Johannes Linden: Managing the global executive committee

Group 9

Case Analysis Johannes Linden: Managing the Global Executive Committee (Leadership)
PGDM Ex.2013-14

Group 9: Sheshank Kumar (1303-041) Shubha Mishra (1303-042) Somyashree Khare (1303-043) Sougata Sarkar (1303-044) Sumati Arora (1303-045)
1 Institute of management technology, Ghaziabad

Johannes Linden: Managing the global executive committee

Group 9

EXECUTIVE SUMMARY
Fluss AG, the Swiss parent company of FWD (Fluss Washer and Dryer Division), having 51,000 employees was established in 1947. Fluss specialized in design and manufacture of large households Appliances and also expanded its business across the globe. FWD division was divided initially into three geographic regions: Asia, Europe and the America. After becoming Director of FWD in 2004, Johannes Linden restructured the geographic regions from three to six ( i.e. South America, North America, Europe & North Africa, China & South East Asia, Japan-Korea & Australia and India & Indonesia) to get all aligned with the strategic division for FWD. After implementing the new regional structure, Linden created the Global Executive Committee (GEC), which consisted of his corporate staff and six regional directors, to make strategic and major investment decisions and to provide necessary support and expertise to Regional Directors to execute divisional strategy. Outside the GEC meetings, Linden also kept close contacts with the RDs and participated actively in the discussions and developments of the annual business plans for the most country managers. Due to lower material cost in 2011, Linden faced a challenge whether or not to change targets of sales for each country to reflect new price(lowerprice) as GEC members were not very supportive with the new targets for their regions.

Q 1- How effective has Linden been in leading the GEC?

Johannes Linden created the Global executive committee (GEC), which consisted of his corporate staff and the six regional directors (RD) with him at the top of hierarchy. The best practice to handle global team it to stay connected and meet the team frequently and address issues as soon as u can. So, Linden agreed with GEC to meet three times a year in Basel to focus on operational matters and important initiatives, and once a year at a regional headquarter to discuss on long term strategy. He always reminded the corporate staff that they are directly reporting to him and should support the team rather dictate on them. In the first two years from September 2006, when GEC was formed, RDs were not too sure how to work in this hierarchy but by early 2008, they were more comfortable working through problems together. RDs believe that Linden was always looking for consensus among the team but after all discussion he tries to convince team with his own idea, so few RDs call him smooth dictator. RD from South America commented If only I could argue with him in Spanish maybe Id win more often. Though he was dictator at times but he was friendly to team as well, at one Basel meeting, he stole the show by daring members of the GEC to play drums with him. This type of relationship among RDs builds up more confidence and friendship among the members of the team. Effective strategy requires communicating with people about the strategic goals and Linden was very good at that. For all sensitive matter, he was meeting team one by one to look and resolve problem more smoothly. On the latest GEC meeting held on February, 2011 he proved that he is not dictator and rather a team player and require team consensus for the decision, as he said You dont have to sell your teams on a change and agreed not to change the bonus strategy.

Institute of management technology, Ghaziabad

Johannes Linden: Managing the global executive committee

Group 9

It can be concluded that Linden was a good global leader and was handling GEC with consensus and confidence.

Q 2- What was Lindstrom's purpose in establishing the GEC, and to what extent has this purpose been fulfilled by the members of the GEC?
In response to changing global trends and growth of emerging economies FWD was restructured in 200 , the number of FWDs went up from 3 to 6. Johannes Linden, DirectorFWD, created GEC (Global Executive Council) with the intention of establishing a forum for making strategic and major investment decisions. The GEC consisted of Linden's corporate staff and 6 Regional Directors (RDs). Purpose in establishing GEC: Country managers were concerned with growth and targets in local/national context. The RDs were there to think on a regional level when deciding upon: developing/planning business strategies, directing resources, overseeing future contracts, co-ordinating advertising/marketing, searching efficiencies/opportunities across region, risk assessment, and monitoring distribution networks. In broader sense, the RDs existed to think from a macro aspect. The GEC was supposed to be good at 'change management'. Also, it wasn't enough to be prepared to respond to global changes but also keep an eye on local preferences. RDs were to keep a tab on revenue and market share as well. Competition was getting tougher and profit margins kept getting slimmer. In this highly competitive scenario it was of utmost importance that newer growth opportunities were spotted and worked upon promptly. RDs were needed to be a step ahead of competitors. It was expected that GEC would set an example of BPS (best practice sharing) on global level, at the same time attuned to local needs. Extent to which GEC fulfilled its purpose: Linden shares CEO's remark at one of GEC meetings that FWD has made invaluable contribution to the overall corporate performance during the worst financial crisis in generations. This says it all; it shows GEC's grit. We are shown through the case that GEC started with fumbling baby steps, but it took off quite well gradually in the able guidance of Linden. Looking at the go getter dynamic style of Linden and his high expectation of GEC we doubt the success of GEC. But, nowhere it is shown that they are inefficient. Yes, there is room for improvement. Linden expects GEC members to take initiative. He's disappointed when they don't. I think he needs to introspect on why- not one of his dynamic go getter RDs does so? Is there a problem in the system or himself or with them? The global scene was that of unprecedented flux. There were great opportunities but plentiful challenges. Linden needed an agile org led by executive with both strategic and operational expertise. GEC needs to rise to the challenge of changing times and also the expectations of Linden.
3 Institute of management technology, Ghaziabad

Johannes Linden: Managing the global executive committee

Group 9

To answer the question: GEC has fulfilled its purpose to a large extent but they have 'miles to go before they sleep' (changing the famous lines of Frost's poem).

Q 3- What challenges lie ahead for Linden and the GEC?

As per our observation few of the challenges were lying ahead for Linden as well for GEC : 1. Lindens main goal to form the GEC was to bring all talent of all regions under one roof. He wanted each RD to contribute beyond their regional responsibilities and for that the meetings were taking place frequently as per the schedule. But he was sensing that the RDs were not interacting with each other frequently barring one or two exceptions. The main idea behind the formation of GEC was to give RDs the global exposure beyond their regions. Though they were discussing issues of all regions during the each meeting but they were limiting their self to their own regions and their main focus was only to achieve their set targets. Whereas Linden wanted all RDs to think from company perspective and expecting them to go beyond their regions 2. Few of the GEC members, the RDs, were feeling that the each time the decision of Linden is just imposed on them, they had developed a perception about Linden that his main focus is to get the things done only irrespective of others concern, he become very stubborn sometimes. The decisions were already taken before the meeting but he just wants everyone to talk about before making it official. 3. Now the main challenge for Linden and GEC lie ahead was adjusting the sales target and bonus target. Linden wanted to restructure the target based on the current scenario along with the bonus. His argument was, since the steel price has already dropped, the target would be achieved easily so how the country managers will contribute. Linden knows that to remain in a leading position and to compete his rival River Tech he has to go beyond the conventional way of thinking and working. He wanted each one of the GEC member to think what is best for the company. Whereas RDs were disappointed as the target and bonuses were never adjusted in the past in any situation and circumstances. So to make them think beyond their own issues were a big challenge.

Institute of management technology, Ghaziabad

Johannes Linden: Managing the global executive committee

Group 9

Q 4- What should Linden do about the GEC discussion of the FWDs business targets and bonuses?
Key issues before Linden to resolve in the bonus and target discussion: Key business task of keeping everyone motivated to work hard. Align executive CMO and CFO using surplus monies for investment in growing markets. Appreciate POV of all RDs E.g. - North America- slowdown in housing, Australia Climate volatility, India Indonesia- keeping investment related authority. Provide RDs greater responsibility in decision making about business and targets. Inspiring everyone to take up the difficult discussion of revisiting Bonus and targets.

Lindens proposed plan of actions to achieve the above: Linden should appreciate the differences in Geographical business and non-business external environment. He should lay down priorities for every region in line with the RDs point of views. India Indo & China SE Asia & South America are only regions demanding investment hence there revenue targets should be revised aggressively with additional inputs managed by region (as RDS want )but monitored by CMO & CFO (as Executive teams want). North America & Europe are big for business and growth opportunity is small hence they should be driven by overall profitability for the division. All the regions should get their goals aligned towards the business performance of the division. Post seeking alignment from all the RDs and Executive teams he should structure the Target and Bonus in the following manner:

The Superlative Bonus should exceed the present Bonus by a handsome 10%-15%, so that all regions are working in alignment with the Global Business goals of the division.

Institute of management technology, Ghaziabad