Norge Electronics Case Analysis

Case Analysis: Norge Electronics

Organizational Design and Management, July 30, 2016

Introduction- was Joao Silva so unique as unique was his company selling proposition?

Norge Electronics Portugal is the smallest subsidiary of a multinational Scandinavian company with headquarters in Lisbon. Its operation is the sale, installation and maintenance of sophisticated equipment for textile manufacturers.

Small but ambitious company, Norge Electronics has unique mission statement: „Never sell to anyone who is not committed to increasing productivity“, „ Prove to thе customer, and prove it again, that the textile industry, if managed well, cаn be profitable in Portugal“ and  „Never hesitate to help a customer with a competitor’s equipment..tomorrow the customer will remember who was thеre when help was needed“.

In a culture of total customer service, with a loved Managing director who was ready to take off his tie and fix any machine issue, the Portuguese firm somehow undermined the management of the personnel function.

Joao Silva, who was at the position of Administrative director, was also responsible for the personnel function. He had to combine skills and competencies of two totally diferent functions: finance and HR.  Was Silva so unique, like the selling proposition of his company, to be able to manage HR function as successfully as Finance? Achieving excellent results in one sphere, does not automatically guarantee anyone success in a different field of performance.

The climate survey showed very low scores of 32 % on HR policies and 32 % on Remuneration, two areas managed directly by Joao, questioned his overall performance as personnel responsible manager. What he did well and what he did wrong? Was he really doing a lot of HR in Portugal as Norge VP HR commented?

Analysis of Joao Silva management approach to HR

Norge Electronics has endorsed the philosophy of "Total service" to its customers which meant that the company always has taken care of customers and at least once per quarter, a technical team of firm will go to customers' factory to inspect equipment and identify potential productivity problems. The technical teams never hesitated to help resolving customers' problems even with a competitor's equipment. Norge's unique selling proposition was its guaranteed increase in productivity. They have invented a NPI (Norge productivity index) and were making audits at clients to check and advise on their productivity. The issued report was of significant importnace for the clients‘ CEOs. As a result of all the innovation in the customer service, the customer loyalty was high. The innovation in productivity measurement was Norge’s competitive advantage and a differentiator among the rivals. Thus they could afford to imply a higher commission on their service which customer accepted. The company seems to be doing well.

The HR function must be in full correlation with the company strategy by supporting its strategic goals. In the environment of total customer service, Joao Silva had to lead the HR function by adopting a style that is in a coherence with Norge’s approach to customers. The internal “customers” must be treated with the same care and enthusiasm. But what actually Joao did?

In the first year he put little attention on the HR issues. His primary task was to process pay by establishing basic procedures and „legalize“ the pay system. During his second year, he agreed with conglomerate VP HR to develop agreed set of priorities for the personnel function. Case shows that there was no immediate need for a change but the VP HR requested from Joao to start planning for the HR needs in the years ahead. The management change Joao was leading can be categorized as “Tuning” as per Nadler & Tushman’s Types of organizational change (Nadler&Tushman, 1989).  

Joao was leading the HR function the same way he was leading Finance. His assertive approach, with a commanding voice, requiring a discipline, definitely was one of the main reasons why he failed in his performance as a HR leader.

On the positive side he is an action-oriented person, eager to take on any challenge and deliver results on each task  he is assigned.  However, he prefers to take decisions on his own and rarely seeks input from his peers or subordinates. Even he likes Lars mainly because he rarely „interfere“ in the administration department.  He is also very persistent in achieving his tasks without being sensitive to employees reactions. Threatening to postpone the payment of the 14th salary if the the deadline for submitting the job descriptions will not be met, was far from internal „total customer service“ approach. He did not communicate in advance with the Directors his ideas about the performance evaluation system rather than going directly to his boss for approval. Even they both met outside the office to maintain confidentiality. Once the system was introduced, he even pushed the directors to adapt the scores of their subordinates to his “personal gross margin” results as opposed to their personal observations of the performance of the employees.  All this leads to the conclusion that the conflict management style of Joao is rather “Competing” (Thomas, K., 1976). His style was in opposition with the tuning change he wanted to introduce ( McGuire 2008) and  in opposition with the function he was leading where different style and approach to people is required. “Mismatch between the change agent’s style and the requirements of the situation often explains why transformations fail” (McGuire).