FREE ESSAY ON VALERIE MORGAN CASE STUDY

VALERIE MORGAN CASE STUDY

Valerie Morgan Case Study
Partnering Leadership and Controls
Margaret Glendinning-Welch
December 13, 1999
Abstract
Morgan Publications is currently in the leadership crisis stage of the company's
evolution. This is characterized by the need for more formal means of communication,
unwanted management responsibilities of the founder and increasing conflicts of the
department managers. A strong management entity is needed to pull the organization
together and assist in setting a direction for the future. This direction includes
establishing more formal systems and controls, but without sacrificing department
manager's autonomy and creativity, and maintaining a decentralized authority structure.
The Problem
Morgan Publications suffers from a leadership crisis as evidenced by Valerie Morgan's
indecisiveness and a lack of basic management systems. Her desire to be a leader and
innovator is hampered by her administrative responsibilities. (Turner & Stevenson, 1986,
779) By divesting herself of the administrative and management role, adopting minor
structural enhancements and controls, she could focus on the future and growth of Morgan
Publications. These changes can be implemented without sacrificing the "small business"
environment or curtailing the autonomy and creativity of the employees. (Turner &
Stevenson, 1986 781)
The Leadership Crisis
Characteristics of the leadership crisis stage include: increased number of employees
causing a requirement for formal instead of informal means of communications, founders
being burdened with unwanted management responsibilities, and conflicts between
department managers [leaders] increase. (Greiner, 1972, 42). The realization that
professional management is needed is coupled with an unwillingness of the founder to step
aside and relinquish control. (Greiner, 1972, 42). Morgan Publishing and Valerie Morgan
exhibit all these problems associated with leadership in crisis.
Morgan Publishing has grown from 10 employees in 1982 to 42 employees in 1986. (Turner
1986, 775) During this time several formal systems were adopted; however, department
heads were reluctant to support them. Department managers set goals in the form of
budgets, but refuse to substantiate them with requested supportive documentation. (Turner
1986, 776) Valerie Morgan's request for information from her managers translates into a
lack of trust or a restriction of their independence to them. (Turner 1986, 776) The
system for managing delinquent accounts does not follow established policy and results in
advertisements being pulled well after the 30-day limit, usually not until after 90 days.
(Turner 1986, 777) Additionally, the sales department is not notified of delinquencies
and only finds out when the accounts call to complain. (Turner 1986, 777) 
As a manager, Valerie Morgan maintains an "I don't know and I don't care" attitude that
leads her to "ignore the administrative component and just tell someone else to make a
decision." (Turner 1986, 779) She is saddled with unwanted management responsibilities
that leave no time for the "creative, big picture issues... or for developing new product
concepts". (Turner 1986, 767) By and large, day to day decision making is left to the
department managers and staff with her being involved in a random, multi dimensional sort
of way, with no clear objectives or agenda for her to focus on. 
Conflicts between departments arise due to lack of communication, clear defined policies,
and controls. A salesman will promise special space to one vendor causing the conference
department to compromise their position with other vendors. (Turner 1986, 777) The
accounting department mails past-due notices to advertisers without warning the sales
department. (Turner 1986, 777) The production manager uses a 'pen and paper' method of
accounting because the current system does not provide her with needed information to
maintain accountability. (Turner 1986, 780) Almost every month the advertising, editorial
and production departments are in turmoil over the closeout of the 
Magazine, due to the lack of an established formal criterion. (Turner 1986, 767)
Management in Action
Morgan Publish needs to hire a manager who has the necessary knowledge and skills to pull
the organization together. (Greiner 1972, 42) By installing a capable manager, Morgan
Publications can enjoy a period of growth and direction. (Griener 1972, 42) Job
assignments have already become more specialized and some organizational structure is
already in place. (Turner 1986, 778) While controls and communication are needed at the
strategic level, this should not occur at the cost of departmental autonomy and the
decentralized decision making process. 
Decentralized responsibility and decision making has improved many big firms' response to
the market place. (Mathis & Jackson, 1997, 210) Corporate giants such as Microsoft are
taking the paths of smaller firms headed by entrepreneurs, like Valerie Morgan, and
controlling costs and bureaucracy. (Mathis & Jackson, 1997, 210) The payoff for thinking
big and acting small is experiencing growth in sales when competitors are only holding
their own. (Mathis & Jackson, 1997, 210) This type of structure is a positive force in
Morgan Publishing and does not need to be changed.
Managerial controls are necessary at this stage in Morgan Publishing's business cycle in
order for the business manager and Valerie Morgan to maintain operational stability.
(Mosely et al. 1996, 493) Reports on delinquent accounts are necessary for management to
make key decisions involving budgets, liquidity, compensation, or to establish new
payment guidelines. These reports are also important to the sales department to direct
energies to current account advertisers and not delinquent accounts. Having advertiser's
double check advertisements for accuracy after layout would reduce errors and conflicts
with the accounting and sales departments. These feedback controls help the departments
work together and keep control at the lower level while satisfying upper management's
need to track progress.
Performance standards need to be established. Standards are important for managers to set
clear objectives to channel the organizations energies. (Mosely et al. 1996, 497) Some
specific standards that are needed include sales quotas, budgets, job deadlines, and
subscriptions. (Mosely et al. 1996, 497) By implementing these standards the decision
making process becomes more routine and clearly defined for all involved. 
One of the major regular issues at Morgan Publishing is whether to close the magazine for
the month. (Turner 1986, 767) The editorial department maintains a strict 60-40 split
between editorials and advertisements. (Turner 1986, 767) The sales department claims
they can bring in more revenue if the closing is held a day, but if they do the editorial
department needs to obtain more articles, and then production time is cut. (Turner 1986,
767) By establishing a minimum number of advertising pages, and updating both the
editorial and production department of this number on a weekly basis, this will reduce
some of the confusion. When the minimum number of advertising pages is not met by the
deadline date, then that is a clear reason to hold closeout and each department will have
been informed. When the minimum goal has been achieved, then closeout will proceed and
any late advertisers will moved to the next month's magazine. Managers must be involved
in the goal setting process and understand that controls are established to assist, not
hinder their independence. (Mosely et al. 1996, 502) For the controls to be accepted,
people must clearly understand the purpose of the control system and feel they have an
important part in the creation process. (Mosey et al. 1996, 502)
Budgets are necessary to establish whether or not Morgan Publications is meeting
financial goals as well as allocating funds for future endeavors. By establishing
monetary
constraints, Valerie Morgan can establish which businesses are making money and which
businesses are losing money. The results of comparing budgets to actual expenses also
indicate areas that should be increased or decreased over the budgeted amount. (Mosely et
al. 1996, 503) This information can also be used in the performance appraisal system for
Morgan Publications.
Currently, Morgan Publications has no performance appraisal system for the department
managers. (Turner & Stevenson 1986, 777) Valerie Morgan simply allots a 15 to 20 percent
'upside' in compensation for people who perform well. (Turner & Stevenson 1986, 777)
However, this is difficult because there are no quantifiable performance standards to
measure each managers actual performance. (Mosely et al. 1996, 498) From the department
manager's perspective, they collectively agree that the budget and accompanying goals are
not linked to their performance appraisal or compensation. (Turner & Stevenson 1986, 779)
By establishing guidelines and linking them to the appraisal process, Valerie Morgan
instills in her managers a clearly defined purpose in providing the operating information
she needs and currently finds so difficult to obtain.
The Big Picture
Valerie realizes that she desperately needs more controls and stronger management. The
problem is finding that person who will be accepted by Valerie and the department
managers. (Greiner 1972, 42) However, once the manager has been selected and the above
mentioned controls set in place, Morgan Publishing will achieve growth and direction
because: (1) Valerie will be able to focus her energies on new ideas; (2) department
managers will be able to function better with well defined goals that do not encroach on
their autonomy; and (3) the small business feeling that is a critical part of the
corporate culture will be maintained. 
Greiner, L. (1972, July-August) Evolution and Revolution as Organizations Grow. Howard
Business review, 37-42
Mathis, R. and Jackson, J. (1997) Human Resource Management. St. Paul, Mn: West
Publishing Company.
Mosely, D., Pietri, P., and Megginson, L. (1996) Management: Leadership in Action 5th
edition, HarperCollins College Publishers.
Turner, James and Stevenson, Howard (1986) Valerie Morgan Case Study, Harvard College
Harvard Business School, case 9-386-164, 767-787