Executive Summary

The Ivanovics’ have to consider how their business would function in the future. Their options are
limited to accept McRae’s proposal and let him continue in hisposition as is, to reject his proposal
while hiring a replacement team and finally, to reject his proposal while scaling down and regaining
control of their business. They have to consider the importance of expansion and growth of Iggy’s,
while also taking into account product quality, brand reputation, the satisfaction of their employees.
Rejecting McRae’s proposal, while hiring a replacement management team with Nikola at the helm,
seems the best way to go.

Situational Analysis

Igor and Ludmilla were passionate people and Iggy’s breads was a culmination of this passion. They
learnt the trade at Pain d’Avignon which they later left because they weren’t willing to compromise
on quality of ingredient in the pursuit of profit. Their focus was the wellbeing of their work,
employees and customers. They also refused to hurt their friends at Pain d’Avignon by operating in
the same circles. This was indicative of their positive intent and their belief that there is enough
space for all to function and grow as a business. In their early days, Nikola, an economics major,
helped them with running the business.

Ludmilla instituted a Clean & Happy Hands rule which wasn’t simply a rule on cleanliness but also a
rule to ensure that no worker worked unhappily. It represented her aim to build a utopian workplace.
They further motivated employees and ensured that they had a holistic understanding of the
business. Thus the employees had a personal connect with the business.

As the business grew, it became exceedingly difficult for Iggy’s to serve all its customers. To maintain
their value system, they decided to grow the company. Matthew McRae, who was hired as COO
without any formal hiring process, wasn’t demarcated his role and responsibilities clearly. He began
to build his own management team with people he knew personally. One of the new hires was Diane
Coleman who the owners did not believe was up to the job. The approach of this management team
was markedly different from the prevailing one at Iggy’s and this led to friction between the
management and the employees. The owners, who had distanced themselves from the operations of
the company, started feeling the differences too. This led to problems between them and McRae.

While they were working things out with McRae, McRae and Diane hired another manager behind
their backs which was the straw that broke the camel’s back. In final negotiations McRae asked for a
higher compensation. This was a clear display of the clash of thought processes between the
Ivanovics and McRae. He was driven by monetary benefits and did not have any interest in aligning
himself with the culture of the company or the well-being of the employees both of which were
close to the Ivanovics heart.

Problem Statement:

What should be Ivanovics’ future course of action for their business?

Options:
  Accept McRae’s proposal and let him continue to run their business as is.
 Reject McRae’s proposal and find a replacement management team.
 Reject McRae’s proposal, scale down the business and regain control of the business.

Criteria for Evaluation:

1. Expansion and growth for the business

2. Product Quality & Brand Reputation
3. Organizational Culture
4. Employee Satisfaction

Evaluation of Options

1. Accept McRae’s proposal and let him continue to run their business as is.

Since McRae had previous experience running a successful company, he brought in a lot of
good experience into Iggy’s. His ideology being more growth oriented was well in sync with the
business wanting to expand and grow itself. However, with the team that he brought on - it
became evident that the product quality, linked with employee satisfaction, had started
suffering. There was a distinct difference in the way the new management team and the existing
employee base approached the business, which was causing a dilution of the existing company
culture.

2. Reject McRae’s proposal and find a replacement management team.

Rejecting McRae’s proposal would mean removing him and his team from the managerial
positions. However, to continue expansion and growth of Iggy’s Bread of the World – bring
aboard a replacement management team was necessary. This time, the Ivanovic’s could take in
account the professional credentials and experience of the candidates while hiring them in their
positions. Their approach to business and cultural fit should also be of the highest importance to
them.

3. Reject McRae’s proposal, scale down the business and regain control of the business.

Since Iggy’s was operating very well before they decided to expand their business, it would make
sense to roll back and continue to operate within select circles of customers. Since their primary
aim wasn’t toward monetary growth, it makes sense that they return to their original goal of
providing quality bread to their customers and a happy work place to their employees.

Recommendation

Reject McRae’s proposal and find a replacement management team.

Action Plan
The first step would include the Ivanovic’s asking McRae to step down from his position along
with his team, since their approach to the business wasn’t aligned with the core value of Iggy’s.
They should then an institute a formal hiring process to select the right candidates for these
managerial positions – while ensuring a professional experience and cultural fit with the
company. Meanwhile, they should elevate Nikola to the head of this management team since he
was involved with the company since its inception and understands its operation the best.

Contingency Plan

In case McRae refuses to step down, the owners should wield their power and ask him to replace
Diana Coleman with Nikola. They should look towards enhancing Nikola’s powers within the
management team thus keeping in check McRae’s influence in the organisation.