Homework: Change Management Program
Case Study: Wildwear Clothing Company faces Covid-19
This case study is fictional, designed exclusively for Change Management 643, summer 2020 semester, ©University Canada West. While the story is fictional, facts related to Covid-19 are sources from various news media and industry reports.
Part I: Setting the scene
The company: Wildwear Clothing Company Ltd.
Company description:
Wildewear Clothing Company (WCC) is a small company in Vancouver that manufactures sportswear such as outdoor clothing (coats, jackets, sweaters, pants, shirts, hats, scarves, socks) both for walk-in customers at three Vancouver stores and for Costco, Superstore, and London Drugs in Vancouver. So far it does not do on-line sales.
WCC has been in operation since 1981 and consistently makes a profit while charging about 10% higher for its clothing products. This is because while there are many competing clothing stores in the Greater Vancouver area, there is very few that make made-in-Vancouver clothing. The target customer for WCC is middle to higher-income adults above 25 years of age.
Although WCC is a private company is does have three major shareholders. The first shareholder is the president of the company, Madam Jasmine Galor, who owns 52% of the shares. The second shareholder is Ms. Melanie Waters, with 24% of the shares, and the third is Hamid Horizon who also own 24% of the company. All three live in the Vancouver area.
The company relies on getting its raw products including rolls of wool, cotton, and satin from China as well as zippers, buttons, pins, and other smaller assembly needs from China. WCC buys its manufacturing equipment such as industrial cutting and sewing machines from factories in Quebec, Canada.
WCC has 15 non-union sales employees at three retail outlets in the Greater Vancouver area (5 at each store) plus 3 store managers (1 at each store). The sales staff includes 11 women between the age of 19 and 22. Three are married, and one female employee is the single mother of a young child (Grade 3). None of the male staff are married or have children. All work 40 hours a week at the stores. The sales staff is paid $16 an hour which is above the BC minimum wage of $14.60 an hour. All staff is included in a medical and dental plan. The managers are paid $19.50 an hour. While one store (the most profitable, has a woman manager, the other two have male managers). The length of sales staff employment in the three stores ranges from six month to three years.
The stores' hours are Monday to Friday 9:30 Am to 9:00 PM, Saturday from 10 AM to 6 PM, and Sunday from noon until 5 PM.
The company also has 12 manufacturing staff at its clothing factory in Burnaby BC., all are women. Their average age is 28. There is a great deal of diversity in the production employees with the first language being Punjabi for eight employees and Mandarin for the other four. The workers do a variety of jobs from pattern cutting to assembly and packaging. They work eight hours a day, Monday to Friday, 8:00 AM to 4:30 PM. The average length of employment in the factory is six years.
There is also one production manager at the factory, a French Canadian male who is 60 years- old and has been with the company since it opened. The factory makes clothes for all three WCC stores as well as for the large department stores and drug store customers. While production employees make $18.00 an hour the supervisor makes $20.75 an hour.
In addition, and located upstairs at the factory, WCC has a small administration staff. This includes one full-time accountant, one part-time human resources consultant, a clothing design consultant, and a consulting company that provides marketing, and external communications and public relations for WWC on a contract basis.
The culture:
The culture of WCC since its inception in 1981 has been focused on demonstrating the values of its three owners. Those values are honesty, integrity, professionalism, compassion, and respect. The company rewards employees who do an exceptional job with bonuses, rewards, and recognitions such as Employee of the Month. Employees in the manufacturing plant are encouraged to learn about the latest developments in the industry and can have certain training programs paid for. Each year WCC conducts an anonymous employee survey asking about job satisfaction and morale, the effectiveness of internal communications and conflict management, and what innovations the company can make.
The structure:
WCC has a very flat organizational structure. The major shareholder and owner of the company, Madam Galor, is also the president. The production manager, the three store managers, the accountant, the part-time HR professional, the clothing design contractor, and the consulting company contact all report to her.
Once a month Madam Galor meets with the "senior management team" comprised of the two other shareholders, the accountant, the part-time HR consultant, the production manager, and the three store managers to discuss company business including finance and administration.
Once a year, Madam Galor holds a planning session. Besides herself she includes the two shareholders, the accountant, the part-time Human Resources expert, the production manager, the three store managers, the consulting company doing marketing, and occasionally guest experts on various matters. This session produces a strategic plan with goals, objectives, and measures of success.
The systems:
Communication with all employees is on an as-needed basis. However employees are encouraged to ask questions about the company's customer base, its profitability, their training needs, and to offer suggestions either in person to their immediate supervisor or through an email. All production employees are strongly encouraged to immediately notify their manager if there is a problem with product quality or problems with the production process. Workplace responsibilities are very clear and each manager has a very strong mandate to ensure all employees are held accountable for their actions in a fair, clear, and immediate manner. The company has a very clear and well communicated policy against workplace harassment of all types and respect for diversity and gender.
The workplace climate:
In annual surveys, 72% of all employees at the factory agree that they have high job satisfaction (they like what they do) and 55% agree they have high morale (feeling respected and well treated). As well: 61% agree they are empowered to make decisions on their own; 78% have high pride in their work quality; 45% agree their wages are fair; and 79% feel they are profiting from the friendships they have made as well as profiting from both the training they can access and their daily experience with a unique clothing manufacturer.
The survey results for the WCC store sales staff are different. 51% of all sales staff agreed they have high job satisfaction and 35% agree they have high morale. As well, 58% agree they are empowered to make decisions on their own; 65% have high pride in their work; 48% agree their wages are fair; and 72% feel they are profiting from the friendships they have made as well as profiting from both the training they can access and their daily experience with a unique clothing manufacturer.
The actions:
The key actions of the company include designing, manufacturing, and selling high quality outdoor clothing under the brand name Wildwear. Each action lives up to the core values of the company resulting in deadlines being met, plus customers and client-stores being exceptionally satisfied with the product and service.
Part II: And then came Covid-19
WCC was continuing to enjoy profitable sales in early March 2020 and was expecting quarterly sales to be 12% higher than the first quarter of 2019. The morale of employees was high according to a short survey by the company in January 2020.
In the monthly senior management committee meeting on March 30, 2020 the matter of Covid-19 was only briefly discussed by the WCC senior management team. The three store managers reported that sales were still strong as expected for the time of year. The production manager suggested that Covid-19 contingency plans should be considered. Madam Galor stated, "Well, let's just keep an eye on it."
Meanwhile the following was occurring (from news and business journal sources)
1) On January 7, 2020, when it appeared that there was a health crisis emerging in Wuhan, Dr. Theresa Tam, Chief Public Health Officer of Canada, was quoted advising Canadians: "There has been no evidence to date that this illness, whatever it's caused by, is spread easily from person to person; no health care workers caring for the patients have become ill; a positive sign.
2) On January 25, the first identified presumptive case in Canada was a male in his 50s who travelled between Wuhan and Guangzhou before returning to Toronto on January 22. Canada issued a travel advisory against non-essential travel to China due to the outbreak, including a regional travel advisory to avoid all travel to the province of Hubei. Federal health officials stated that the risk in Canada was low.
3) On January 26, Tam stated "There is no clear evidence that this virus is spread easily from person to person. The risk to Canadians remains low."[12] Final testing conducted at the National Microbiology Laboratory in Winnipeg, Manitoba confirmed the presumptive case on January 27.[13] On January 27, Canada confirmed its first case. On January 29, Dr. Theresa Tam told Canadians that "It's going to be rare (COVID-19), but we are expecting cases."
4) On January 30, the WHO declared the coronavirus was a "public health emergency of international concern"
5) On March 11, the World Health Organization declared the existence of a global pandemic.
6) On March 16, Trudeau announced that new entry restrictions would be implemented shortly after midnight ET on March 18, restricting entry into the country to Canadian citizens and permanent residents and their immediate families.
7) On March 19, a report in the Vancouver Sun newspaper stated that almost 90 per cent of B.C. small businesses are already reporting some hit in lost sales, cancelled contracts or layoffs due to the COVID-19 response, according to a new B.C. Chamber of Commerce survey.
8) On March 24, members of parliament met in order to discuss Bill C-13, the COVID-19 Emergency Response Act. To maintain social distancing in the face of the highly contagious respiratory illness
9) On March 27, The BC Business Council, a group representing most businesses in BC, issued an ALERT to all members and the news media. It stated, "The economic impact of the COVID-19 virus is difficult to estimate because the situation is rapidly changing and because shuttering large segments of the economy is unprecedented. It is even more difficult to gauge the implications for the global economy with the virus now spreading rapidly across Europe and the U.S. and it is unclear how long lockdowns will last.
10) On April 15, Canada's Prime Minister Justin Trudeau warned against premature reopening of the economy, stating that "in order to get to that point, we need to continue doing what we are doing now for many more weeks"
11) On April 15, CTV News reported that "A survey of 10,969 Canadian small businesses from the Canadian Federation of Independent Business, released Wednesday, indicates about 22 per cent of small businesses have had their revenue drop to $0 during the pandemic, while only half are confident their business will survive to the end of May under the current conditions.
WCC considers its options
An emergency WCC executive meeting was called for April 30 by Madam Galor. This time her three store managers reported a drop in walk-in sales by 43% in just over just 30 days. The production manager reported that the large department store customers had in the past two weeks suddenly reduced orders by 24%. The company was now, in fact, losing money when costs were compared to net income. The communications consultant reported that trends for the pandemic were not looking good but "it was hard to predict the future."
The company accountant offered various financial projections stating that if the company kept operating at current cost-levels a short-term pandemic impact of three months would not only show declining profits but also start eating away into the company's financial reserves. A longer-term impact of six months or more would threat the viability of the company unless cost-cutting and other measures were taken immediately. Certain facts were tabled by the accountant:
1) In the three retail stores labor costs (salaries and benefits) accounted for 32% of all annual company costs.
2) In the factory, labor costs (wages and benefits) accounted for 25% of all annual company costs.
3) Consulting costs including Human Resources, accounting, and communications and marketing added up to about 12% of all costs.
4) While the company owned the factory building it had to pay increasing rent costs at the three stores, it had to buy raw products to make its clothing items, plus it has to pay for a variety of operating costs ranging from electricity, equipment maintenance, and transportation/travel.
WCC makes a hopefully life-saving decision
April 30 Following the presentation by the accountant the WCC executive met for an additional nine hours exploring its options and coming up with a strategic survival plan. Here is what the executive decided.
• The most profitable retail store in the neighborhood of Kitsilano would remain open. The other two stores, one in New Westminster and the other in Burnaby, would close on May 5, 2020.
• Those five retail sales employees with the most seniority would be offered the job in the Kitsilano store. The remaining 10 retail clerks would be issued a temporary layoff notice indicating they would be invited to return to work once the stores re-opened. The employees would be encouraged to apply for federal government financial support.
• The managers at the two closed stores would also be laid off and encouraged to apply for government financial help. They too would be told that would be invited back to work when the stores re-opened.
• Upon analysis of the numbers it was confirmed that the factory had maintained a 3- month surplus supply of product. Due to the uncertainty of the pandemic the factory operations would now continue to operate only two days a week while management would continually monitor demand/supply data. This would mean factory employees would now be paid for two days work a week not five, and even this situation was under review. They too could also apply for government financial assistance.
• The above actions would be monitored weekly and revisions made as required.
More bad news in the media
o On August 6, The Vancouver Sun reported that "More than 14,000 B.C. businesses closed during the first two months of the COVID-19 pandemic, new Statistics Canada figures show."
WCC is quickly sinking
On May 16 another WCC emergency executive meeting was called by the president. Again an update was provided by the remaining store manager, by the production manager, and by the accountant. Many questions were asked by the two other partners to Madam Galor, this time all dealing with the pandemic affects. Here is what was learned:
o The last remaining open store in Kitsilano is having 78% fewer customers despite the store taking all safety measures including mandatory disinfecting of hand and wearing of masks by all customers and staff, and all staff wearing gloves. On some days there are no customers at all.
o The factory is operating for only two days a week but still its production levels are far exceeding demand from all customers.
o The company is losing significant revenues on a weekly basis.
o If WCC continues even in its current scaled-down condition for another two months it faces the prospect of requiring bankruptcy protection.
o Remaining employees at the factory and at the one store still open have low morale. One employee in sales at the open store has been home sick now for three days but says it is not Covid-19 related.
o The communications consultant reported that many small and even large business were closing throughout British Columbia and throughout the world.
The Executive Team considered its options, hearing from the accountant, the store manager, the production manager, and all in attendance. After much discussion the following Survival Strategy was agreed upon.
• WCC would within 48 hours immediately cease all operations and sales ("Let's stop the bleeding before we die" said the president).
• All remaining employees would be laid off with the message that when stores re-open they will be offered their jobs back. In the meantime they could seek government financial assistance.
• The part-time HR employee would be laid off. There was no longer a need for the communications and marketing consulting company.
On September 9, the journal Business in Vancouver reported that "About 8,000 Greater Vancouver businesses and 149,000 jobs were lost between February and April due to the COVID-19 pandemic, according to Statistics Canada numbers cited by the Greater Vancouver Board of Trade (GVBOT). Many more layoffs and permanent businesses closures can be expected, when temporary government support programs wind down and taxes that had been deferred come due at the end of this month, unless the B.C. government extends those programs, say various business associations.
Wildewear Clothing Corporation: QUESTIONS
• Which external environmental factors are impacting Wildwear Clothing Company the most in 2020? How are they interconnected?
• Did WCC effectively monitor the external factors through ongoing environmental scanning? Explain the impact of that action.
• What internal environmental factors are impacting Wildwear Clothing Company in 2020? How are they interconnected?
• In reviewing the facts of the company, where do you see possible workplace conflicts occurring even before reaction to Covid-19?
• How could those earlier points of conflict impact a successful response to the pandemic?
• In the company's Survival Strategy what key action or actions are missing? Why do you think that is?
• As an MBA consultant advising WCC in its Survival Strategy what are you recommending? Include in this recommendation a demonstration of your critical thinking, knowledge of the change models and the knowledge you have gained throughout the entire semester.
• WCC needs a communication plan for the FINAL actions it took (May 16). In drafting such a plan answer the following:
o What is the key message?
o Why is it a key message?
o Who are the target audiences?
o What are the three human factors that communication can change? AND how are they relevant to WCC communications, AND which is the hardest of the three to change?
o How will you measure if your communication is successful?
Format your homework according to the give formatting requirements:
• The answer must be using Times New Roman font (size 12), double spaced, typed, with one-inch margins on all sides.
• The response also includes a cover page containing the student's name, the title of the homework, the course title, and the date. The cover page is not included in the required page length.
• Also include a reference page. The references and Citations should follow APA format. The reference page is not included in the required page length.