InterClean - EnviroTech Merger

Write in which you determine when rightsizing is appropriate and which steps are necessary to implement this process for the InterClean--EnviroTech Merger. Be sure to address the following questions within the paper:

1) Introduction

2) What are the viable options the company has at this point?

3) When might rightsizing be appropriate for this company?

4) Assuming that all alternatives, other than job elimination, have been ruled out, how can the company implement the plan in a manner that is both ethical and legal?

5) When the choice is involuntary separations, what steps must be taken?

6) Conclusion

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Below is the scenario:

InterClean - EnviroTech Merger Scenario

The following scenario provides a brief company overview, employee information and emails regarding the merger occurring between InterClean and EnviroTech. The emails communicate the new strategic direction and implications for HR.

Company Overview

In the $8 billion dollar institutional and industrial cleaning and sanitation industry, success is no longer about which products best cut through the grime or kill the most germs. As the industry evolves, clients are more interested in solutions and services that streamline their cleaning efforts in the wake of more stringent requirements for environmental safety.

Health care clients, for example, are continually faced with new regulations governing the maintenance of their sterile environment. Cleaning companies can offer greater value to these clients by providing turn-key solutions that include product training for employees, regular monitoring and info-sharing of new relevant regulations, and in some cases, full cleaning service contracts. Retail customers have shown interest in similar operational solutions.

For InterClean, Inc., a major player on the sanitation scene, future profitability hinges on fulfilling this emerging need. Currently, the sales force excels at demonstrating and selling product, but under the newly proposed solutions and service model, reps will be grouped into multifunctional teams prepared to support InterClean's high-quality products and service. They are instructed in development of full-range service packages tailored to individual accounts. They are also trained to engage directly with facilities managers, health care professionals, and operational executives in their customers' organizations. This happens in 90 to 180 days, when a marketing blitz announces the launch of InterClean's new service focus.

The Players

David Spencer, President and CEO: At age 47, David inherited InterClean from his father, who was responsible for the company's early corporate accomplishments. A successful businessman himself, David is driven to make InterClean an industry leader. He is ambitious, competitive, and willing to take risks in order to grow the business and expand into new markets.

Janet Durham, Vice President of Human Resources: Janet began as a sales representative with InterClean 15 years ago, when she was 40-years-old. Though she has worked her way up to her current position, she still has strong ties to many sales force members. She is pragmatic and interested in using technology to automate the HR function.

Tom Jennings, Vice President of Marketing: David Spencer recruited Jennings to lead this new department just a year ago, when Jennings was 62. Tom's expertise lies in strategic systems planning, and he would like to move InterClean rapidly into strategic dominance in its industry. Tom views the current corporate restructuring as an obstacle to his goal, but a necessary evil that requires his short-term attention. It is his desire to move quickly so that he can continue his plans for global expansion.

Sam Waters, Chief of Compliance: Sam has been with InterClean for two years, and holds a law degree.

Carol Stanley, Internal Consultant: David has asked Carol to conduct a skills inventory in preparation for InterClean's launch of solutions-based selling. Tom Jennings recommended Carol for the assignment. Carol reports to Janet Durham.

Sally Lindley, CEO of EnviroTech, Inc.: Forty-nine-year-old Sally is interested in developing some joint ventures with other firms in the cleaning industry in order to optimally leverage her future power. Politically active, she is well-connected to key state and national elected officials in Florida.

Eric Borden, Ving Hsu, and Terry Garcia, Senior Sales Specialists at EnviroTech, Inc.: Veteran employees with a combined 30 years at EnviroTech, Borden, Hsu and Garcia anticipate playing key roles in the company after it is acquired by InterClean. In fact, they expect to be named the sales and marketing leadership team for the new company.

Communication E-mails

January 31, 2005
URGENT!
MEMO TO: All InterClean Employees
FROM: David Spencer
RE: Strategic Direction

As you are aware, our industry has been evolving in response to changes governing environmental safety. While this has created more work for our clients, it has simultaneously created new opportunities for us. For quite a while, I have felt strongly that the key to expanding our company - both domestically and worldwide - is the development of full-service solutions packages. If we are among the first to introduce all-inclusive service, the potential for growth and strategic advantage is huge. That said, I'm pleased to announce that in the next three to six months, InterClean will begin a media blitz to publicly announce this new strategy.

Clearly, this is an excellent opportunity for anybody at InterClean who wants to help create and fill new and exciting positions of responsibility. I am asking for everybody's support as we move in this exciting direction. Our goal is to provide a full spectrum of cleaning services and solutions that will become our major avenue for sales. As we align our organizational structure around this vision, we will be reviewing our current staffing, particularly in sales and marketing, to determine if we have the skills in place that will enable us an effective transition. We will need to determine the current strengths of our sales team, areas of needed development, and future staffing requirements.

Obviously, though we have a talented sales team, its operation has to adapt to fit our new direction. Solutions-based selling will require our sales force to be more knowledgeable about emerging issues in sanitation, environmental regulation of cleaning and cleaning systems, and OSHA standards. Instead of merely knowing how a product works, they need to understand the legal, environmental, safety, ethical and regulatory issues that affect sanitation and cleaning in varied industries and settings. They will need to develop customized packages of cleaning solutions and systems, not just a patchwork of tools and services, which include products and processes that meet our clients' needs. Finally, since our clients themselves may need staff education and training, our sales force must become conversant in the language of each client's industry as it relates to cleaning and sanitation.

I know this represents a significant challenge for our sales force as we learn to effectively grow and serve new markets. I must reiterate what an excellent opportunity this is for all of us to gain valuable skills that will serve us individually and collectively over the next several years. To meet this challenge, our sales staff will undergo intensive training in the next few months. It may be grueling at times, but I am confident the increased technical skill and expertise will pay off for everyone.

Our HR department leads the staffing review effort. It is possible discoveries made in the review process could necessitate internal organizational changes to help ensure a more seamless transition. It is important that our departmental teams are structured in a manner consistent with our new direction.

Later this week, I will call a meeting of the Executive Team to review each department's plans for this change. These will be exciting times, and with your cooperation and teamwork, we can all benefit tremendously from the opportunities ahead.

FEBRUARY 1, 2005
MEMO TO: HR Staff
FROM: Janet Durham
RE: New Strategic Direction and Implications for HR

I trust you have all read David's memo regarding InterClean's move to solutions-based selling, and I'm sure the subtle references to HR's role in this process didn't get by you. It will be up to us to screen new sales hires for the appropriate background and skill sets to ease this transition. The existing sales staff will no doubt be watching us closely; I'm sure more than a few of them feel threatened by this change, and it is a challenge for all of us to play this diplomatically. Until we know what staffing changes are necessary, I'd ask that you not discuss any of our plans. Deal with panic as it occurs, but be discreet as you do.

I'd like you all to start thinking about training strategies. If our training and development budget is tight - and I expect it will be based on previous experience - then our new hires must need minimal orientation. We'll probably need to focus more of the budget on training managers to implement these changes. We should look at our HR policies to see if any of them could be updated to more strongly align with this new direction.

I'm depending on all of you to maintain your usual efficiency and discretion as we make this change.

Thanks.

FEBRUARY 3, 2005
E-MAIL
FROM: Tom Jennings, VP of Marketing
TO: David Spencer, CEO

Dave,

I overheard two sales reps talking about the changes and I didn't like what I heard. It sounded like prebunker mentality: us against them. I don't have to tell you, this is not good. Everybody knows there will be some terminations, but we need to find a way to control this kind of talk.

Tom

FEBRUARY 7, 2005
DAVID SPENCER'S NOTES FROM EXECUTIVE MEETING

Employee morale is currently low and management is concerned about employees will perceive the staffing audit and follow-up. The executives are determined to proceed in transforming InterClean's workforce in whatever way necessary to achieve the CEO's ambitious long range goals. Additionally, there is some unstated mistrust of Janet Durham, who is seen by other executives as a defender of the status quo and loyal to long-time employees. To meet staffing plan expectations, we must:

? Inventory the skills of the current sales force, and identify skills and competency levels needed for the new sales direction. Determine which gaps need to be filled with new hires.
? Establish optimal size and composition of the sales force.
? Project estimated training and development costs.
? Develop a staffing audit process, and identify phases of execution.

From: Carol Stanley, Consultant
TO: Janet Durham, VP for HR

Janet,

I think our audit process could improve if we told each department, particularly sales, that no one will be harmed or let go by this transition. I'd recommend recruiting key sales team leaders to help us get that message out so that we can maintain better morale.

Carol

FROM: Janet Durham, VP of HR
TO: Executive Team

There are lots of rumors floating around that huge cuts, particularly in sales, are coming down the pike. We need to calm things down until Carol and I can finish our staffing plans. I know that impending change makes these kinds of waves; please know that HR is doing what it can to be reassuring, but it is not easy.

FEBRUARY 21, 2005

MEMO TO: Dave Spencer
FROM: Sam Waters

Dave,

I know that you have a lot on your plate in preparing for this upcoming media announcement, but have you given any thought to compliance-related services specifically? I think they're going to be critical to the success of our clients' programs. If you agree, it probably makes sense to modify our organizational structure so that the Compliance Department reports directly to you. If we are going to serve the compliance needs of our clients, it would also make sense to encourage my staff to help me with that.

I'd be happy to discuss this at your convenience, but I'd prefer to do it sooner rather than later. I'd like our sales teams to be able to take advantage of what we provide as soon as possible.

FEBRUARY 22, 2005

MEMO TO: All InterClean employees
FROM: David Spencer
SUBJECT: Acquisition

I am delighted to announce that InterClean, Inc. has officially acquired EnviroTech, one of our major domestic competitors in the corporate market. With this acquisition, InterClean has taken a giant step in achieving domestic market dominance in the sanitation industry. More than that, the service expertise that comes with EnviroTech dovetails perfectly with our new strategic direction. With that expertise and InterClean's resources, we fully expect to reach our sales goals for the next year, which should increase profitability by 40 %.

Over the next four months, we will be working to merge about 60 EnviroTech sales staff and operations specialists into the InterClean structure. This roughly coincides with the launching of our major media blitz to announce our new service focus.

I hope you'll join me in welcoming the EnviroTech staff into the InterClean family. I expect all management personnel to begin integration efforts immediately.

MARCH 8, 2005

MEMORANDUM***
TO: Tom Jennings, Janet Durham
FROM: Sam Waters
SUBJECT: Compliance Issues

My staff and I have been working on identifying a broad set of compliance issues, knowledge of which will be essential in a solutions-based selling market. For 10 of the major markets InterClean serves or would like to serve, we looked at the environmental regulations and local sanitation standards and found numerous technical specifics that are critical for our sales employees to know.

My staff is preparing a helpful manual, and should be ready in another week. We are committed to making our company's expansion successful and we anticipate that compliance will be a major issue to address with each customer group. I'd like the go-ahead to start work on a training plan to educate sales staff on compliance matters.

MARCH 10, 2005

TO: Eric Borden and Ving Hsu
FROM: Terry Garcia
SUBJECT: Acquisition Implications

I just had a conversation with Sally about our new sales strategy, and she confirmed that after a short transition at InterClean, we should be prepared to take lead roles in sales and marketing.
It's my understanding that InterClean will be looking to us for guidance in the customer- and service-based system we pioneered here at EnviroTech.

I think this is our big break; now that there will be additional funding and support of our work, we really have a chance to advance in this company. There are so many things I want to talk to you about, including the territory division we've discussed; can you do lunch on Thursday?

APRIL 11, 2005

E-MAIL
TO: Janet Durham
FROM: Carol Stanley
Skills Analysis Results

Janet,

Based on my personnel interviews with the InterClean sales team members, I've compiled some demographic data for you concerning proficiency levels in the skill areas we discussed (see Attachment A). And, per your request, I've created a similar analysis of EnviroTech's sales force (see Attachment B). I think you'll agree it's pretty obvious that EnviroTech's and InterClean's sales skill sets are pretty divergent. I hope this provides you with the information you need. Let me know if there's anything else you'd like me to pull out or compare.

Carol

APRIL 18, 2005

Water Cooler Conversation

InterClean Employee 1

It looks like we'll have to look for a new set of customers. I overheard Jim in Marketing Support say that if InterClean wants to sell sanitation services to hotels and convention centers, all the staff will have higher sales quotas each month and rumor has it there will be a lot of new hires. That sure doesn't sound like the company has any plans to retrain us.

InterClean Employee 2

Have you seen the report summarizing our sales team efforts over the past year? I'm not sure why this is being circulated to the Executive Team except to remind them what a lousy year we had. I know I had a lot of leads fall through because of that new client tracking system the IT department wanted us to use. It was useless and just caused me a lot of grief. I would hate to think we're going to be judged on it when everybody is talking about how there are going to be terminations.

InterClean Employee 3

I heard that Mary resigned yesterday. She and I worked on the same marketing team since 1999 and she's going back to school for her graduate degree. I don't think she wants to be in sales anymore. Maybe she's getting out at a good time.

InterClean Employee 1

Well good for her. I've decided to volunteer for the training that Janet mentioned might be coming. Although, I'm concerned about not being able to keep up my level of sales production while I'm learning about new services. I don't know how they're going to determine who stays and who goes, but I think getting on board this train is probably a step toward showing my value. They're going to bring in many new people and if I get this training, maybe I'll be able to stay for a few months.