Hammermill Case Analysis

Purpose: The purpose of this memo is to explore the issues facing Hammermill Paper Company as the company seeks to communicate a new planning process to its five, relatively autonomous, operating divisions.

Summary of Changes In an effort to improve the flow of planning information between Hammermill Paper’s corporate division and the operational divisions, a new planning procedure has been designed. This new procedure is to be a flexible, two-way process. The hope for the new planning and communication system is to erase the limitations associated with the isolation of functional areas of our conglomeration from one another and, in-turn, to leverage corporate synergies.

In years past, planning has been done year to year with budgeting authority in the hands of corporate personnel. Yet these same individuals are only minimally involved in the planning process. To improve this scenario, some changes need to be made. Most important of which are: · New formalized 10 step process for planning the budget · Moving to at least a 3-year fiscal plan · Issue definition and goal setting by corporate personnel, including individualized goals for ROA, growth and cash flows · Requiring department heads to report to a Vice President or “responsible officer” from corporate Successfully communicating this message will require management to overcome barriers inherent to change. The message will be met with resistance because it requires employees to abandon habits and to fit new activities into their schedules. Furthermore, these efforts must not be required of them without sufficient reward and without the necessary resources and support to follow through with the changeover.

Key Communicators and Audiences The President and CEO of Hammermill Paper Company is the primary source for communication as well as the spokesperson for the upcoming changes. There are several reasons for choosing the CEO as the main communicator of change within a company. To begin with, the CEO possesses both the authority and credibility needed to institute change. Of all the top-level executives, the CEO should have the broadest vision for the company and its future. Also, when change is introduced by the CEO, both the corporate and operations mangers know to expect extensive executive support of the transition as well as potential consequences that could result from resisting the change.

The responsible corporate officers and the operations managers constitute the primary audience in this case. This will be a top-down change, in which the message flows from the CEO down to the corporate officers and then to the operations officers until it reaches each employee at all of Hammermill’s plants. Despite the fact that plant employees do not directly participate in the planning process, they must be aware of reasons why the change must take place and of how it will affect the company overall. So that they can be integrated into the revisions of the new process and can provide feedback and information to managers and planners, operation level employees must embody the need for change. Groups such as clients, suppliers, competitors, the media and the public at large make up the external audiences. These groups must also be informed that they, as well as the entire organization, will be affected as a result of the change.

The Message At this point in the process, corporate personnel and the responsible corporate officers, which represent functional areas of the company, are already convinced of the need for change and have bought into the new process. It is now the task to effectively communicate this change to the operations managers and the operational level employees within the company. In doing so, it is of utmost necessity that the audience and the values associated with blue-collar workers and entrepreneurial spirits are first considered. A memo briefing employees on the subject will precede both the meeting with managers and the actual forum in which the message is delivered. The message intended to be communicated follows the top down approach to change with the message being carried from CEO to executive officers to operations managers and operations personnel.

· Establish a sense of urgency o The need for long term budgeting is a necessity if plants are to remain competitive. A failure to do so will likely result in a loss of profitability to the company, which, in turn, will result in a loss of jobs in the long run.

· Guiding Coalition: Responsible Corporate officers and operations managers are to work in conjunction and are to be in continual communication in order to perpetually improve the process.

· Vision o Understanding and applying the new guidelines will steer the company toward unparalleled success with which comes a more profitable future and job security.

· Empowerment and Recognition o Those units, which most accurately demonstrate the new competencies, will be rewarded and recognized for their efforts. Useful feedback and ideas will also be rewarded and encouraged.

· Institutionalization: o The process is in a continual state of improvement, innovation, and revision. Without the input of management and employees alike, the venture will fail.