Leading Culture Change at Seagram JRL Consulting Cross-Cultural

Managing Organizational Change: Leading Culture Change at Seagram

JRL Consulting Cross-Cultural Technology Management E-Mail : [email protected] Website : www.jrleeconsulting.com

1(a) What were Seagram’s biggest challenges?

The Seagram Company, founded in 1924 as a distillery in Canada, had been very successful in the past 70 years with premier products and strong presences in the North America and Europe. With the diversifications of businesses to other non-core business in late 1980s and the social culture shifting as well as the new government regulations in the early 1990s had contributed to the downturn conditions of the Seagram Company. To right the situation, Bronfman (CEO) and the Seagram executives had made the strategic move to (1) expanded its spirits business into China and other Asian countries (2) acquired the global fruit juice business from Dole Food Company (3) redeemed 156 million of its DuPont Shares for $8.8 billion (4) Purchased 80% of entertainment company MCA Inc. With these business transformations, the only way to succeed is to revise and redefine the culture that defined the brand of Seagram. To prospect in this business, Seagram needed to be the best managed company with the growth rate of 15%. This new business model (global expansion, reengineering, and diversification) calls for new disciplines of “teamwork”, “innovation” and “customer focus”. These new “Seagram Values” are clearly different from the existing ones like “individualism”, “entrepreneurship”, “authority”, “functional pride”, and “personal relationship.” The biggest challenges for the Seagram’s executives were to ensure that the new culture would be implemented and sustained. The following questions outlined specific challenges needed to be addressed. (1) How would people be rewarded for values-based behavior? (2) How would the evaluation process be conducted? (3) Who should be trained in values? (4) How would values be institutionalized into everyday behavior?

1 (b) Why have they chosen the values initiative?

To achieve the business growth rate of 15%, Seagram needed a major reengineering effort for the whole company from redesign Business Structure, streamline Business Process, implement Management Information System to Marketing and Manufacturing. These reengineering efforts required a clean break from its old culture that is the barrier to progress. These old processes would only change if behavior changed and to change behavior required a new set of underlying values. The most effective way to revise the behavior is to explicitly outline the values needed. The values in this case had been viewed as the missing link.

1 (c) Why are companies today introducing and/or paying more attention to corporate values when dealing with change?

The corporate values influenced how employee behavior in organizational environments. Clearly, organizations need to communicate their values to followers. It is imperative for organizational leaders also abide to these corporate values, since these shared core values are what bind the organization together, especially during these rapid and unpredictable times. These corporate values can also be evaluated. In Seagram case, the values are introduced and evaluated through three different channels (1) A personalized communication cascade system (2) a 360 degree feedback process for the senior executives (3) a training program. These corporate values can be enforced, thus an effective strategy to handle for corporate transformation.

2. How well has Seagram instituted this culture change process to date?

No new information can be found for Seagram since it was “Defunct” in 2000. The Seagram company was acquired by the Vivendi Group and Pernod Ricard. From the book “The Organization in Crisis” by Ronald J. Burke, and Cary Cooper, the Seagram had successfully instituted the culture change into the company. It had created a new genetic code, new business strategy, the stock price is up. Other quantifiable measures such as customer satisfaction surveys, training workshop evaluations were ranked very high. The book concluded the transformation successful up to 1999, a four year’s evaluation.

3. If you were one of Seagram’s executives, how would you respond to each of the five following challenges? What are the dilemmas and possible actions for each? a. “What should be done with the various recommendations for action raised by participants in the programs?”

There is a need to create a “recommendation” acceptance process. Each individual employee can submit recommendations concerning the Seagram’s Values through different channels (1) drop box (2) direct communications with HR (3) open communication with upper management through appointment. A value recommendation evaluation team with sponsors from corporate executive team should be formed to evaluate and address these recommendations. These recommendations will also be published in internal journal or newspapers. This

process provides a way to monitor the success of Seagram’s Values, puts in place a mechanism for hearing recommendations, and sustains momentum by encouraging continuous employee input into the program. b. “Are We Going to Punish the Values Violators?” c. “How Will We Recognize and Reward the Values Champions?” There should be a mechanism to link performance bonuses and employee’s behavior with “living” the new values. The executives, managers, and employees should be all subject to similar evaluations based on modified 360 degree feedback as an evaluative tool. These evaluations should be semi-annual. Employees (managers and executives) that earn low scores will be given feedback from their immediate manager as to why they received a low score and will be offered ways (coaching or training) to improve. The people who received high score will receive reward (bonus, cash, or vacation time). This mechanism can be used as a tool to enforce “Values” for “living the corporate value” by rewarding values champions while punishing the values violators.

d. “What Should Be Done with the New Employees (15,000) Who have Been Acquired from MCA/Universal?”

The new employees should be subject to the same corporate values, while these values could be revised to reflect the local needs for the different industry (entertainment business). e.” How Do We Sustain the Momentum and Attention on Values?” and “What Should Be Done to Institutionalize the Values Deeper and Wider Across Seagram?” A refresher process is needed to sustain and transform the values. One is adopted the concept of using computer network to keep track of process, a website for employee to record customer’s needs as well as personal achievement through these corporate value. A web “Voice of Customer” program will be able to achieve this need. The other is to retrain the employee, the train should be viewed as a continuous process that can be served a vehicle to sustain the momentum and the attention on values. The combination of these two suggestions should help institute the value deeper and wider across Seagram.

4. What else could they have done to drive culture change other than the use of explicit corporate values?

The McKinsey 7-S Model is a framework that can be used to analyze organizations and their effectiveness. Based on this framework, 7 different elements (Strategy, Structure, Systems, Skills, Staff, Style, and Shared values as shown in figure 1) needed to be rightly implemented for a successful transformation of a company. The shared value can also be viewed as a company’s culture that interlinked with the other 6 elements. To influence corporate culture changes, many other techniques can be used: (1) Restructure the company (STRUCTURE) and adjust the staff (STAFF) with proper skills (SKILLS) – lay off people that do not fit the projected new cultural structure, and employ new “fit” employees with right skill sets. (2) New strategy (STRATEGY) with new business systems (SYSTEMS)– use tool to reshape work force and enforce the new culture (total quality management system (TQM), 6 sigma lean system). The tool would modify employees’ behaviors toward a culture of quality-oriented business environment. (3) Lead by examples (STYLE) - with unique style and vision of leadership (STYLE), Edgar Bronfman maybe able to use his influence for the company’s culture change as Steve Jobs for Apple Inc. These proposed methods can be used to help drive culture change, but the use of explicit corporate values is the most direct and effective. These methods could be conformed to a common shared values (corporate culture) once these explicit values initiative dissolve into normal business behavior of employees.

Figure 1 McKinsey 7S model. 5. What techniques are the most effective in implementing a change initiative like this one? Justify your answer.

6. How feasible and important is it for a multi-national company to have one set of values worldwide?

7. Should people exhibiting the right behaviors culturally (i.e. the new values) receive extra rewards or not?

8. Should people who exhibit the “wrong” behaviors be penalized in any way and if so, how?