Specialty Medical Chemicals

While the Harvard Business School case study writers would have you believe that the main issue or problem facing Specialty Medical Chemicals has to do with personnel and tenure/compensation, I would argue that the main problem facing SMC is that they probably haven’t selected the right man for the CEO job.

What Specialty Medical Chemicals needs is to have a leader that can:

  • Keep “boosterism” to a minimum—meaning that leaders should strive to keep consultancy hiring as free from conflicts of interest as possible.  Hiring Laura, someone who is entrenched with the recruiter who has a vested interest in Carl staying with SMC, is not helping the company objectively evaluate the strengths and weaknesses of the company’s systems and personnel,
  • Reach beyond his/her comfort zone and make the hard decisions, and
  • Leave the narcissism at the door

 Based on the information presented and not presented, I believe the major problems that SMC faces are:

  • New CEO, Carl, wants to grow the organization but he doesn’t think he has the correct staff in the appropriate positions.  He wants to change the company’s systems completely, even though he thinks only certain areas are a problem
  • Carl’s relative youth (only 41) and lack of experience make him feel the need to prove himself and thus, this is I believe the real reason for the drastic change he is planning to implement
  • From a business perspective, the sales compensation system seems wrong.  Full commission sales force means that sales force will always gravitate to the low hanging fruit first, which means that the company may be missing out on significant amounts of growth opportunity
  • Since it has been four months and no meaningful changes have occurred, the blame game between sales and product development is in full court press and it is causing intra-group competition.
  •  And, because of this, people won’t think or voice their opinions on items outside their functional silos; they wont comment on things they aren’t experts on
  • The system of compensation doesn’t seem to be commensurate with contribution or effort; that said, it could just be that people’s ratings aren’t aligning with Carl’s personal feelings towards the individual players
  • Laura’s assessment does not appear to be objective as it was based on Carl’s impression…big time bias

 Other issues:

  • He is using a consultant basically to justify the changes he wants to make.  That’s probably why he used the recruiting company’s “gal” …they have a vested interest in his staying in his current position—he probably mentioned that during his “bait and switch” conversation before he brought Laura on board.
  • Carl seems to have a bias against the Admin department, which might be clouding his judgment
  • Carl says that he wants a team environment, but it sounds like he isn’t comfortable in making the big decisions
  • Carl seems to suffer from Narcissism
  • Everyone else has the problem—why should he participate in the evaluations
  • Doesn’t like Craig because he could be a threat, thus Carl sees him as slow, trying to dress young and not cognitive enough
  • Doesn’t think Michael Everett is doing a good job, but nothing concrete…biggest complaint is wishy washy but not at his job…
  • Carl is an extrovert and thinks everyone should be—thus Roberta isn’t doing a good job
  • Carl is blaming Roger for what seems like a systemic problem—sales force not focusing on new business.  He also doesn’t like him because he is a perceived threat…the board seems him as a successor to Carl—he and Roger are the same age and have a lot of the same qualifications
  • Carl doesn’t like the relationship that David Rice had with the former CEO—bad news for David

 Changes Needed:

  • If Carl is going to change the system into product silos, he will need to change the system of compensation for the sales force; particularly those in the biotech and generic departments
  • Carl needs to step up and just make decisions, the people are expecting him to make the decisions—no one is willing to stick their neck out until the changes have been made
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