Simmons Case (A) Review
They say there are only two things constant in life: death and taxes, the rest of the time we are faced with change. Since 1875 the Simmons Company has seen many changes in product lines and technology; however by 2001 they were facing out dated leadership techniques and economic challenges that needed to be addressed in order for the company to survive. Eitel, Simmons CEO, found division between manufacturing plants and low morale throughout many of the factories. In order to instill new life into Simmons, Eitel knew that the company had to make some drastic changes to its culture. One of these changes up for debate was the Great Game of Life (GGOL).
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The main reason for the implementation is that the GGOL program has the ability to improve morale. This happens through a change in leadership practice and the team building action that empowers employees to be valuable members to the success of the company. The Corporate Leadership Council revealed that more than “70% of [an employee’s] commitment is based upon manger interaction” (Harrison, 2012). The Gallup Organization recently estimated that there are close to “22 million actively disengaged employees costing the American economy up to $350 billion per year in lost productivity” (Harrison, 2012). Simmons could face the ability to regain a portion of the expenses for the GGOL program through increased productivity, thus reducing the financial burden of the program.
Once morale has improved, Simmons could face other cost saving actions through the reduce HR expenses such as reduced absenteeism and new hire and training costs. Fink (2012) outlines that absenteeism results in “billions of dollars off the bottom line”. Bliss (2012) points out that the cost of replacing a single person is about 150% their annual salary over the first year. Estimating that the average salary for a worker in the plant is $20,000 per year, then it would cost $30,000 to replace them. Simmons has 18 plants, most with significant morale issues leading to increase turn-over of front line staff. If GGOL program could prevent 100 good employees from leaving their $20,000/year job, the company would save just over $1.5 million dollars. Given the leadership turn-over for upper management and the higher annual salary ranges for them, Simmons’ could be looking at HR savings close to $3 million.
Another point to consider, but much harder to project, is the wealth of ideas from the employees. Employees who are actively engaged tend to be more proactive in cost saving, product line improvement, and new product ideas. By changing the culture through GGOL, Simmons can increase the flow of these ideas leading to better market share and reduce supply costs. So for the initial cost of the program, Simmons could see a return on investment simply through the improvement of morale and communication.
In order to prove that GGOL would be successful, Eitel had the team of a low productive manufacturing plant and their leadership go through the program. As seen in the video Charlotte’s Pride, every person who went through the program felt inspired and connected in a completely new way. By bringing people outside of their comfort zone and forcing them to rely on each other, GGOL helped build team network. Reading about Charlotte’s leadership culture before the GGOL and seeing the video afterwards shows the type of transformational change the right leadership can have. While I was supportive of the GGOL before the video, after the Video I felt inspired to see how I could even use some of these aspects in my own units.
It’s important to keep in mind that paying for the...