McKinley Saks

Case Analysis #1

MacKinley Saks

1. There are several problems with the MacKinley Saks business. First, they are lacking any true leadership, which is defined as “the ability to influence a group to toward the achievement of a vision or set of goals” (Robbins & Judge, 2016, p. 192). Sara was given 51% control of MacKinley Saks and named CEO (Zavakos, A. (2015). MBA 795 case analysis #1 – MacKinley Saks). Just because she was endowed with these rights, there was no guarantee that she would lead effectively, especially since she doesn’t have any formal business training outside of bartending. Second, the employees do not trust Sara. Trust is an important characteristic of leadership and is defined as not acting opportunistically and having “positive expectations about how things are going to turn out” (Robbins & Judge, 2016, p. 206).   This lack of leadership and trust and be seen in MacKinley Saks unstable workforce and “revolving door of new employees” (Zavakos, A. (2015). MBA 795 case analysis #1 – MacKinley Saks). Finally, in its current state (since Sara was named CEO), MacKinley Saks lacks a positive organization culture, which is defined as “emphasizes building on employee strengths, reward’s more than it punishes, and emphasizes individual vitality and growth” (Robbins & Judge, 2016, p. 280).
2. In order to gain a greater understanding of MacKinley Saks and it business, it would be important to know the following:

1. Employee engagement/satisfaction prior to Sara being named CEO
2. Any previous organization politics that may have existed
3. George’s leadership style prior to checking out
4. Was there any communication or transition prior to the organization change
5. How old is George? Is he avoiding the business and conflicts because he just doesn’t care or because he’s ready to retire?

However, for the sake of this analysis, I will assume the following:

1. Prior to George’s departure employee engagement and satisfaction was high and there was very little to no attrition.
2. There were no previous organizational politics. MacKinley Saks ran like a well-oiled machine. Employees were promoted from within rather than externally.
3. George was a very engaged leader and deemed as a servant leader. He invested in the professional development of his people and was empathetic to those experiencing any personal distress.
4. There was no formal communication or transition period George’s leadership to Sara’s. It happened overnight and employees were surprised, shocked and blind sighted by it.  
5. George is 75 years old, missing companionship (this explains why he got married shortly after his wife’s death) and he should have retired years ago but the conflict at the company has lead him to avoid it altogether.
6. 0jhhPrior to Sara taking control, employee attrition was at a minimum. Some of the employees at the company have been there since the inception of the business or for several decades. These employees were dedicated to the success of the business and did everything for the good of the company.

1. Sara has several goals. The case indicates that Sara has enjoyed the income that the business once provided (Zavakos, A. (2015). MBA 795 case analysis #1 – MacKinley Saks). She wants to spend more time with her children while they are small. While she doesn’t care for George’s older sons, Phineas and Ishmael, she admittedly recognizes that they know the business better than her and willing to hand over authority to them.  Zavakos, A. (2015). MBA 795 case analysis #1 – MacKinley Saks). Additionally, she doesn’t want to relinquish her 51% share of the business because one day in the future she would like her two sons to have the opportunity to lead the business (Zavakos, A. (2015). MBA 795 case analysis #1 – MacKinley Saks). To save the business and to ensure that she can accomplish these goals Sara understands that there is a need for organizational change. This is why she has reaching out to experts experienced in helping small to medium sized businesses.  
2. George has one goal in mind and that is retirement! He founded the company more than 50 years ago and was “once a strong leader” (Zavakos, A. (2015). MBA 795 case analysis #1 – MacKinley Saks). Now in his mid 70’s George appears to have “checked out” and “avoids conflict by avoiding the office, opting to play golf five days a week with some of his retired cronies” (Zavakos, A. (2015). MBA 795 case analysis #1 – MacKinley Saks). It appears that George is suffering from stress, which the text defines as  “a dynamic condition in which an individual is confronted with an opportunity, demand or resources related to what the individual desires and for which the outcome is perceived to be both uncertain and important” (Robbins & Judge, 2016, p. 294).  More specifically, behavior-related stress symptoms can include reductions in productivity and absence- to just name a few. (Robbins & Judge, 2016, p. 296).
3. Phineas exemplifies several leadership qualities. First, according to the behavioral theories of leadership we can understand a leader’s effectiveness by their behavior and how they treat others. (Robbins & Judge, 2016, p. 296).  According to the case information, Phineas is an extrovert, who treats each of his employees as if they are special. (Zavakos, A. (2015). MBA 795 case analysis #1 – MacKinley Saks). Phineas is an “employee-oriented leader” that exhibits high consideration for his employees (Robbins & Judge, 2016, p. 193).  Consideration is defined as “the extent to which a person’s job relationships are characterized by mutual trust, respect for employee’s ideas, and regard for their feelings” (Robbins & Judge, 2016, p. 193). Phineas can also be seen as a transformational leader because he is able to inspire his employees to put their self-interests aside for the good of the company. Prior to Sara being named CEO, many of the employees had been with MacKinley Saks since its inception or for several decades. They cared about the business and more importantly the customers of MacKinley Saks that they had developed relationships with over the years. Finally, Phineas could also be described as a servant leader, which the text defines as a leadership style where “leaders go beyond their self-interests and focus on opportunities to help followers grow and develop” (Robbins & Judge, 2016, p. 193).  According to the text, Phineas continues to stay at MacKinley Saks, despite having many other options because he wants to protect the remaining employees even if it means financial ruin for him (Robbins & Judge, 2016, p. 205).
4. The case indicates that he is an introvert as well as a task oriented leader. Ishmael’s leadership style can be described as being a transactional leader which is defined as a leader that “guides their followers toward established goals by clarifying the role and task requirements” (Robbins & Judge, 2016, p. 201).  Ishmael’s “analysis paralysis” behavior is in line with a leader that is very much production-oriented (Robbins & Judge, 2016, p. 193). These types of leaders are typically control freaks and are not able to delegate, which in turn as evidenced by Ishmael’s behavior as indicated in the case results in them getting off task and taking 8-12 weeks to complete the company financials while the other executive work is not being done. (Zavakos, A. (2015). MBA 795 case analysis #1 – MacKinley Saks.
5. Sara lacks leadership qualities. Her sudden promotion to CEO has gone straight to her head. Sara’s behavior is that of coercive power which can be defined as being dependent “on fear of the negative results from failing to comply” (Robbins & Judge, 2016, p. 214).  Sara’s coercive power and power tactics such as “pressure”can be clearly demonstrated in  several instances:

1. Forcing Ishmael to change banks several times in order to get greater lines of credit.
2. Firing the company trainer and making up charges against him in order to take over the employee training.
3. Shouting at the customer service employees, calling them “stupid” and reminding them that if it weren’t for her they wouldn’t be employed.

(Zavakos, A. (2015). MBA 795 case analysis #1 – MacKinley Saks).

1. My Recommendations:

1. First, Sara should step down as CEO. Second, I would recommend yet another organizational change by naming a new individual to run the company. In order to implement the change, a “powerful change team” should be formed. (Holden, 2008, 9). This competent and resilient team will oversea the transition.  Next, in order to overcome any resistance to another change, education and communication will be key. Communicating the logic behind the organizational change will reduce any employee resistance as well as rumors that may arise. (Robbins & Judge, 2016, p. 286).  Then the newly appointed leader of the organization should increase formal organizational communication in order to reduce any ambiguity or uncertainty (Robbins & Judge, 2016, p. 298). This formal communication begins with the new leader holding a town hall meeting with all of the employees to make the announcement regarding the transition of power.  This face to face meeting will allow the new leader to address and questions or concerns immediately. Following the face to face town hall with the employees, the new leader should release an email or memo that reiterates the message from the town hall. This will ensure that there was no miscommunication or misunderstanding of the facts. Finally, I would recommend that MacKinley Saks implement an employee wellness program to help its employees cope with stress.
2. If my recommendations are not implemented then I foresee that the company will eventually fail over time. As a result of the current leader, MacKinley Saks sales are lower than they have been in decades. They are defaulting on loans and unable to gain new lines of credit. Employees are not being trained. Employee morale and engagement are at an all-time low as evidenced by unstable and disengaged workforce. (Zavakos, A. (2015). MBA 795 case analysis #1 – MacKinley Saks).
3. In order to pull MacKinley Saks out of crisis, the new leader must exhibit authentic and ethical leadership. Authentic leaders “know who they are, know what they believe in and act on those values and beliefs openly and candidly” (Robbins & Judge, 2016, p. 204). A quality that authentic leaders produce is trust. They openly communicate with their followers and as a result it creates a positive energy resulting in heightened performance (Robbins & Judge, 2016, p. 204). Additionally, ethical leader is one that creates “ethical expectations” for its members (Robbins & Judge, 2016, p. 204). Ethical leaders are humbled, treat their followers with respect and continually provide them with truthful information (Robbins & Judge, 2016, p. 204). This foundation of trust and authenticity will result in employees becoming more engaged and more willing to devote themselves to the organization.
4. Phineas should be appointed as the new leader. He knows the ins and outs of the business and has been getting groomed to lead the business prior to his mother’s death and Sara entering the picture. He has a vested interest in his family’s business but he is also a servant leader which I consider to be a step up from ethical and authentic leaders. He cares about the employees and a proponent in investing as well as developing those (Zavakos, A. (2015) MBA 795 case analysis #1 – MacKinley Saks). He is more concerned with protecting the employees at MacKinley Saks than he is in

1. Kotters 8 step plan