Home' Trinidad and Tobago Guardian : March 1st 2015 Contents MARCH 1 • 2015 www.guardian.co.tt SUNDAY BUSINESS GUARDIAN
PERSONAL FINANCE | SBG13
The following guide is
intended to aid read-
ers in analysing the
case Top Rig Ltd.
When analysing a
case, remember that
there are many pos-
sible approaches and
solutions and the goal is to develop your
analytical and problem-solving skills rather
than figure out "the one right answer."
Eric Nayar is about to retire as CEO from the family firm
and the company will need to find a suitable replacement. He
is concerned that selecting the wrong person for the CEO
position could jeopardise the future of the business but feels
the time had come for him to step aside. The company has
experienced major changes to the organisational structure in
recent years but sales continue to be stagnant while a number
of larger competitors have aggressively entered the market.
Q1. What qualifications should a suitable
candidate for the position of company
It is apparent that the incoming CEO will have to not only
possess considerable experience managing a manufacturing
business but also be adept at managing the human resources
of the organisation.
The company provides very specialised products to business
clients in the oil and gas sector so knowledge of the industry
and the decision making processes of customers in this sector
would be a major asset. Experience derived from working as
a senior manager for a company in the industry would also
assist in maintaining the personal contacts that are vitally
important for driving sales of the company s products.
A critical requirement is that the candidate be able to handle
the dynamics of family members being intrinsically involved
in the business.
A certain degree of diplomacy and tact is needed in order
to ensure that Eric s influence over the operations of the com-
pany is limited after his retirement. The CEO will also be
responsible for managing the careers of other family members
still employed by the firm and must be able to manage the
competition for resources among managers that currently
exists. People skills are thus extremely important if the culture
of the organisation is going to be changed and new policies
In addition to having strong leadership skills, the new CEO
must recognise that this is a family run firm and there is the
likelihood that one of Eric s children may wish to occupy this
position in the future.
The candidate would thus need to be reasonably comfortable
operating in an environment where job security is not guaranteed
and be prepared to relinquish their position in favour of a
family member. This might be more
easily accomplished if the candidate
is older or closer to retirement and
willing to accept a role as a caretaker
manager until the next generation is
ready to lead the company.
Q2. How effective is the ex-
isting business model and
design of the organisation?
Although the company continues to be profitable, flat sales
and intensifying competitive pressures suggest that the founder s
goal of 10 per cent annual growth may no longer be realistic.
A reassessment of the company s growth potential and realign-
ment of sales goals with the current environmental conditions
is imperative. The overall strategy of focusing on a limited
number of product lines and providing a high degree of cus-
tomisation appears suitable for the business market in which
the company operates.
The decision to match competitor s prices may help the
company to maintain market share in the short run but may
not be sustainable over time due to the economies of scale
that the larger firms can benefit from.
Unless the company continues to bring innovative new
products to market it will find it increasingly difficult to
compete solely on the basis of price since this is an area where
it is at a competitive disadvantage relative to its larger rivals.
The current organisational structure is suboptimal and char-
acterised by competition for resources among managers and
employee confusion stemming from multiple reporting lines.
There is also no evidence that employees are working towards
a common goal with a shared vision of how to take the company
forward. The CEO s efforts to empower employees and get
them to work across their functional silos is a step in the right
The problem, however, seems to be the failure to recognise
the entrenched corporate culture which has favoured a cen-
tralised command and control system in which all major deci-
sions were made by the owner. Changing the structure without
recognising the need for cultural change is contributing to the
internal conflicts being experienced. The company may thus
have adopted a structure that is overly complex given the
limited range of products that it sells.
The fact that Top Rig is a family business which employs
several of the CEO s children means that advancement for
non-family members will always be an issue. Unless there are
clear paths for advancement within the company, the exodus
of middle management talent will continue.
The challenge for senior managers and the incoming CEO
is to find space to accommodate family members in a transparent
way that is based on competence and not purely family affil-
iation. The delegation of responsibility for operational decisions
to a working group is likely to slow down the decision making
process and leaves the company vulnerable to faster moving
While useful in the short run to manage the transition, the
emphasis should be on finding a replacement for Eric as quickly
as possible in order to end the leadership vacuum that currently
Q3. What strategies should the new CEO pursue
in order to ensure the viability of the business?
The incoming CEO needs to start by setting realistic goals
for growth and then aligning all the company s resources to
achieve these targets. The current organisational structure
appears overly complex and there should be consideration
given to creating business units for each product line which
would be supported by the marketing and production depart-
This structure would establish clear lines of authority and
reporting and eliminate some of the confusion experienced
by employees. It is absolutely critical, however, that systems
be developed to more fully share information within the com-
pany so that managers do not simply retreat to their silos as
It should also be recognised that this restructuring may
require that resources be reallocated among the managers and
the CEO should prepare for the exit of some of the managers
who may be unwilling to accept the constraints imposed on
them by the new structure.
Provision also needs to be made for the family members
who are currently employed by the company. A clear set of
guidelines regarding promotion needs to be developed and
widely circulated so that perceptions of nepotistic preferences
are minimised and there is transparency in the HR practices
of the firm.
This should provide depth among the middle management
ranks and put a halt to the steady loss of talented personnel.
The CEO will need to actively engage with the family members
to provide guidance on managing their careers over time. This
is particularly important for the two family members that Eric
has requested be promoted upon his departure.
Team-building strategies are necessary in order to overcome
the tensions that exist among the senior managers in the com-
pany. Implementing a profit sharing system based on achieve-
ment of team goals would be one way to foster a more cohesive
approach to conducting operations. It may be necessary to
hire an external consultant to assist in changing the current
independent mindset and allow employees an opportunity to
more freely ventilate their issues to what they may perceive
as a neutral third party.
Finally, the CEO will need to be politically astute in managing
the influence of the former CEO who remains the company s
largest shareholder and clearly wants to play a role post retire-
ment. It is important that Eric supports the efforts to change
the way the company does business and does not become an
obstacle to progress. To this end it may be advisable to retain
him in an ex-officio advisory capacity for the short run while
the transition is taking place and perhaps engage him on a
specific project assignment such as leveraging his contacts in
the industry to open new business for the firm.
Dr Barney Pacheco is a lecturer in the Department of
Management Studies at The University of the West Indies,
Case preparation guide: Top Rig Ltd
Solution in team building
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