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Executive Summary
Iggys Bread of the World, the bakery store established by the couple, Igor
and Ludmilla Ivanovic in 1994, as a small sized enterprise had grown
exponentially over the years. The success of the business was attributed
to the owners passion, hands-on approach and a genuine interest in the
employees well-being. Due to the growth in the business and inability to
take on new accounts, the couple decided to expand their operations. In
addition, they hired a professional, Matthew McRae as the COO (chief
operating officer) in order to ease their work. However, McRae assembled
his own management team and operational style, being very different
from that of Igor and Ludmilla led to the loss of the culture and workenvironment that was established by the couple over the years. In
addition, McRae had asked for a hike in his compensation. The Ivanovics
had to decide how to respond to McRaes proposal. Upon careful
deliberations of all options and evaluating the criteria of judgment it is
recommended that the Ivanovics reject McRaes proposal and hire a
culturally-fit person having similar capability as McRaes.
Table of Content
Sr. No.
Content
Page No.
1.
2.
Introduction
Problem Statement
Analysis of case facts and underlying
assumptions
Solution objective
Possible Solution Alternative
Solution Analysis
Recommendation
Action Plan
Contingency Plan
5
5
3.
4.
5.
6.
7.
8.
9.
6
6
6
7
8
8
8
Respons
ible
Introduction
Iggy's Bread of the World was a bakery opened by Igor and Ludmilla
Ivanovic in 1994 in Watertown, Boston, Massachusetts. Iggys Bread of the
World bakery concept was threefold: the quality of the bread, the work
and the employees and the community-they wanted to make a difference
by not treating the customers as numbers. The success of the venture was
solely based on word of mouth and the high quality of their bread. The
philosophy followed by Ivanovics for Iggy's was to include all the
employees in every aspect of the business and not restricting them to the
portion of their work by job rotation policy. Events like celebrating
employee's birthdays, soccer games, offering English classes were
organized to unite the employees.
Within a year, their business grew rapidly to such an extent that they were
functioning beyond capacity and were unable to take on any new
accounts. Igor and Ludmilla had to take critical decision of whether to
expand their business or not. Igor as a first step to expansion decided to
go for physical expansion in 1998 using loans .With the physical capacity
expanded and a new financial structure in place, they began looking for
someone to help them with the financial and administrative side of the
business.
So they decided to hire Mathew McRae first as a consultant and then as a
COO to help them run the company. McRae hired a new management
team without Ivanovics consultation. In addition, his working-style being
very different from that of the Ivanovics, led to a brewing of discontent
among the employees. Igor and Ludmilla were side-tracked in the
organizations decision-making when McRae hired Diane Coleman as VP,
Sales and Marketing. Subsequently, this led to a conflict between McRae
and the Ivanovics. After several mediations, McRae decided to tender his
resignation. Although he took back his resignation the next day, he
proposed for an increase in his compensation and including him in share
of profits. Ivanovics now have to take a call on how to respond to McRae's
demands and ensure a certain future of Iggy's.
Problem Statement
The Ivanovics were faced with the decision as to how they should respond
to McRaes proposal for a significant raise in his salary and bonus with a
view of setting the future course of strategy for Iggys.
Solution Objective
The solution objective is to increase the revenue, profit and growth of the
firm, improve the relations between Ivanovics and McRae, maintain the
culture and morale of the employees and maintain the image of the firm
on the customer mind.
Solution Analysis
Criteria Impact on
Alternatives
Accept McRaes
Proposal
Reject McRaes
proposal and take
control
Reject
McRaes
proposal and hire a
suitable replacement
Profit,
Revenues
and
Growth of
Firm
Relations
between
McRae and
Ivanovics
High
Culture and
Morale of
the
Employees
Firms
Image
Low
Low
Low
Low
Low
High
High
High
High
High
High
High
Low
Low
Low
Negotiate with
McRae & Settle
Recommendation
On the basis of foregoing analysis, it appears that option 3 i.e. rejecting
McRaes proposal and hiring a suitable replacement is a win-win situation
and is recommended. Ivanovics should also follow a formal way of
recruitment for the future potential candidates and they should consider a
person who is more of a culture fit as their initial growth was attributed to
their employee connect culture.
Action Plan
The Ivanovics should follow the following sequence of steps:
1 In consultation with the board, reject McRaes proposal. This would
also set a good precedent for the future.
2 They should search for a suitable replacement. A suitable
replacement for the firm would be someone who has the same
cultural values and considers the employees welfare as important.
In addition, the replacement should also have an eye out for the
Contingency Plan
1 In future Ivanovics should be more involved with the
management.
2 They could also think of training their future management hires
on the basis of culture, quality and customers success pillars of
Iggys.
3 They should also groom potential leader for the future succession
planning.