The PGP Company Case Study

This case presents a very common situation that every person that joins a company faces, especially when he wants to modify already existing processes and/or the culture where he is suddenly immerse. In this case we can make evident common issues that arise easily regarding communication, change management and effective decision making in an organization.

The Facts
Mr. Ghosh has recently been hired as the VP of the purchasing department. He wants to centralize the company’s purchasing procedure which was otherwise decentralized and dependent on each of the executives who handled purchasing in the individual plants. Mr. Ghosh sends a letter to the executives trying to impose a new procedure on the amount of purchase that the plants can make on their own, stating that the executives should clear with the head office all purchase contracts which they made in excess of Rs. 1 lakh. His letter doesn’t have the desired effect because despite getting positive answers from the executives, none of them actually follow the procedure.

What went wrong?
In first place, sending a letter and not discussing the path to take regarding the purchases with the executives could have been taken as an affront. Sending a letter to communicate a reduction of “power” and a change in a process to people is clearly not the best way to act in this kind of situations. Mr. Ghosh should have met in person with each one of the executives of the plant to listen their points of view and discuss a strategy with them. Considering he was new to the company, and that any action that he take could be point of disagreement, he should have managed the situation with better communication. Additionally, in general, people is averse to change, especially when they consider the way they are doing things is the correct one. When introducing a new procedure, a change in the process, or in general, any change, the person in charge should do it in a way that enable the other people to embrace the change.

Any change in an organization is more likely to succeed when people is involved in the definition process, and also when they feel their voices are heard, making sure that the benefits are clear for everyone, that the communication is effective, and training is given to educate people or to update their skills to match the change. The executives might be given a different perspective about the benefits that this decision might have on the company overall. This might help the people recognize the need for this change and respect the decision made by Mr. Ghosh rather than turning their backs on him. In this case, we see that a simple change that could actually reduce the work load of the executives by removing the big purchases out of their tasks wasn’t well received because it wasn’t properly discussed with them and was imposed by the “new guy that doesn’t know how things work”.

What he should do now?
Now that the procedure for purchases was not followed, Mr. Ghosh should organize a formal meeting between the executives and him. The purpose of this meeting would be to discuss the issue that needs to be addressed, and come to a consensus about what is the problem the company has and what should be the best solution. Additionally he should mention that he expected a better response from them in the past, and he they didn’t agree they should have said something and not just ignore the request. Also, Mr. Ghosh and his assistant should make periodic visits to the plants to make sure that there is proper compliance with the measures and making sure to check if the change made is actually working for the plan as well as for the company.