Assignment:
WeaveTech: High Performance Change: Frank Jennings was hired as vice president of human resources at WeaveTech in 2010. WeaveTech was the modern incarnation of the century-old Johnson-Ware apparel company. CVX Partners, a private equity firm,1 had bought Johnson-Ware in 2007 and rechristened it WeaveTech shortly thereafter. Jennings's first two years with the company were relatively uneventful, with most of his time devoted to administering its data-driven HR processes. Over the past year, top executives from CVX had invited Jennings with increasing frequency to strategic planning presentations, where Jennings learned more about the plan to change WeaveTech's customer base. This plan would reorient the firm away from its focus on military (70%) and security (30%) customers and toward the high-end performance clothing market.2 (Exhibit 1; Company Mission Statement, 2012 WeaveTech's mission is to continue to produce high-quality, high-performance apparel in order to meet the demands of our customers. WeaveTech is committed to the well-being of our employees. We provide opportunities for them to develop their skills, and we offer a competitive compensation package. WeaveTech is also committed to our shareholders. Their investment is vital to our long-term success, and we strive to maximize their return).
Despite his knowledge of the impending changes, Jennings was shocked by the assignment he got on the first Thursday of October 2013: CEO Ron Gilford informed him that 20% of WeaveTech's managers needed to be cut from the company's payroll by January 2014. Gilford said, "WeaveTech must change and grow, and we can't do either with the skill set of our current managers. We're moving into a new league. A high-performance past does not guarantee a high-performance future." Gilford told Jennings to deliver his recommendations on the following Monday.
Apparently, his assignment was not as secret as Jennings had believed. On Friday, he received a copy of the "confidential" Five-Year Plan Summary from Gilford is as follow;
(Exhibit 2 ; Five-Year Plan Summary (Confidential)
Five-Year Plan Summary, September 2013 (Confidential)
To: WeaveTech Executive Committee
From: Ron Gilford
As you know, changing business conditions, accompanied by the departure of our friend and colleague Jack Davidson, require us to reconsider the future of WeaveTech. We are at a strategic inflection point, our traditional customer base is shrinking, and price sensitivity is rising.
To address these challenges, we will soon announce our new strategic plan. The goals are aggressive, but our top management team, in conjunction with consultants from the Strategic Advisory Group, has concluded that these goals are necessary and feasible. By the end of this year, 5% of our sales will go to performance-wear customers in the private sector. By the end of the second year, these customers will purchase 10% of our products, and by the end of year five, they will purchase 25% of our products.
To support this transition, and to use our present resources more effectively, we will be making major investments in new production technologies and [in] sales and marketing.
As you know, technology alone will not assure success. We need a new "private-sector" philosophy and an organizational culture to support that philosophy. Toward that end, we have engaged Powers Consulting Group (PCG), an organizational change consultancy. Over their three-month engagement, these consultants will interview all members of the executive committee. You should, ASAP, contact Administrative Coordinator Mary Young (x0399) to arrange your meeting time and receive preparation guidance).
On Saturday, he received an email with a subject line that read "Mr. HR Guy Read This." The message was a copy of the "No Layoff" memo that Jack Davidson, WeaveTech's previous CEO, had written in 2005.
(Exhibit 3; The No-Layoff Memo from Jack Davidson (This memo was removed from the Employee Handbook following the CVX purchase.)
At Johnson-Ware, we care about long-term success. Because we are privately owned, we do not have to worry about meeting our quarterly numbers like our publicly-owned competitors do. We can invest in the future in order to serve our customers better, even if doing so means we lose money in the short term, and we cannot succeed if we do not meet our customers' needs.
Yet we have learned that meeting our customers' needs means that our most important job is to take care of our employees. We cannot succeed without you. That is why we have the best employees in our industry. We selected you carefully, we respect your expertise and initiative, and we pay you well.
We also do not believe in layoffs. It would be easy to make downsizing part of Johnson-Ware's "strategy" when times are lean, but taking the long view of our business means that we resist doing what is easy when that is not the right thing to do. We have sometimes needed to be creative in order to avoid letting employees go during a downturn, but I am proud to say that we have succeeded in this effort). Jennings's mind was unsettled as he struggled to sort out the demands being placed on him. It was time to craft his recommendations. Monday wasn't going to be easy.
WeaveTech History: Johnson-Ware
Headquarters for WeaveTech were located just outside Gloversville, New York. WeaveTech employed 315 managers and 1,835 employees at its headquarters and at three plants within a hundred-mile radius of Gloversville. The company intentionally cultivated a low profile and had long embraced the informal motto "Survival before pride.
Explain the types of policies that should be developed for this organization to address potential risks. For example, you could address policies regarding privacy policies, social media, and so on.
Describe the appropriate due diligence activities related to mergers and acquisitions that would be relevant for this organization.