Please write a report on the conclusion and followup to the attached case study on Sanderson Soaps
Case Study: Productivity at Sanderson Soaps
Sanderson Soaps is a small, family-owned and family-operated company based in Portland, Maine. The company was founded in 1978 by Emily Sanderson and her husband, James, in the early years of their marriage, with Emily as the chief executive and James as the vice president of product development. Together, they combined Emily’s love of fragrance and knowledge of the cosmetics industry with James’s degrees and experience in organic chemistry. Armed with a small business license, two patents, and big dreams, these company founders quickly developed a corporate philosophy and overarching mission, a few custom personal care products, and goals for the success of their new venture. For more than 35 years, Sanderson Soaps has experienced steady growth and modest success, with very few changes in operational philosophy or structure. As the business grew, employees were added, with family members receiving top priority in the hiring process. As with many small, family-operated businesses, positions were often created whenever a relative expressed an interest in working for the family business. With over $3 million in gross sales last year and more than 30 employees, Sanderson Soaps is on the verge of becoming a much larger enterprise, with a loyal customer base and tremendous potential. The company currently supplies more than 200 retailers in New England with high-quality soaps, shampoos, and other beauty products, with 24 individual products in six product lines. Their signature classic floral scents are Rose and Lilac, and they also specialize in various coastal-themed products designed to appeal to both male and female lovers of the New England shoreline. The Sandersons have long wanted to expand into other markets and eventually have a nationwide presence but have lacked the knowledge and resources necessary for such expansion. In addition, the company experienced issues with productivity last quarter and was barely able to fill orders. The founding couple also wants to develop a succession plan, as they are nearing retirement age and have begun to experience health issues. They realize this will require a thorough review of their staff and structure, as well as the identification and resolution of issues stemming from the organization’s family-oriented operational philosophy. While Sanderson Soaps does not have a large cash reserve, there is sufficient room in the budget to acquire expertise and make necessary adjustments for the long-term success of the company. There is also room for the company to acquire debt for the purposes of expansion, as Sanderson Soaps currently has no long-term debt from facilities or equipment. Of their 32 employees, Sanderson Soaps employs 18 family members, including the 4 Sanderson children and 5 grandchildren, as well as several spouses, cousins, and other relatives. The company’s vice president of marketing and sales is Emily Sanderson’s youngest sister, Margaret. There are four divisions at Sanderson Soaps: product development and production, marketing and sales, distribution, and accounting.
Chief Executive Office
Emily Sanderson (61) is both a cofounder of the organization as well as its chief executive officer (CEO). For many years, she served as both the mother of four young children and as the company’s one-stop-shop officer, handling marketing, sales, accounting, human resources, and all other operational responsibilities until the company’s growth enabled her to hire additional employees to help with some of these tasks. Known to be a fair but strong-willed leader, Emily has a soft spot for family. Other than her husband and her sister, she would not appoint any other executives to lead divisions until her children became ready to fill those roles. She tends to make excuses for the failings of her loved ones, but she has tried to develop them to meet the company’s needs and to provide them with secure employment. Recently diagnosed as being in the early stages of Parkinson’s disease, Emily is eager to identify a successor and begin transitioning the business before her symptoms worsen. Throughout all the years she has worked closely with her family, she has tried very hard not to show favoritism or to clearly pinpoint a successor. While she believes that was in the best interest of the company as a whole to this point, she knows she now has a very difficult decision to make. Emily employs one executive assistant in her office, her niece Allison (31). Allison is Margaret’s daughter. Allison provides clerical support to the entire organization and serves as the backup receptionist. She has been working in Emily’s office since she graduated from college, and is very familiar with the organization and its operations at all levels. Her leadership style is much the same as Emily’s, but she is not as blind to the flaws of family and realizes that some changes are needed to move the organization forward.
Product Development and Production
James Sanderson (62) is both a cofounder of the organization as well as its vice president of product development and production. (The “and production” part of the title was added in 1983, when the company hired Margaret as well as several more employees and needed to clarify organizational structure.) An organic chemist with a nose for fragrance, he is adept at turning his wife’s ideas and suggestions into quality lotions, soaps, shampoos, and other products. There are six employees in James’s division: two who work with him in developing and testing new products and four who work to produce existing product lines. His eldest daughter, Janet (37), is considered his “right arm” in excuses for the failings of her loved ones, but she has tried to develop them to meet the company’s needs and to provide them with secure employment. Recently diagnosed as being in the early stages of Parkinson’s disease, Emily is eager to identify a successor and begin transitioning the business before her symptoms worsen. Throughout all the years she has worked closely with her family, she has tried very hard not to show favoritism or to clearly pinpoint a successor. While she believes that was in the best interest of the company as a whole to this point, she knows she now has a very difficult decision to make. Emily employs one executive assistant in her office, her niece Allison (31). Allison is Margaret’s daughter. Allison provides clerical support to the entire organization and serves as the backup receptionist. She has been working in Emily’s office since she graduated from college, and is very familiar with the organization and its operations at all levels. Her leadership style is much the same as Emily’s, but she is not as blind to the flaws of family and realizes that some changes are needed to move the organization forward.
Product Development and Production
James Sanderson (62) is both a cofounder of the organization as well as its vice president of product development and production. (The “and production” part of the title was added in 1983, when the company hired Margaret as well as several more employees and needed to clarify organizational structure.) An organic chemist with a nose for fragrance, he is adept at turning his wife’s ideas and suggestions into quality lotions, soaps, shampoos, and other products. There are six employees in James’s division: two who work with him in developing and testing new products and four who work to produce existing product lines. His eldest daughter, Janet (37), is considered his “right arm” in developing new products. A brilliant mind with a degree in organic chemistry, Janet loves working with her father, and together they make a very strong team. Her younger sister, Amy (30), and Amy’s husband, Sanjay (34), work in production along with two non-family members. Sanjay also has a degree in organic chemistry, but his ideas differ greatly from those of Janet and James. Not only does he resent being the only non-white employee at Sanderson Soaps, but he is a fierce animal activist and disagrees with some of the research practices employed within the new product lab. Arguments erupt regularly, creating a difficult environment for all seven employees in this division. Amy often serves as the mediator in these disagreements but dreads confrontation with Janet and tends to agree with her husband and his views on animal cruelty. Although her family is unaware, she is the one who let the rabbits out of their cages when she was in high school, creating a major setback in production in the late 1990s. The atmosphere of this division is tense. Absenteeism and turnover are fairly common in the production area, creating an additional workload for others. Janet has been torn between her father’s views and Sanjay’s vocal opposition to company policies and procedures, but she does not know how to deal with the situation. Everyone recognizes Sanjay’s value to the company, but Janet knows her father would never agree to the changes Sanjay would want to make. Concerned about Emily’s medical condition as well as how much the weather in Maine has begun to bother him as he ages, James is also interested in moving forward with the development of plans to turn operations over to others. Although he wonders what will happen to the company and wants to make sure the credibility of the Sanderson Soaps brand remains strong, he has never enjoyed the business side of the organization. He ignores Sanjay and Amy, and leaves most decisions to Emily and Janet. James prefers to be in his lab, developing and testing new products.
Marketing and Sales
Margaret Bennett (57) is vice president of marketing and sales at Sanderson Soaps. As Emily’s sister and senior employee, she has often been seen as the most likely successor as CEO. Emily and James readily admit that the company never would have grown to its current level of success without Margaret’s expertise and ability. A master at developing and building business relationships, Margaret manages client relations herself throughout six states (Maine, New Hampshire, Vermont, Massachusetts, Connecticut, and Rhode Island), traveling frequently to maintain those relationships and create new ones. She knows she is considered as the most likely successor to her sister, and she welcomes the opportunity. However, Margaret is easily influenced and worries that she may not be strong enough to maintain the current direction and operational philosophy of the company against those with very strong opinions, such as Sanjay. Regardless, she has been training her great-nephew, Scott (20), in sales and marketing and has taken him with her on several trips, but she wants Scott to go to college for a degree in marketing before she is willing to relinquish much responsibility to him. He is not happy with this and has become extremely vocal about his desire to assume more territory and handle client relationships on his own. Margaret has come to rely on him so much that she hates the thought of losing him to higher education for several years, anyway, but cannot help but think that the company would be better served by someone with advanced marketing knowledge. Margaret also has one other employee, a non-family member—Rachel (28), who helps with advertising and serves as the organization’s receptionist. Rachel does have a degree in marketing but lacks Scott’s charm and savvy in building relationships. She has a particular knack for advertising, though, with an eye for what appeals to the market, as well as great research skills. A recent analysis by Rachel revealed that 78% of Sanderson Soaps’ market is female, between the ages of 24 and 70. The largest percentage of those (65%), are between the ages of 45 and 65 and have been loyal customers for many years. Also, sales demographics and a client distribution analysis showed that although 70% of Sanderson Soaps’ client-base resides in Maine and another 20% resides in Vermont, two states over. This was unexpected, since the majority of Sanderson Soaps’ product lines are coastal themed.
John Sanderson (38) is the Sandersons’ eldest son and is the vice president of distribution. Having worked for his parents since he was old enough to be helpful, he believes he knows everything about the business. John feels his success as a future CEO of the company is secure, even if Margaret takes the reins for a few years first. He likes that his wife and all three of their children work for the company, and he has hopes that Scott will take Margaret’s place someday as the vice president of marketing and sales. He enjoys his current role, although he does not like dealing with personnel issues. He employs ten staff members (six in packaging and four in transportation). Of the six who package products, two are Janet’s twin sons, Ed and Andy (18), and one is a cousin. Of the four in transportation, one is a cousin and one is his uncle Dave (James’s brother). All ten of the employees who report to John say he is difficult to work for, but John tells them they are just slackers and that is why he is tough on them. He frequently complains to his mother that they are all lazy and the reason production is falling behind. He has caught the twins sleeping on the job twice; they contend this is because their uncle John has them working 12hour shifts with no breaks. Every time John lashes out at them for being lazy, they tamper with his food in the lunchroom, hoping he will get sick and leave for the day, since he never seems to do any work anyway. Uncle Dave doesn’t stop them, because he feels John is out of line. He has witnessed how hard the twins work, and he knows that John complains about him too, even though he works countless hours scheduling transportation routes, driving trucks, and serving as the company’s mechanic on their three delivery trucks. Dave does damage control behind the scenes, attempting to improve morale. He’s the only thing that keeps the others from walking out, but because he is not the boss, there is only so much he can do. It’s not enough to motivate them to be more productive. They hate John and his bullying attitude.
Anthony Sanderson (33) is the company’s chief financial officer (CFO) and has always been considered the most level-headed and responsible of the Sanderson sons. His role encompasses all billing, bookkeeping, purchasing, mailroom, housekeeping, and human resources (HR) functions. Anthony has a staff of eight. This includes two in HR (one is John’s daughter), three in billing (one is John’s other daughter and another is John’s wife), and three who handle purchasing, mailroom, and housekeeping services. Only three are non-family members, but all eight of these employees enjoy working together and for Anthony. He has cross-trained them all to cover for one another, and all are willing to pitch in and do whatever needs to be done, because they do not want to disappoint Anthony or his parents. John’s wife, who handled many of Anthony’s responsibilities before he became CFO, is much happier now with Anthony in charge. Anthony has no aspirations to become the company’s CEO; he knows John well enough not to even think he has a shot at that. However, he loves his parents’ company and is extremely loyal to Sanderson Soaps. Anthony enjoys what he does, takes pride in his staff and the work they do, and is always looking for ways to improve. He also encourages his staff to come up with new ideas, and whenever one of those ideas is related to another area, he passes it on in executive staff meetings. The other vice presidents give those ideas due consideration and readily accept those that are feasible; however, Anthony has learned not to give credit to John’s wife or daughters in those meetings, because John becomes angry with them for “overstepping their bounds”; John believes everyone should stick to their own areas of responsibility. The two brothers have had many heated arguments over the years related to John’s leadership style and treatment of the women in his household. Not wanting to cause more trouble for John’s wife and daughters at home, Anthony looks for other ways to make sure their ideas are heard and does his best to let them know how much they are appreciated by the company. Anthony has also noticed high absenteeism and turnover in both John’s area and on the production side of his father’s area, especially amongst non-family member employees. This is a frequent topic of discussion amongst employees in the company’s common areas. With Emily’s encouragement, Anthony has been working with his sister Janet and his aunt Margaret to develop an incentive program to encourage more ideas and increase productivity but has not yet figured out how to deal with John on this project. He has been considering working with his uncle Dave for the distribution areas but knows that would also cause problems and is not the right solution.