Marilyn Carlson Nelson and the Carlson Companies Renaissance Case Solution

1. Carlson Companies Overview

The Carlson group started off in 1937 by Curtis L. Carlson when he started a Gold Bond Stamp Company with his wife. The company saw incredible growth over the years facilitated by Carlsons’ vision, salesmanship and management style. By the 1960’s as the trade stamp company matured Carlson expanded into other operations such as hotels, restaurants, travel, and marketing-incentive programs. Radisson Hotel, Ask Mr. Foster and T.G.I.F are a few names that this skilled and successful entrepreneur acquired and further expanded. Carlson preferred franchising or taking management contracts over other modes when it came to expansion and business growth.

Carlson’s daughter Marilyn Nelson joined the organization in 1988 as a full-time employee and over her time has worked extensively on revamping the organizational culture that was viewed as an organization that does not care about people. Having created an employee friendly culture, Nelson was now stormed with several issues pertinent to the downfall of the economy that implied outsourcing certain operations such as non-strategic IT and Finance jobs, however, this implied laying off 525 workers.

2. Critical Issues

The outsourcing of the non-strategic IT and Finance jobs was a major source of concern and a critical issue for Nelson. The company culture was aimed at fostering improved relations with employees and outsourcing was a threat to the “employee family” and Carlson. The initial issue for the organization was Curt Carlson’s command-and-control management style that was de-motivating for many executives and employee turnover was high. The divisions began to restructure under the vibrant leadership of Nelson, but there were still some issues looming at Carlsons.

The travel and leisure industry in which Carlson had high stakes was vulnerable to geopolitical shocks. These had a drastic impact on the operations, costs and revenues for the conglomerate. As the data in the exhibits reflects the September 2001 terrorist attacks put a dent on the company’s revenues. At the forefront, instead of these developments, was Nelsons’ battle to manage costs and invest in human capital that was an essential for the organization.

3. Affected Stakeholders

Given the issues that are impacting the organization, the primary stakeholders that will be affected by these would be the employees. Outsourcing the non-strategic divisions of IT and Finance would result in 525 employees at Carlson's losing their jobs. Nelson had worked rigorously to develop a culture that fosters human capital growth. The culture that she had spent so much time creating was going to be questioned if this decision went through. It would have a negative impact on employee confidence in the company and their overall morale, both that had been delicately built over a long period.

Although employees will be the most affected in this case, the organization would also be affected both positively and negatively. Apart from being able to cut down on costs and divert efforts towards other critical and strategic functions, the organization would also be impacted negatively regarding its image and reputation.

4. Alternatives

Given the current scenario, Nelson has a limited choice regarding what decision would be feasible. Either way, there would be a trade-off between organizational and employee benefits. Whereas outsourcing would be better for the organization, it would have a negative impact on employees. Conversely, retaining these functions would imply Carlson would have to continue bearing additional costs and would be unable to compete effectively in the industry.

Alternative 1 - Outsourcing

The first alternative for Carlsons is to outsource the divisions. There are certain pros and cons associated with this alternative:

• Pros – Through outsourcing, Carlson would be able to cut operating and labor costs, be able to divert management time towards critical functions, increase operational efficiency, optimize resource allocation and increase the speed and quality of delivery.