Rainbarrel Corp.

Rainbarrel Products, a diversified consumer durables manufacturer, was coming off of a couple unproductive quarters due to a slowdown in consumer spending. Hiram Phillips was brought on as a CFO and chief administrative officer to reverse the fortunes of the company. Hiram stepped in and implemented a new corporate budgeting and performance management strategy that appeared successful by the numbers but had several consequences.

Hiram came into a highly unorganized situation that was full of uncertainty. "Look, none of us fights very hard at budget time, because after three or four months, nobody looks at the budget anyway" (Kerr, 4). Rainbarrel's executives had no idea of the corporate budget and spending but they still went forward in funding and developing new products. The company spent freely and without any concern which was a concern for Hiram.

Hiram was an individual that was concerned strictly with numbers and thus wanted to rectify the budget of the company. Hiram immediately wanted to reduce the labor costs and thus offered a buyout package for the bottom quartile of performers throughout the company. When that was not successful he "imposed an across the board headcount reduction of 10% on all the units." Although overhead costs were reduced who was going to account for the work to be handled bye these dismissed workers? A company is similar to a totem pole. If the bottom is taken away the entire structure will be compromised. If a company is to downsize it must be sure that all tasks can be accomplished with the reduced labor force and this is one thing Hiram did not make sure would occur.

Hiram was in charge of a company that produced consumer goods but he did not survey customer satisfaction. An example of this was the shipping of orders to customers. "Nothing was counted as shipped till it leaves the company property" (5). However, there was no system of tracking deliveries when they left the company premises. This left one their biggest customers, Billy Brenton, very upset. In a conference call, Mr. Brenton said he was "told last Tuesday an order had been shipped, and come to find out, the stuff was sitting on a railroad siding across the street from your plant" (7). This illustrated the lack of follow up with consumers once products left the company premises.

A feeling of uneasiness also existed among the employees of Rainbarrel after Hiram instilled his policy of monitoring new company targets. Those employees who did not reach the targets would have their names placed on a "Wall of Shame." This was more a form of degradation than encouragement for employees. The company should have a nurturing atmosphere where it would help those departments and individuals which were not meeting new targets goals.

Hiram took over with the idea of implementing a plan that yielded immediate results. In doing this, he just cut overhead costs and cut corners on his way to achieve his goals. His employees began to take this same attitude. One of Rainbarrel's employees avoided opening and responding to emails in order to avoid the problem at hand. In a sense, Hiram did the same by avoiding to fix the problems facing the company.

Despite the adversity present at Rainbarrel, Hiram Phillips is dedicated to turning around the fortunes of the company. The first step he should have taken was to set goals and a strategy for Rainbarrel. What would be the company's focus? What consumer group were they targeting? Goals are necessary to define the roles of workers within the company and this was a step that was not taken.

Furthermore, a lack of strategy and well defined goals has led to uncertainty among workers. Hiram is a high level executive but he does not understand the problems facing the company on its lower levels. Looking at the article Seven Practices of Successful Organizations, Hiram can apply these techniques to improve the fortunes of Rainbarrel. Hiram should reduce status differences in the company and interact with all members of his staff to understand what is occurring in each department. If he sits down with his call center staff that deals with consumers he can understand the concerns and complaints of consumers. Thus he can implement measures to rectify these problems.