The T2T Company
Case
"What would you do,
Senior
Leaders?"
INTRODUCTION
Students assume the roles of Senior Management Committee (WC) team members of the T2T
Company, a Holland based global provider of transportation and logistics services. Historically, the
Company has achieved success as a loose confederation of national and regional business with no
enterprise — wide governance, operating systems or people practices. Despite a dominant market position
and strong brand reputation, T2T has experienced declining operational and financial performance in the
recent past. In fact, the Company has just survived a well-publicized campaign by major shareholders and
certain Board of Director (Board) members to "Break up" T2T into separate, publicly traded national and
regional companies.
By a vote of 12 — 10, the majority of the Board of Directors believed the "whole (of T2T) is
worth more (if properly managed as a global organization) than the value of the separate parts" and
voted to keep the Company as one operating entity. The Board majority based its decision largely on the
findings of several internal studies and surveys conducted by the Company over the past 12 months.
Specifically, the BOO has charged the new CEO, Sonja Y,
(A 20 year T2T employee) with the successful execution of the Board created Three Year Business
Plan (see attachments 1 & 2). In the event Sonja and her Leadership team fail to deliver the Plan,
the "Break up" proposal will be implemented.
In its last meeting, the Board approved and announced to Sonja the following five strategic
imperatives to guide the Company over the next three years:
1. "Get fit" by consolidating / merging operations; upgrading the IT infrastructure; and
reducing administrative casts.
2. "Grow the Top Line" by building the sales / marketing channels and resources to cross
sell; introducing a suite of new global products; and leveraging major customer
relationships.
3. "Build profitable critical mass in emerging markets" by increasing investments in the
Middle East, Asia and the global supply chain markets.
4. "Differentiate on value and service" by accelerating global product and network
offerings and improving customer service to meet changing local and global customer
needs.
5. "Identify, Install and realize Industry.Best practices" in all parts of the Company in the
form of management systems; research; business processes; and customer service.
On the advice of her closest, strongest Board supporters, Sonja has also included an additional
Key Organizational Behavior and People Business Imperative: "Create the very best,
global organization and the very best people practices in the industry" through a series of
deliberate, globally and locally focused organization investments and projects.
She has formed the Senior Management Committee (SMC) to diagnose, design, and deliver
the specific global HRM and organization behavior solutions to meet the capability requirements of
the "new" T2T. Each member of the SMC has been selected to:
1. Wear the Big Hat of the enterprise—wide business, operations, and HRM goals; and
2. Represent the local, cross cultural and ethical issues which must be recognized and
addressed in formulating and executing the agreed upon "Winning Plays" for T2T.
The five SMC teams consist of the following groups, charged with addressing the enterprise
wide HRM needs while acknowledging legitimate local issues and global interdependencies associated
with the "Key Organizational behavior and People Imperative" championed by the CEO:
● Team #1 — H.Q.
● Team #2 — Domestic freight 1: USA, UK, Germany, Holland, Italy.
● Team #3 — Domestic freight 2: China, India, Australia.
● Team #4 —Global Express: Americas, UK, Europe, Middle-East, Asia.
● Team # 5 Global Supply Chain: Europe, Asia, Middle-East.
—
BUSINESS UNIT "HEADLINES"
● Headquarters (HO)
T2T Corporate Headquarters has existed in Amsterdam Holland since 1947. At the HO, the
number of staff personnel, levels, work processes, and costs haven't been reviewed
in 15 years. The main corporate functions are finance, accounting, legal, government affairs, and
administration. Management style at HO. is formal, bureaucratic, and financially driven. No new
reporting system or I.T. investments have been approved for the HO in the last decade. Thus HQ
staff work is very labor intensive. No college
recruitment, external staff hiring, or rotation of internal T2T personnel have occurred during the
same period of time. 235
No enterprise —wide governance or management systems exist. Strategy formulation, resource
planning, HRM and operations goal setting processes are separately conducted at the country
level of each Business Unit. HQ staff members assist the Business Unit in these activities. No
central HR department exists at T2T.
In exchange for favorable tax treatment, T2T HO has agreed with the Dutch, Italian and German
governments not to involuntarily reduce employment in these countries for the next 5 years. This
pledge covers all T2T Business Unit personnel in the affected countries.
• Domestic Freight .(USA, UK, Germany, Holland, Italy)
This Business Unit provides a range of express mail, parcel and package (up to 70 kilos) pick- up
and delivery services within each country's boarder. Customer loyalty and service price points are
threatened by lower cost, technologically advanced cross-border
competitors, The growth sector in the industry is pointed towards cross-border express service
and global supply chain management. Domestic freight 1 is operating with 30% excess capacity in
its outdated network operations and work centers. However, its sales channels and sales teams
are considered "Best in class".
Both management and union employees are long-tenured, nationally focused, and
operate in a traditional hierarchy. Several productivity programs introduced in the past 3 years
have resulted in strikes, not achieving the desired performance improvements. Last year, several
"Top Performing" sales, technical and marketing personnel left to join the competition. 2 years
ago the "Best Practices "team from the Global Express
Business Unit was assigned to introduce new operations methods in Domestic Freight 1_ work
centers. The project was not correctly communicated. Rumors flew; local management failed to
accept the suggested changes and resented "these foreigners
telling us what to do." In fact, the Global Express team members were held hostage by the
Italian and German unions. They were released unharmed only after local management agreed
not to continue the project.
End-to-end work flows and activity streams have not been documented, nor developed in a
manner consistent with Industrial Engineering principles. 80% of all positions lack current job
descriptions. 50% of the work force will be retirement eligible within the next 5 years, Domestic
Freight 1 is exiting the USA market and employs only 500
personnel in Miami and New York City. 236
• Domestic Freight 2 (China, India, Australia
This Business Unit provides the same portfolio of services as Domestic Freight 1 to the Australian,
Indian, and Chinese country markets. Volume and price increase leverage exist in both China and
India, while Australia is experiencing downward revenue and profit pressure. Government
regulatory environment is uncertain but improving. In China and India the operations are currently
running above 125% of network capacity. investments in work center technology, sales channels,
warehouse space, and personnel productivity are planned for the next 5 years.
Major account customers and retail customers are demanding a "one stop shopping" service
providing both in-country and cross-border express delivery. Management is very active in
negotiating new government licenses to operate in all parts of these emerging economies.
Dramatic growth is expected for the next 20 years in China and India.
The work force consists of young, inexperienced (but highly promotable) managers and
semi-skilled, hard working front line employees. Although a similar cross-border unit project failed
4 years ago, Domestic Freight 2 management recently requested a team of experienced personnel
from Domestic Freight 1 and Global Express be assigned to China and India in order to introduce
"Best Practices" in work systems, network management, supervision, and sales methods.
Competition for skilled labor and effective managers is intense in both countries. Several "Mission
Critical" and high potential personnel resigned in the last 6 months citing "lack of advancement,
incentives and international opportunities" as the main reasons.
• Global Express (Americas, Europe, Asia, Middle East)
Launched 20 years ago, this Business Unit provides cross-border / global delivery of mail, express
parcels, and freight shipments (up to 100 kilos) for individual and small to
large corporate customers. Following the successful negotiating of a major contract with 10
large government post offices ($713/yr in revenue) to deliver mail, T2T just completed a multi
— year capital investment program to upgrade the network, work centers, and truck / plane
fleet. Global Express is very operationally, technologically advanced. Although located in many
cities near Domestic Freight 1 and Domestic
Freight 2 work centers, Global Express has maintained its assets and managed its people and
business processes separately from the rest of T2T. But Global Express has, however leveraged
the common T2T brand very well.
10 years ago, the Global Express management dramatically redefined human capital
development and management as critical, strategic processes. The Business Unit created new
HRM strategies and policies while upgrading the HR department talent with high potential line
managers. Global Express systematically refreshes the skill sets and talent in sales, operations,
and technology through college recruitment, cross —border personnel rotations, and strategic
outside recruitment. its network systems, work centers are engineered to be "Industry Best".
Global Express's future success in the attractive global transport market is threatened by UPS,
Fed-Ex and German Post. To win the battles with these global titans, T2T Global Express must
operate its assets at 110-125% capacity (versus current 70% utilization) and reduce its unit cost
dramatically. New performance management, leadership development and pay-for-performance
compensation systems are being piloted and rolled out to all operations in order to achieve these
goals. Global Express has proposed to T2T HQ and the other Business Units a cross-selling
program with incentives, products, and processes defined. This proposal is pending with no
response to date.
Global Supply Chain (Europe, Asia, Middle East)
This Business Unit is only 5 years old. Its mission is to provide integrated solutions for our global
customers' logistics and supply chain management needs." The target market is exploding with
I5%+/year growth anticipated for the next 20 years. The service offering of the Global Supply
Chain Unit includes a sophisticated suite of software driven warehouse, hauling, and storage
investments which create a highly synchronized movement of goods along a company's supply
chain to the customers.
The T2T Global Supply Chain Business Unit currently generates itsSI. B revenue base from only 3
accounts (auto, chemical, and technology). With "all its eggs in just 3 baskets," the Business Unit
needs to quickly fill out its global network foot print, recruit / develop the needed global marketing
and technical work force, and install "work class" systems in all its major accounts. The
management workforce was carefully recruited to grow the business. Their skills are in high
demand. The future success of the Business Unit depends to a great extent on the collaboration
with other T2T Business Units
relative to major account relationships, network cooperation, and loaned management expertise,
The "Real Time Situation"
The CEO, Sonja Y, has just last week completed a 5 day Participative Planning Workshop in
which the top 1,000 managers gathered together to discuss, understand and agree to the 5 year
Business Plan and the 5 Strategic Imperatives of the Board of Directors. Sonja also introduced to the
group the "Key Organizational Behavior and People Imperative."
For the last 10 hours, Sonja and the Senior Management Corn M ittee (SMC) have been reviewing
the feedback from the senior leaders at the workshop, as well as the recently completed organization
surveys and audits. Their eyes have focused on the following "Business Information":
● Top Business and organization priorities as voted on by the Senior Leaders at the
workshop (attachment 3)
● The results of a survey conducted in the last 60 days of the top 5,000 managers
(attachment 4a,b)
● The result of a company — wide survey of all employees, high potential personnel,
and "Mission Critical" personnel conducted also in the last 60 days. (attachment
Sa,b,c)
● The top leader profile and the high potential profile of a talent audit conducted
company — wide the last quarter. (attachment 6a,b)
● A summary of a recently completed T2T Business Unit Labor, Quality, and Productivity
Index completed by an industry consulting firm hired by the Board of Directors.
(attachment 7)
Sonja has organized the T2T Corporate Planning Calendar to include 15 weekly meetings of the
SMC, commencing this week and ending with full Board reviews. Each SMC team is charged with
addressing specific global HRM and organizational behavior issues and presenting to the Board their
specific team's recommendations on the solutions needed to achieve the 5 Strategic Imperatives of the
Company and to meet / beat the financial requirements of the Three Year Business Plan. Sonja looks up
over her glasses and quips: "Ok, gang, let us get started on creating a successful future for T2T. We have
3 years to achieve the business plan and the strategic imperatives or we will be broken up."
Attachment 1
T2T COMPANY .
THREE YEAR BUSINESS PLAN
Business Units Current Revenue 3 Year Revenue Current operating 3 Year operating
Profit Profit
Domestic Freight 1 $20 Billion $15 Billion $1.0 Billion $ .6 Billion
Domestic Freight 2 $5 Billion $10 Billion $.2 Billion $.6 Billion
Global Express $15 Billion $20 Billion $.45 Billion $.66 Billion
Global Supply Chain $1 Billion $5 Billion $.1 Billion $1.0 Billion
T2T Total $41 Billion $50 Billion $1.75 Billion $2.86 Billion
Attachment 2
12T COMPANY
THREE YEAR EMPLOYMENT PROJECTION
Business Unit Current Employees Projected 3 Year Emplpyment
Domestic Freight 1 20,000 16,000
Domestic Freight 2 8,000 12,000
Global Express 20,000 30,000
Global Supply Chain 2,000 5,000
H.Q. 5,000 2,000
T2T Total 55,000 65,000
Attachment 3
121 COMPANY
Top Business and Organization Priorities
Voted by the top 1,000 managers at The Participative Planning Workshop
1. "Silo" mentality and "Tribalism" which dominate T2T culture 85%
2. Lack of a performance focused, innovative, and collaborative culture in T2T 82%
3. Inconsistent Business processes and declining customer service standards 78%
4. Identification of operation consolidation, global product, and best practices
cross-fertilization opportunities 77%
5. Global Approach and deeper investment in Global Supply Chain Business Unit 70%
6. Creating the channels, personnel, and motivation to cross sell the domestic freight and
Global Express products 68%
7. Restructuring I-I staffs, authorities and costs 55%
8. Design of an integrated Domestic Freight and Global Express Business Units 65%
9. Establishment of enterprise — wide leadership development, talent Management and
productivity systems. 64%
10. Company —wide audit of HRH processes to assure efficient, competitive, and effective
people practices. 60%
Attachment 4a
T2T COMPANY
Top 5,000 Manager Survey
"To be successful, T2T has the proper ...." % agree, strongly agree)
Global Global Supply
Item H.Q. DF 1 OF 2 Express Chain
Global Vision and Priorities 80 58 65 78 75
Cohesive Leadership Team 70 45 60 60 55
Desired Cross Cultural Awareness, needed
business skills and necessary organization 40 35 40 30 30
behaviors
Clear Roles and structures in local decisions 60 70 75 55 65
Clear Roles and structures in global decisions 60 40 50 65 : 65
Global structure aligned with source value 60 40 45 70 : 50
Local structure aligned with source value 50 90 _ 85 60 . 65
Right People in right jobs 60 65 55 65 • 70
Local talent to achieve goals 60 90 80 75 ; 65
Global talent to achieve goals 40 45 35 65 60
Aligned measures and incentives 45 40 45 55 50
Effective and efficient G & A 90 30 35 40 ! 40
High Performance values 70 65 65 70 75
Needed cross-border values and behaviors 30 25 20 50 70
Capacity to lead change locally 35 75 70 35 60
Capacity to lead change globally 45 40 50 55 _ 80
_ Innovation to succeed globally 1 65 50 45 50 80
Attachment 4b
12T COMPANY
To5 coo iili ariie
"To be successful, T2T has the proper ...." ( % agree , strongly agree)
Global
Item H.Q. DF 1 DF 2 Express
Collaboration to succeed globally 40 NM 45 50
11111111112
1
Operation processes to succeed locally 75 80 ME 70
65
Operation processes to succeed globally 50 ME 40 45 30
Productivity to succeed 40 65 50 60 55
Needed HM processes globally 40 50 40 40 30
Revenue growth culture 40 65 45 40
Proper rewards and motivation programs 50 50 45 40 50
Needed global talent management system 45 55 30 30
Needed performance culture/ system 65 60 70 65
244
Attachment 5a
T2T COMPANY
ptoyee Climate surrey
% favorable response
Global
H.Q. DF 1 DF 2 Express
Leadership capability and behavior Mill 60 85 80 85
Communications 50
MIN= 7° 80
Training i Development 50 MEM 78 =MI 85
Direction of T2T IIEM 60 80 70 80
Work effectiveness 45 40 55 80
Customer satisfaction NM 60 65 80 85
Competitive Products 50 55 40 65 45
Employee engagement 50 45 85 80 90
Cooperation between my group and other
65 30 50 50 50
organizations
Workplace involvement 40 45 60 75 75
Ethics 90 90 70 70
Performance management 35 30 25 65 55
Attachment 5b
T2T COMPANY
High Potential Manager Climate survey
% favorable response
Global
H.Q. DF 1 DF 2 Express
Leadership capability and behavior 40 35 45 80 60
Communications 45 35 45 ' 75 70
Training / Development 35 30 50 80 75
Direction of T2T 40 45 60 70 80
Work effectiveness 30 35 55 85 65
Customer satisfaction 40 50 55 80 70
Competitive Products 35 45 50 60 50
Employee engagement 35 50 50 80 75
Cooperation between my group and other
35 45 50 35 30
organizations
Workplace involvement 45 45 60 SO 80
Ethics 85 85 80 90 85
Performance culture p 40 40 65 75 80
246
Attachment Sc
T2T COMPANY
"Mission Critical " Personnel Climate Surve
% favorable response
Global
H.Q. DF 1 DF 2 Express
Leadership Capability and behavior 40 40 50 ; 75 80
Communications 50 35 65 80 50
Training /development 50 40 50 80 60
Direction of T2T 55 50 55 65 65
Work Effectiveness 35 25 55 75 60
Competitive Products 40 45 65 50 35
Customer Satisfaction 45 60 60 70 65
Employee engagement 30 45 SS 75 70
Inter organization cooperation 35 30 45 45 50
Workplace involvement 25 45 60 70 45
Ethics 90 80 80 85 85
Performance culture 45 50 65 75 80
Annual turnover % 3% 8% 15% 20% 30%
247
Attachment La
TT COMPANY
Talent Audit
Top 3 Levels: Leadership Profile
Global
H.Q. DF 1 Dr 2 Express
Average Age 54 52 38 40
MEI
MEI
7
1MM.
3
LO, S. years 30
N
% Experience sales MEI 60 60 11111M 20
% Operation KM 30 20 65 6
% General Management 10 45 10
MEM 5
%I.T. NM 5 1
8 0
% Staff 80 10 4
11111.111 5
5
=
% International Experience 15
MIN 20 90 75
% Cross — unit Experience 15 2
ME 55 15
248
Attachment 6b
12T COMPANY
Talent Audit
High Potential Personnel
Global Global Supply
Item H.Q. OF 1 DF 2 Express Chain
#s 100 400 250 600 150
Average Age 42 45 35 37 32
L.O.S. years 20 25 15 8 3
Cross Border Experience Ifs 20 40 10 500 50
Cross Unit Experience 45 20 10 5 150 10
Marketing i Sales Experience #s 5 50 25 150 65
Operations Experience 4s 10 50 150 300 80
General Management Experience fts 2 200 25 125 20
Technical Experience ifs 15 100 j 25 120 100
Staff Experience #s 68 -- 25 30 .■ MP
Females #s 35 100 25 350 30
% of Turnover 2% 3% 10% 5% 20%
