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Norton Lilly International Implementing Transformational Change In The Shipping Industry Case Solution
The lack of attention to integration of new agencies and the problem with unrelated acquisitions was termed under problems with capital outlays. To solve this problem required a change in the company’s capital outlay policy. This policy required that all projects or investments be considered after necessary due diligence had been performed and proposals had been evaluated by the executive committee. All project or investment funding would only be granted if solid evidence had been presented demonstrating the projected financial value. For other non-project related expenditures, a system titled ‘Authorization for Expenditure’ (AFE) system was implemented to ensure that each business unit leader signed off on all capital expenditure requests and understood the impact that particular expenditure would have on KPI targets (Hill, 2005 pp. 285-290).
Following questions are answered in this case study solution
Strategic directions including policies, processes and systems implemented during major change in the company
Company Performance Management System
Different leadership approaches and how each of them contributes to the strategy implementation, and what leadership style was most suitable in successful alignment of rewards and building positive culture
Ways that the company managed the issues such as lack of concentration on operation, lack of integrating shipping new agencies, lack of attention to shopfloor level operations, and unrelated acquisitions
Case Analysis for Norton Lilly International Implementing Transformational Change In The Shipping Industry
1. Strategic directions including policies, processes and systems implemented during major change in the company
The first change in processes came from the formation of an executive committee which included the five business unit executives, the two owners, Win Thurber and John Rutherford, James Burton and the chief administrative officer, Sunner Adams. The aim of making an executive committee was to decentralize the decision making process, which was achieved by low involvement of the two owners in the committee’s meetings.
The first change in strategy after the formation of the executive committee was the introduction of process mapping. This would help in all the employees understanding the service delivery process so that deficiencies in the process could be improved upon.
Process mapping was first launched in the Liner group, which operated in eight different US offices, with no standardized processes and a fragmented mix of services across all facilities. With an uncoordinated service delivery system, the Liner group had many nonstandard processes and implications were severe, with most cases leading up to financial penalties. However, the implementation of the new system yielded better results with fines and penalties getting reduced from $325000 to a mere $28000 in only three years.
Another policy implemented by James Burton was the identification of operating level objectives for each process and labeling it as key performance indicators (KPI). This helped in clarifying accountability and by the end of 2007 responsibilities for achieving KPI goals were assigned to individual managers and supervisors.
Lastly, another system launched by James Burton, which accompanied KPI goals were a balanced scorecard to assess the performance of employees based on a number of variables which helped in assessing performances of employees in value creating roles better.
Furthermore, resource allocation policies, a focus on developing managerial talent, making more information available for decision making and changing the financial performance expectations and taking a new approach to forecasting financial performance were all the steps taken to make a major change in the company.
2. Company Performance Management System
The balanced scorecard, as a performance management system was rolled out along with the KPI rollout. The scorecard was meant to focus further on managerial level employees’ attention towards value creating processes. In order to have a holistic perspective, metrics such as process KPIs, customer satisfaction and financial performance were included in the balanced scorecard system. Customer satisfaction was not proactively gauged and not actively pursued before the implementation of the system, and as such was included to achieve better customer satisfaction rates (Reilly & Drzycimski, 2004 pp. 423-446).
The implementation of the balanced scorecard system was gradual, starting off with the development of a dashboard of performance indicators to provide a quick overview of operational and financial performance at the business unit level. These dashboard indicators were first established for the Liner division and contained a fairly basic level of KPIs.
The addition of KPIs to the process mapping system established earlier helped each business unit leader to understand cause-and-effect relationships between day-to-day activities and operating and financial performances (Lui, 2003 pp. 1841-1854).
By the end of 2007, the success of the balanced scorecard was resulted by the fact that the KPI status was being reviewed monthly at meetings between all the business unit leaders of Norton Lilly. After review, the business unit leaders would then sit down and propose corrective actions to resolve differences between what was expected and the actual performance levels.
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