Growing Pains. Flamholtz Eric G.

deeper insight into the kinds of problems he was facing at Medco. He did a search for books that would help, and obtained a copy of an earlier edition of Growing Pains. After reading the book, he initiated action to help his company overcome the problems associated with growth. Specifically, he began a program of organizational development for Medco. The four specific steps in the program were as follows:

      STEP I: Conduct an organizational assessment.

      STEP II: Formulate an organizational development plan.

      STEP III: Implement the organizational development plan.

      STEP IV: Monitor progress.

Step I: Conduct an Organizational Assessment

      An organizational assessment was performed to evaluate Medco's current state of development and future needs. The assessment involved collecting information from employees about their perceptions of Medco and its operations. One tool used in this process was the Growing Pains Survey©, which will be presented and described in Chapter 5. This survey measures the extent to which an organization is experiencing the 10 classic symptoms of growing pains.

      At Medco, the scores on this survey ranged from 30 to 34, with an average score of 32. As explained further in Chapter 5, this indicated that the company was experiencing some “very significant problems,” which required immediate attention. Specifically, the assessment revealed that the company needed to:

      • Better define organizational roles and responsibilities and linkages between roles.

      • Help employees plan and budget their time.

      • Develop a long-range business plan and a system for monitoring it.

      • Increase the number of qualified present and potential managers.

      • Identify the direction the company should take in the future.

      • Reduce employee and departmental feelings that they always “needed to do it themselves” if a job was to get done correctly.

      • Make meetings more efficient by developing written agendas and taking and distributing meeting minutes.

      • Become profit oriented rather than strictly sales oriented.

Steps II–IV: Formulate and Implement an Organizational Development Plan and Monitor Progress

      Having identified its organizational problems and developmental needs, Medco proceeded to the next step: designing and implementing a program that would resolve problems and help the company develop the infrastructure necessary to accommodate its rapid growth. Management met at a retreat to design a plan for the firm. The plan included specific action steps to overcome its problems.

      Some of these steps were (1) acquisition of human resources and development of operational systems needed to support current operations and continued growth; (2) implementation of a strategic plan that clearly defined where the company was going, and how it was going to get there; (3) implementation of performance management systems to motivate people to achieve the company's goals; (4) design of a management and leadership development program to help people become better managers and overcome the “doer syndrome”; (5) development of a system to explicitly manage the corporate culture. In addition, Bob began to focus on making some important changes in his own role, behavior, and attitudes.

       Acquisition of Resources and Development of Operational Systems . As the company grew, so did its need for greater skills and sophistication in certain functional areas. A controller was recruited to replace the firm's bookkeeper. A national sales manager was appointed. Medco also hired a personnel director and a marketing manager. Moreover, Medco engaged a consultant to serve as its adjunct management and organizational development adviser. In brief, the firm made a significant investment in its human resources. These people, in turn, were responsible for developing the day-to-day operational systems required to manage growth in various areas.

       Implementing Strategic Planning . One of the first steps Medco took to manage its growth was to develop a strategic plan and begin implementing a formal strategic planning process. The major goal of this process was to motivate the company's managers to begin to take a longer-range view than “what's happening after lunch.” A related goal was to affect the corporate culture at Medco and make planning a way of life.

      The process began with a two-day strategic planning retreat that focused on some fundamental issues necessary to guide the future development of the company, including:

      1. What business is Medco in?

      2. What are our competitive strengths and limitations?

      3. Do we have a market niche?

      4. What do we want to become in the long term?

      5. What are the key factors responsible for our past success, and to what extent will they contribute to our future success?

      6. What should our objectives and goals be for developing Medco as an organization?

      7. What should our action plans be, and who is responsible for each action plan?

      In addition to these generic strategic planning issues, which are relevant to all organizations, the company also examined certain company-specific strategic issues.

      After the strategic planning retreat, a draft of a corporate strategic plan was prepared. This plan clearly identified the business that the company was in, its long-term goals, and its competitive strategy. The plan also included specific, measurable, time-dated, short-term goals – with each goal being assigned to a specific member of the senior leadership team. The plan was circulated among the firm's senior managers for their comments and input. It was revised and approved by Bob, and then distributed to all senior managers. The plan provided a “blueprint” for future development, including specific goals focused upon eliminating the problems leading to the company's growing pains.

      Medco then held quarterly meetings to review the company's results, compare them with the plan, and make required adjustments. This signaled that the plan was more than merely a “paper plan” – it was a real management tool.

      A key decision made by management during this retreat was to be more selective in accepting new business until the firm had digested its present growth by building the required infrastructure.

       Performance Management Systems . Medco developed and implemented a more formal performance management system. A first step in this process was to develop a measurement system for tracking progress against each goal in the firm's strategic plan. These measurements were developed as part of an organizational development team meeting in which all of Medco's senior management participated. Once the measurements had been decided upon, the next step was for Medco to revise its information system so that the data required could be obtained. Some of the data came directly from the firm's accounting information system. For example, information about sales, gross margins, and net profitability came from this source. Other information had to be obtained separately. The firm's management team felt that one of the vital aspects of the business concerned the percentage of merchandise that was being shipped to dealers as opposed to end users. This information began to be monitored on a regular basis.

       Management and Leadership Development . Bob and Medco's other senior managers realized that people were Medco's true asset. The firm's technology, products, and equipment were really not proprietary; the true differentiating factor was the motivation and skills of its people.

      Recognizing this, Medco believed the company had to make an investment in building its management and leadership capabilities for two reasons. First, there simply was not a sufficient number of effective managers. Although many people had managerial titles and could recite the right buzzwords, relatively few were really behaving as managers. They were spending too much time as doers rather than managers. There was little true delegation, and insufficient effort was given to planning, organizing people, performance appraisal, and team training. Another need for management development was more symbolic. Bob recognized that some of the people who had helped build Medco to its current size were in jeopardy of becoming victims of the Peter