Comprehensive Case Scenario/Human Resources Management
The Wilson Brothers Limited Case
In 1960, the Wilson Brothers, Bob and John, started Wilson Brothers Limited. This Canadian company manufactured and distributed various lines of prepared food products for the Canadian market from a number of plants, with the head office located in Brandon, Manitoba. Bob was just 23 years old at the time, and John was 21. In the first year of operations, the sales volume for Wilson Brothers Limited was $300,000. By 2000, Wilson Brothers Limited had six operating plants in Canada. They had also expanded to the western US market and had several plantsin Europe. Wilson Export Division was responsible for exporting product to Japan and China. In 2000, the total sales volume of the Company was over $6 billion. The company was a Canadian business success story, both at home and abroad. In addition to the spectacular volume increases, the company was very well managed financially. Ithad no reason to go public to raise capital as it financed all of its expansion through earnings.
There were several reasons for the Company’s exponential growth. First and foremost, the brothers valued hard work. They each worked ten to twelve hours per day, even in the latter stages of their careers. Consequently, their senior and middle management group worked similar hours. Secondly, each brother was a skilled salesman in the traditional sense. Their handshake was their bond. Thirdly, they had tremendous “cultural sensitivity.” Whenever they expanded to foreign markets, they recruited a local executive to be CEO at that location so that the local culture was respected and integrated to business practices (fostered). They assigned a Canadian executive to be VP Finance so that financial reporting was consistent across all Company operations.
The brothers were proud of the exponential growth of the Company and were particularly proud of their Canadian roots. This pride and work ethic permeated through the organization from top management to the line employees in the plants. The success of this Canadian organization attracted executive and management talent from across Canada.
Setting them apart from their competitors was the speed with which strategic decisions were made and the flexibility by which thesestrategies could be implemented. Strategic decisions were made only by the brothers.From the Vice Presidential level down,all operational choices made were in support of the implementation of the plans developed by the brothers. Employees from coast-to-coast were extremely proud that the Company could go from conception of a new product idea to launch of the product in the marketplace in a matter of weeks. Similar decisions made by their competitors could take months or even years.
The brothers controlled as many elements of the food supply business as they could. For example, theyensured that the plants always had an adequate supply of ingredients on hand for production. They also formed their own trucking firm, Able Distribution Limited, a wholly owned subsidiary of Wilson Brothers Limited. In this way, they were able to guarantee on-time deliveries to customers. More than 70% of the demand for the trucking firm came directly from food business deliveries, independently operated out of Truro, Nova Scotia.
Threats to the Business
Today, the Wilson brothers know that regardless of the success their company has enjoyed over the years and their attempts to control aspects of the business, it faces significant threats to profits on a daily basis.
General Canadian Economic Conditions
Over the last decade, the Canadian economy has seen a major deterioration in its manufacturing base which in turn has increased unemployment and depressed real wages. So even though inflation hasn”t been a huge factor in the equation, it has risen at a level greater than general wage increases. One could argue that this should have little impact on the food business as “food is food and everyone has to eat,” but consumers have become increasingly more price-and health-conscious. In terms of the percentage of overall family budget devoted to food acquisition, the average family spends less now than it did five years ago. The trend to shopping at big-box wholesale or discount stores such as Costco and Walmart, or the popularity of generic brands at Sobeys or Food Basics, impact the profitability of brand name products competing for the same market.
Significant competition exists in Canada from major companies with similar product lines. In the juice business, for example, Wilson Bros would compete with Coca-Cola through its Minute Maid Division. There are severalother American firms that have penetrated the Canadian market attempting to decrease Wilson Brothers Limited market share. Some of the US competition is dependent on the value of the Canadian dollar.
Competition has also stiffened overseas, particularly in Europe. Early on Wilson Bros was often first to market with their products in many European countries;but as the market matured, local companies saw the success of prepared foods, assessed the opportunity, and began to compete directly with Wilson products.
The Canadian market for food producers is split into two avenues: retail sales,selling the product through major grocery chain stores such as Sobeys; and food service sales, such as McDonald’s or Swiss Chalet. On the retail side, major grocery chains have developed their own “house-brands” to compete on price against Wilson Brothers products in many of their food lines. On the food service side, Wilson Brothers is only able to maintain the business primarily on “best price” so that over time, regardless of volume increases, profit margins tend to decrease.
In the early years, the Wilson Brothers products were extremely popular, solely based on the convenience of prepared food. Recently, however, consumers have becomemore discerning about purchasing convenience foods, paying closer attention to such health concerns as transfats, unsaturated fats, salt, and sugars. Wilson Brothersdessert sales in particular have suffered. In Quebec,the market has always been softer than other markets in Canada, and continues to deteriorate because of the preference for “home cooking”.
Able Distribution Limited (the wholly owned subsidiary of Wilson Brothers Limited) transports raw product to its plants for manufacture and inventory to its customers to market. However, the global cost increases in petroleum products have been significant; and because of the need to keep product priceslow, transportation cost is a major area of concern for the Company.
Wilson Brothers has been an attractive employment opportunity for Canadian executives, managers, and plant personnel because of its Canadian roots, culture, and success. However,the Company has had significant issues recruiting in Vancouver in recent years, since the cost of living in that region far exceeds real income.
Most of Wilson Brothers Canadian operations are non-unionized, and for competitive reasons the brothers tend to prefer it that way. They have always felt that any issues with an employee could and should be dealt with directly, on a one-to-one basis. The brothers believe they need to operate with flexibility in order to make quick strategic decisions, develop new product ideas,and take them to launch as quickly as they do. Labour agreements can add a level of structure and time-consuming protocol that creates a less flexible operational environment.
The Current Situation
You are brought in to the organization as Director of Human Resources for the Canadian operations. The Company has manager-level HR representation in each plant in Canada, but no one coordinates the overall effort. Your job, as described, is to develop and implement HR policies so that the company can apply them consistently throughout the Canadian organization. Subsequently,you will introduce policy to international operations,ensuring that where currently the company has non-union status, this status is maintained. In that capacity, you report to Ron Abrams, Vice President of Operations,Canada.You work from the corporate offices in Brandon.
You discoverseveral HR issues that need to be addressed. First, executives and managers are hired at starting salaries that have been set primarily based on their ability to negotiate their own salary rather than on any specific salary range criteria. No policies regarding Employment Equity or Pay Equity exist.
Second, the company hasno job description, nor any job evaluation processes in place. Performance appraisals are nonexistent below senior management, and even at that level, appraisals are informal and basedentirely on a Management ByObjectives(MBO) style of management.Bottom line results take precedence over everything else, regardless of the behaviours exhibited by the executives and managers to get those results.
Third, there are no bonusesin the organization except for the sales and marketing staff, and they are paid solely on sales target achievement and market share improvement.
Fourth, succession management has not been considered. Historically, if a brother determined a vacancy,hewould offer that position to an existing employee based only onan employee’s ability to implement a strategic objective. Often that judgment was based on a fleeting impression. Even the brothers themselves have no plan with respect to who will replace them should they retire.
Fifth, along with the pride of working for the company, there is also a pervasive fear. At the head office and plants in Brandon, for example, employees are very afraid of losing their jobs, as Wilson Brothers Limited is the one major employer in the area. Since there are no consistent policies on any employee relations issues,any employee at any level can be terminated at any time if he/she fell out of favour with the owners.
The sixth issue has to do with team meetings. The brothers attend two noteworthy team meetings. The first team, which includes the CEOs from all of the European and Asian subsidiaries, meets once every three months at the corporate office in Brandon. The purpose of this team meeting is to discuss and improve profit results. The brothers also meet once a month with a second team — the senior executive team in Canada,which includes the VP Sales-Retail, VP Sales-Food Service, Executive VP Marketing, VP Engineering, VP Finance and VP Operations. No other formal team meetings are held in the company. There are groups that meet on an ad-hoc basis to manage new product implementation; these employees come from Sales, Marketing, Finance and Operations.
As the newly appointed Director of Human Resources for Wilson Brothers Limited, you recognize that there is substantial work ahead. You know that while changes are required, you are very aware that the company has been a huge success. How will you help move the company forward? Bob, John, and the other members of the executive team will have projects and assignments for you to do in the near term. You will gain knowledge and experienceas you offer your leadership in the field of Human Resources Management. Good luck and have fun!
Wilson Brothers Limited Executive Team-Canada
Bob Wilson: Co-Owner-CEO
John Wilson: Co-Owner-President
Murray Brown: Executive MP Marketing
Ron Abrams: VP Operations
Dave English: VP Engineering
John French: VP Finance
Gayle Robillard: VP Sales Retail
Diane Ouellette: VP Sales Food Service
Canadian Plant Operations
Vancouver, British Columbia (220 employees)
Old Facility and Equipment
No Room to Expand as Plant right on the Shoreline
Only 1 Product Produced at Location
Union Operation-IBT (Teamsters)
Average Hourly Wage Rate $38.02
Total Benefit Rate $9.51
Total Compensation Rate $47.53 (hourly only)