy’s that could have assisted and

complemented McRae and his team had they been given the opportunity to work together for

mutual solutions.

As a result of separating the departments and divisions, McRae’s management team

showed their leadership inexperience and caused the feelings of further isolation for the existing

employees. I thought it was glaringly obvious that this particular organization was unique

culturally and I would have to assume that McRae could have perceived this fact by his initial

familiarization with the firm when he accompanied Igor on his daily tasks.
 Case Analysis 8

The managerial style totally ignored any type of feedback, even when it was presented by

the owners of the company. We learned in class 03, “Communication” that “the essentials of

communication” are to “actively listen” and respond to these cues. McRae’s team did not even

put any effort into learning the organizational pulse or cultural differences that made Iggy’s

successful. They tried unsuccessfully to impose their own ideas regardless of the established

protocols. When benefits are not perceived as a result of change, the change will not be

embraced. The workers at Iggy’s had enjoyed communicative benefits, relationship

enhancements, and an empowering environment for several years and the new management was

attempting to remove these well-perceive perks. We studied the importance of learning the

patterns of behaviors and group practices in class 07 and observing and implementing the

patterns for the good of the group as a whole. It did not seem that McRae’s team took any time to

examine the staff long enough to determine any pattern, and as a result, the team suffered from

this omission. The Ivanovics’ themselves probably lost some influence over their existing team

since they made the decision to allow McRae and his team to disrupt the status-quo of the team

and this caused mistrust and lower confidence levels in the leadership of Iggy’s.

I was confused by McRae and his team’s ineffectual reaction to the complaints of the

Ivanovics. When concerns are addressed by the owner of the corporation, especially in the

beginning of a new experience, they are generally treated as a major importance and much

attention and/or resources are put forth to correct these issues. The case study portrays McRae

indifferent or even hostile to the complaints of his superiors instead of McRae and his team

endeavoring to solve the alleged problems. Although I was not surprised that ultimately McRae

would have a communication problem with his bosses based on his lack of interaction skills he

and his team had with the workers.

Difficult People Profile

McRae and his team epitomized Bramson’s, “Sherman Tank” style of leadership from
 Case Analysis 9

class 08, “Coping with Difficult People”. McRae came into a recognized and reputable company

and immediately assembled a team without any communication from the existing team or

without getting accustomed to the culture at Iggy’s. This tactic overwhelmed and unsettled the

simple management style currently in place. McRae’s team then used intimidating methods to try

to control the team members by using a strictly defined hierarchy chart, described in the case

study, and even tried to coerce one of the principals into using their new system. I picked this

particular style because the profile perfectly mirrored McRae’s and his team’s behaviors that they

demonstrated. In addition I have also worked for this type of person and felt very uncomfortable

reading this part of the case study, almost like I was remembering the similar situation I found

myself in years ago. I felt very sympathetic to the Ivanovics and recognized McRae style

immediately from Bramson’s profile of “Difficult People.”

It seems that there was also contempt for the Ivanovics as the “Profile” slide of the

“Sherman Tank” clarifies since McRae and his executives did not acknowledge the founders

concerns at all and resisted any direction or requests that the Ivanovics’ presented. It seemed

from the behavior of McRae and his group when they interacted with the founders that they

believed the Ivanovics’ did not understand the management dynamics of running an organization

and they were to be treated to be on a lower intellectual level than the new management team.

Finally, the last piece of the “Sherman Tank” profile is that McRae personally attacked

the founders without warning and this left them feeling angry and confused. It was obvious that

McRae was indignant that he was not getting his way and he was defiant when Igor tried to

communicate with him and these are two characteristics of the “Understanding Them” slide of

the “Sherman Tank” distinctive traits. Trust and compassion were not apparent in the new

management team’s style and the cultural importance of the company was never addressed by

this group. I believe McRae brought in a mediator to prove that his opinion was “right”. The

need to be “right” is a typical behavior pattern of this Bramson title. The result of McRae’s
 Case Analysis 10

performance is that he permanently shattered the relationship he had with the Ivanovics which is

a classical “Result” of the “Sherman Tank” as we learned from the “Difficult People”

discussions.

The Ivanovics are not heeding the correct counsel of handling someone like McRae in

this situation. Bramson advises, “Don't take difficult people's behavior personally…Don't try to

appease them. Difficult people have an insatiable appetite for more.” (Meyerson, 11/12/08). The

Ivanovic’s took the comments in the letter of resignation personally and by asking McRae, “what

would make him happy…” it seems that they have opened Pandora’s Box for this problematic

type of personality feature.

Final Scenario

I was surprised at the immaturity of the verbiage from McRae’s resignation and shocked

that he would try to withdraw it the following day. The quote from McRae’s resignation letter

again demonstrates his egocentric focus and not as a leader of an organization. The excuse from

the case study that he was “angry and overreacted” was an understatement and a flimsy one in

my personal opinion. He did not mention his manager’s feelings or apologize for his very

inappropriate and unprofessional action. I thought Igor’s analogy was appropriate mainly

because of the personal attack on the Ivanovics’ and on their corporation. It reminded me of we

learned from class 03, “Communication” regarding the “Irreversible” type of message that can

never be taken back once it is said.

The patience and understanding of the Ivanovics was amazing to me, and I was really

astonished that they tried to appease the person that had caused them so much consternation

when he was supposed to be their solution. The questions that the founders asked McRae

regarding his compensation and his daily responsibilities should have been considerations that

the new COO would have considered before he was initially hired. The Ivanovic’s initially

brought McRae in as a consultant to learn about the culture and the needs of the company but he
 Case Analysis 11

used that time to assess what he could gain from the company such as presenting high paying

positions for friends and family and personal income for himself instead of what he could offer

for the business. Negotiations so quickly after the hiring process are very unusual and would

indicate to me that major problems with this individual are imminent. I am puzzled at the reason

McRae would submit a compensation package request that included bonuses for already

achieved profit figures and I found his excuse about the “new economy” and “other people

making millions in start-ups” to be spurious. If McRae read and learned from the wisdom in our

text of, “Balancing the “Me With The We” (Neck & Manz, 2007, pp. 102-104) and followed

Drucker’s advise behind “shared leadership” he could have learned to manage the business in a

more positive way. Since the company was going through a reorganization of management, it

would have been inspiring and encouraging for existing team members to be in shared team

groups with the new management and allowed each department to give input to form a fresh

direction for Iggy’s future.

The Ivanovics need to consider the encounter with McRae and his team as a learning

experience and if I was one of the advisors I would strongly and vehemently recommend that

they accept his resignation without delay. McRae has proven that he is unable to lead this

organization in the direction that the Ivanovic’s would like to go in and he is unable to

communicate effectively at many levels. He has proven that his concerns mainly revolve around

himself and his ideas and consequently he has proven that he is not an asset for this firm.

I would then suggest that they call in his staff immediately before his team would have

had a chance to speak with McRae, and explain that the company has accepted his resignation. I

would also elaborate that Iggy’s will not tolerate any lack of communication and they will be no

more hiring or policy changes without approval from the original management staff. I would

state that Iggy’s would completely understand if anyone of McRae’s staff would like to tender

their resignations and accept those as well. Since the new staff worked less than six months, the
 Case Analysis 12

severance packages would be minimal and the company could recover quickly from this strategy

from a financial perspective.

I would then advise the Ivanovics’ to create job descriptions starting with the COO and

clearly define the qualities and attributes they are looking for, particularly in their leadership

positions. I would then suggest working with a professional human resource consulting firm for

assistance with this task and to execute a retained search. When this process was completed

successfully I would then suggest that they start a new interview process again with help from

the above mentioned human resources firm. As part of the interview process, I would request that

the qualified candidates submit a short-term plan to create the desired results while maintaining

the company’s core culture and mission statement for review. This exercise would allow the

Ivanovics’ and their advisors to assess in detail, all of the perspective candidate’s plans and

review if their ideas fit into Iggy’s mission statement.

To revisit all that we learned from class 06 and the slides of “Power”, it would seem that

the Ivanovic’s would benefit more if they found a leader that fit into the “Expert” category which

they could then learn from about the financial and managerial aspects of the business. The

founders should narrow their search for a leader that also emulates the “Inspiration Based”

“Currencies” since slide 9 from the “Power” slides indicate “Vision, Excellence and Moral

Correctness” are the chief drivers of this “Currency” and this practice most closes matches the

attributes and qualities needed to satisfy the purpose of Iggy’s mission statement. This system, as

we also learned, takes a significant amount of time and patience, and I feel that the Ivanovics’

and their staff would welcome this change of leadership.

 Case Analysis 13

References

Neck, C. P., & Manz, C. C. (2007). Mastering Self-leadership: Empowering Yourself for

Personal Excellence (p. 103). Upper Saddle River, NJ: Pearson Prentice Hall.

Robbins, S. P. (2009). Self-assessment Library Insights into Your, Interests and Abilities (fourth

ed.). Upper Saddle River, New Jersey 07458: Pearson.

Meyerson, H. (Comp.). (11/12/08). Learning to Deal With Difficult People. Retrieved March 5,

2009, from http://www.confidencecenter.com/art12.htm