Page 19 - DMGT520_ORGANIZATION_CHANGE_AND_DEVELOPMENT

Organization Change and Development

Notes
needed to apply modern management principles to keep up with its growth in size and
complexity.
The first step was to recruit a new executive vice president from competitor Mountain
View, Subodh Marwah, to lead the changes. Mr. Marwah quickly made numerous changes
to modernize the management systems and processes, including team based management,
numerous training programs for trainees at all levels, a new multirater evaluation system
in which managers were rated by peers and subordinates as well as their supervisors, and
the use of numerous consultants to provide advice. The company revised its old mission
to provide excellent products and services and to turn every customer into a friend. In
addition, the company created one new international venture and one new business each
year, resulting in solid businesses in UK, Japan and Germany. Mr. Marwah was elevated
to chief executive officer in 1993 and, continuing the modernization, hired seven new vice
presidents, including Ankit Verma as new vice president of human resource to oversee all
of the changes in the employee arena. The first two years, the changes seemed to be
working as the company added 100 million Rupees in revenue and posted record profits.
All was not as rosy as the profit picture seemed to show, however. In spite of the many
programs aimed at employee’s welfare, training, and teams, many employees complained
of always having to meet production and sales quotas. The new employee performance
evaluation system resulted in numerical ratings, which seemed to depersonalize
relationships. No matter how many pieces she monogrammed per day, one employee felt
that her work was never appreciated. Other employees complained of too many meetings
necessitated by the reorganization and the cross-functional teams. One team of catalog
artists, buyers, and copywriters needed numerous meetings each week to coordinate their
activities. A quality assurance manager complained that his workweek has increased
from forty hours to fifty-five hours and that the meetings were taking time away from
doing his real job. Many employees complained that they did not need to go to training
programs to learn how to take care of customers and communicate when they had been
doing that all along.
The doubts grew until late 1994, when the board, led by Mr. Das decided that the new
management was moving the company too far too fast and getting too far away from the
basic philosophies that made the company successful. On December 2, 1994, Mr. Das and
the Vice Chairman Nikhil Rao asked for Mr. Marwah’s resignation and fired Mr. Verma,
citing the need to return to basic and lack of confidence in the new direction of the company.

Mr. Das then chose thirty-four-years-old Vikash Sen as chief executive officer to guide the
return to basic. Mr. Sen, an eleven-year veteran of Sea Side (his entire working career),
immediately started the about-face by dismantling most of the teams, reorganizing the
others, and returning to the basics of the top quality classic clothes and excellent customer
service. Three other executives left the company shortly after Mr. Sen’s appointment.
Shortly after his takeover, however, paper prices doubled, postal rates increased, and
clothing demands dropped sharply. Third-quarter profits dropped by 60 percent. As the
year ended, overall profits were down to Rupees 30.6 million on barely Rs. I billion in
sales and Mr. Sen had to cancel one mailing to save money. Rather than cutting quality and
laying off people, Mr. Sen spent even more on increasing quality and employee benefits,
such as adoption assistance and mental health referrals. His philosophy was that customers
still demand quality products and that employees who feel squeezed by the company will
not provide good customer service. Early results were positive, with first-quarter profits
three times those of the year before.

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