UNIVERSITY OF MASACHUSETTS LOWELL

The Manning School of Business

(66.601.202) Managing Organizational Change

Case Study Analysis

Team Collapse at Richard, Wood, Hulme, LLP

Instructor: Prof. Diane Vacarra

Group members: Hui Kou, Nhi Pham, Weile Zhang

Executive Summary

As a result of ineffective management system, poor team structure design and job

security concerns, Spector audit team had found difficult in maintaining the team morale and

individual commitment. The auditing is being fallen behind the schedule. Three main

solutions are going to be presented to solve the problems. Our recommended solution to the

problem is giving team members better rewards which will solve all major problems related

to the current situation of the team, helping to build new collaboration culture, and foster the

efficiency and effectiveness of the team. In order to complete the work on time with this

solution, we also suggest an implementation to Richard, Wood, Hulme, LLP (RWH) to get

the team back on track.

Fall, 2014

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Situation Analysis

RWH is a mid-sized professional service firm offering clients audit and taxation

service. RWH’s mission is to deliver superior client service and improve client’s internal

control. To support that, efficient teamwork is very essential in this company. Efficiency and

continuity in teamwork is a way for the company to retain its clients and make profit. Due to

team-oriented culture, RWH terminated employees who had poor teamwork behaviors. Every

audit engagements had fixed deadlines. In addition, RWH pays much attention on continuous

improvement of employees: they collect feedback frequently and appraise performance

appraisals annually in order to determine employee’s salary and bonus. Spector is an

important client since some of board of directors is prominent Canadians, and RWH

dedicated to strengthening the relationship with Spector.

In 2007, the Spector audit team had collaborated successfully. The senior associate,

Jody Ellis, was responsible for planning the engagement and assigning tasks and interim

deadlines for each individual to team members. The team worked very well together, very

member felt being supported by colleagues, had willingness to assist each other and was

committed to the deadline. The high-level cooperation within team made them successfully

meet the deadline.

However, during the fall of 2008, the looming recession in Canada, the collapse of the

credit market and housing bubble in the United States had a huge effect on Spector, which

increased the scope of the team’s work. RWH had to cut down the operating cost immensely.

Consequently, the working conditions are limited. Staffs cannot be offered extravagant perks.

RWH cannot maintain a profitable business as before because it is hard to obtain new clients,

many current clients went bankrupt and others fought to reduce audit fees. Within the

organization, the number of idle staffs is increasing. The Spector audit team in 2008 does not

do well even though they have same members as that in 2007. Ellis was unable to plan the

engagement due to a six-week paid study leave and her upcoming examination. A new

employee, Watson, was assigned to planning the engagement, and left the company without

finishing the planning. One of the factors for the team’s success in 2007 was the client’s

dedication. Nevertheless, the audit team did not receive any information from Spector until

the third day of the 2008 audit. On the second week, the client revised some forecasted

financial information, which forced Michaels to restart his work from scratch. Goodman also

noticed the supporting documents given by clients are not good prepared, and asked them to

re-do the schedules, which also making the task more complex and time consume.

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Due to the failure in the chartered accounting qualification exam, two important

members, Jody Ellis and Kira Dee who have good reputation and respected, were fired

although they did a good job. That staff elimination makes other staffs worry their job future

and raise the dilemma that what if they also fail the test although they work very hard and do

a good job. In the team, some people worked overload at client site while others worked at

home and nobody know what they were actually doing.

Problem Diagnosis

First of all, the problems from business environmental changes happened in 2008.

There are sharp changes in 2008 including the recession in Canada, and North American

financial crisis affect the Spector that is highly dependent on construction loans to manage

cash flows. The clients began putting more pressure on RWH to reduce the auditing fees.

Plus, RWH has to cut the operation cost. Hence it is hard to maintain great working

conditions for the employees. Also it is not easy for employees to complete the job perfectly

while the deadline is extremely intense in conjunction with the task is getting more complex,

Along with the problems from unfavorable business environmental conditions, there are

many leadership and management issues occurring within the team. It is seen clearly that the

management level of the team has low participation on the teamwork. Team leaders did not

make a good plan and give feedback. In 2008, Ellis was unable to plan the engagement not

only since she had to use six weeks away work to prepare her last examination. And this plan

is playing a crucial role in the following audit works. The plan was completed a few days

beforehand. It might cause confusion in terms of deadline and assigned tasks since people did

not have time to review their task carefully. Simultaneously both she and her teammates are

doing other jobs for other companies. Some teammates are not only working in one team, but

also working in other teams; the intensive working schedule makes employees not to have

enough time to complete every task perfectly. Jay M.J. and Myra H.S. (2003) stated that

organization profit when executives seek feedback and are able to deal well with criticism. It

means that in order to make any organization or team do a good job, team leaders should give

and get the feedback. Here, we can see in Spector team, team leaders did not give much

feedback frequently about the quality of each member’s work. Therefore, the quality of the

task is not guaranteed and kept track. The other leadership problem is Michael lost his control

of the low moral staff and could not finish tasks in time, due to Ellis and Dee is fired as they

failed in the chartered accounting qualification exam, leading to the great concern of job

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security within the team. In order to maintain the position in the company, they would prefer

to prepare their exams than do the job task even in the work time.

Likewise another primary cause is poor team structure. Since the co – op students

required a high level of coaching and support from senior associates to complete their work,

these add an unnecessary layer to the team structure and consume more working time of

senior ones. Moreover, there are many idle staffs while some others have to work 15 hours

per day, causing to the unfairness among staffs.

The team also faces communication problem. They did not spend much time to work

together like before. The face-to-face communication is lessened significantly although RWH

has team based driven culture. Due to lack of communication, team members do not trust

each other. Some people work at home, and they cannot cooperate with others. Other

colleagues question the work of others. Animosity grew between them. Members worried

about job security, so that they are more willing to study instead of work. All of these

problems that happen in 2008 result the lack of communication among RWH team workers.

Base on the situation analysis, we can interpret the rooted causes of the main problems

existing in Spector team are changes in business environment, low participation of

management level, poor team structure and lack of communication.

Alternative Solutions

Solution 1: Give team member better rewards

The first solution for the team is giving more monetary and nonmonetary rewards to

motivate existing team members. It is the mixture of applying instant rewards, assigning two

senior associates on the team to do planning. Employees are easily motivated, by receiving

small gestures or rewards for their positive accomplishments of both individual and team.

One way of doing so could be instant reward if an individual and team complete the job

before the deadline three days. Also, team members who work overtime would be received

more compensation.

Pros:

It would not require a great deal of time to make it work promptly.

It can increase the employees self esteem and make him/her feel better about their job

or position. Therefore, this results to an improvement in their work rate.

The plan making would not depend on only one person.

Cons:

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It adds cost to operation expenses which RWH is trying to cut down.

It might cause unfairness between the team memers and also with other teams within

RWH if the team leader and the founder could not build and apply a well – defined

implemention plan.

Michaels will need to work very closely with his team on defining those measureable

criteria in order to prevent confusion. Employee needs to understand clearly the details of

their goals, the benefit on achieving them and how to get there.

Solution 2: Restructuring the team

Another approach is that restructuring the team by adding more junior and senior

associates to the existing team and removing the co-op students to other teams. As mentioned

above, there is a great deal of imbalance and confusion of the workload and assigned tasks.

This change aims at boosting the effectiveness and efficiency of the auditing.

Pros:

It can solve the issue of having idle staffs. It would not add more costs to expense.

The workload might be eased since the tasks can be assigned to more people.

With the help of new junior and senior associates who have auditing experience, the

process could be fostered.

Cons:

It might take more time for additional team members to learn and understand fully

Spector’s business.

It may run into the risk of having resistance from inside the team. It faces the

challenge of getting support from senior managers. Additionally, this change requires an

absolute support and alignment between the current and new team members, which is hard to

guarantee.

Other teams’ work would not be likely willing to accept new members, co – op

students since it might affect the task assignment of those teams.

Solution 3: Multi- approaches

A mixture of discussion and review sessions for reflection and looking at strategic

plans, whilst requiring participants to work more closely together in the office. Also, team

members could improve their interpersonal skills includes the ability to discuss issues openly

with other team members, be honest, trustworthy, supportive and show respect and

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commitment to the team and to its individuals. Simultaneously, RWH assigns two more

senior managers to replace the vacant positions in the team.

Pros:

This solution would not increase more cost for the company.

The number of team member would be the same as the team in 2007. Therefore, the

task assigned to each team member would not be changed. In other words, there is no change

in task assignment.

It supports the friendly and team oriented culture of the whole company. Everyone

has more chance to have face to face conversation, share and reduce the animosity between

employee when it comes to time of asking for help or support from each other.

Cons:

It may affect the current work of the senior associates who are newly assigned to join

the team.

It would face the resist from senior managers.

The new senior associates do not have customer-based knowledge about Spector’s

business. It takes more time and effort for them to learn all the financial information of

Spector and adapt themselves with new team.

Recommended Solution

Solution 1: Giving better monetary and nonmonetary rewards

Elements of collaboration and competition coexist within any management team:

executives share a stake in the company's performance, yet their personal ambitions may

make them rivals for power (Kathleen, Jean, Bourgeois, 1997). In other words, the

collaboration and competition can be used to maximize working capacity. In the case of

Spector team, the better would improve collaboration and competition among team members

since it is not only based on individuals’ performance, but also team’s achievement. If any

member who has the best performance could receive more incentives, each member would be

more compete to achieve the best result. On the other hand, the compensation is also based on

the whole team’s performance, every member in the team would be more likely to collaborate

to enhance the team performance. It also might foster a caring work environment which has

not being seen in the team lately. Collaborating working atmosphere is built from

individual’s effort to work effectively with other team members; open communication and

positive feedback - actively listening to the concerns and needs of team members and valuing

their contribution and expressing this helps to create an effective work environment. Team

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members should be willing to give and receive constructive criticism and provide authentic

feedback. Another point is that this change is able to eliminate the unfairness between the

team members. As article “Fair process: managing in knowledge economy” (Kim &

Mauborgne, 2003), suggests, it is not always the outcome people are looking for but the

process. Hence, this approach would foster the progress of the whole team throughout the

process in order to achieve the ultimate goals. As a result, the time to finish the job would be

lessened significantly.

Implementation Steps

The management should clearly inform the reason why the new reward method

should be implemented. What the criteria are? What each individual should do to receive the

best assessment? Also, give everyone the opportunity to ask questions about the new method.

This method would have everyone understand what and why the new method should be

implemented and be benefit for them.

At the beginning of the plan, tell them the purpose and the goal of this activity and

also ask the members’ opinion about what they think about the new rewarding. From this

activity, everyone would feel that they are part of the very beginning and suggest in which

courses they feel interested.

The management level should support the culture of teamwork among the members.

Promote the important reason and incentive via company system such as intranet or mobile

phones in order to make employees realize the necessity of closely collaboration and

incentive they will receive. This action will encourage each member to follow the new

rewarding method with fully understanding and willingly work with others.

The new rewarding should be implemented not only for team members, but also for

the entire of the company. In doing this, all employees will feel equally fair.

In the long run, the management should create explicit career path. If employees

focus on only this segment, what they will develop and receive in the future, including salary

based. After that, inform their employees all alternatives they can choose to be. Making

obvious career path and incentive will relive the employees’ concern. Also, they can decide

their future easily what they like to be in the future by themselves.

References

Eisendhardt, Kathleen M., Jean L. Kahwajy, and L. J. Bourgeois, III. "How Management

Teams Can Have a Good Fight." Harvard Business Review. (1997): 77-85

Kim, W. C., & Mauborgne, R. “Fair Process”. Harvard Business Review. (2003): 1-12.

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Goold, M. & Blenko, C.A. “Do You Have a Well-designed Organization”. Harvard Business

Review. (March 2002): 1-11.

Jay M.J. & Myra H.S. “Fear of Feedback”. Harvard Business Review. (March 2003). 8

Rogers, P. & Blenko, M. “Who Has the “D””. Harvard Business Review. (2006)

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