Confidential Memo 

Confidential Memo 

 

 

TO: Roberto Berardi, CEO, EU Design 

FROM: Matthew D. Blythe 

SUBJECT: Advice and Counsel on EU Design 

DATE: May 7th, 2018 

 Dear Mr. Berardi,  

In the following pages, please find my analysis and recommendations of EU Design, and how you can work towards moving your company to the next level. I’ve uses causal loop diagrams to better illustrate and help you understand your company’s strengths and weaknesses. I’ve broken them out into four different loops, analyzed each, and brought them all together to provide a full understanding of the EU Design system. From there, I’ve drafted a comprehensive recommendation based on my analysis, as well as the recent employee survey.  Hopefully this serves as an aid in helping you to begin thinking of new ways to improve the overall success of your company.  

 Blue Loop 

Starting with the first causal loop, it can be seen that this balanced loop begins with the number of hours your employees are putting in, or that can be anticipated to put in. As both the work load, as well as production expectations increase on your employees, their level of exhaustion increases (s). Because of this, As the expectations mount and they continue to grow in their feeling of work balance fatigue, their risk of burnout will increase as well. When the probability of burnout overload happens, their level of efficiency will inevitably decrease. This negative decrease is marked by the (o). With expectations and workload mounting, your employees will naturally begin to innovatively find ways to increase their ability to multitask (s). With that in mind, as the need for this continues, they will feel the increased need and desire, because they’re so personally invested in EU, to work longer and longer hours. This is a destructive loop, that will ultimately hurt and damage your workforce long-term if not addressed.  

Green Loop 

In this next loop, we add a few more aspects into the employee expectations to see how this balanced loop is impacting the teams. This loop picks up at the decreased efficiencies of the employees caused by the increased hours they are needing to work, the need for multitasking continues to increase. The need for multitasking is exasperated by the broad range of products the employees are expected to manage. This high expectation of product knowledge continues to be multiplied as the number of suppliers increase. As a result, the need to meet the demands of such a variety of suppliers adds to the amount and variety of products they are expected to manage. As this continues, the negative impacts on the employees is felt more and more, resulting in a continued decrease of their efficiency, exacerbated by mounting stress as a result of constantly growing expectations.  

 

Red Loop 

In the next loop, we are evaluating the employee compensation and motivation. In this reinforcing loop we can see how staff motivation is driven. Staff motivation is driven first and foremost by the benefits and culture that EU Design has created for their teams. This begins with the overall number of generous holidays they receive, as well as the freedom they have in their daily (unsupervised) work and schedules to be maintained. By and large, this driving force brings a positive amount of commitment each employee has for EU and drives them to continue to give their all. The desire for employees to commit their best effort and achieve goals can be seen in their ability and willingness to multitask, as well as an increased willingness to take on a broad range of product management. A result of their positive experiences is their commitment to work. And, as a by-product, this positivity results in their maintained and established positive working relationships with their clients and resulting in good customer satisfaction. As customer satisfaction remains high, so does company performance. A retained high level of customer satisfaction should result in an increase in staff salaries, so we are able to keep with our standard of generous benefits, keeping staff motivation high. If everything remains positive, this loop will continue to be reinforced.  

 

Yellow Loop 

In looking at our final loop, we can start to see how an increased workload due to an increase in the number of suppliers EU is working with can negatively impact EU Design. With an increase in the broad range of products the employees are expected to manage, so too is there an increase in the number of suppliers they must handle on a regular basis. With an increase of suppliers comes a decrease in the overall quality of all the suppliers. This causes the employees to increase their level of quality control to ensure all the products meet EU standards. As the need of quality control continues, so does the increased need for each employee to maintain high levels of multitasking. Ultimately this will stretch employees’ morale thin, and so the cycle will continue, which is unsustainable.  

 

UE Design Systems Model 

When we begin the process of putting these loops together, we can take a holistic look EU Design as a complete system. One of the common denominators between all the loops is the need for multitasking amongst the employees. As the expectation of multitasking increases, the amount of work needed out of each employee also increase which leads to exhaustion and an overall decrease in the efficiency. Conversely, as multitasking increases, so does their abilities to take on more product management and more handle more suppliers. Since the employees are well compensated and highly motivated, through multitasking they can take care of more customers well, resulting in good client relations and high customer satisfaction. This ends in positive benefits for the company overall. With both positive and negative aspects in this complex system loop, we must work to minimize the negative aspects, such as exhaustion. Exhaustion can be a factor as result of extended work hours. Being aware of this allows you the ability to find ways to maintain and increase company performance.  

  

Recommendations 

EU Design has thrived as a growing company with a hands-off approach to leadership. This has allowed for freedom for the employees, and a decreased need for higher level management positions. The question is, how can EU Design bring structure to this organizational model, while still ensuring employee freedom. The retention of allowing employees to feel a sense of freedom is crucial, as it has been determined to be a predominant driving factor in employee self-motivation? 

In reviewing the causal loops we’ve discussed above, as well as feedback from the recent employee survey, we have the ability to begin drawing some conclusions, and potentially ascertain a likely road map in how to best move the company forward. From the survey it can be seen the employees feel the need for additional management and leadership. The primary need for this would be to help facilitate better communication between both the two offices as well as suppliers. Lack of communication and trust between the offices can be seen in the increased number of hours employees are needing to work and their increasing levels of exhaustion. The desired need for better communication with the supplier is a result of the quality of the suppliers, which has decreased as the overall number has increased. Finally, what has kept EU so successful, and which has been the capital that has been a marker of success, is and will always remain the employee. In order to keep a highly motivated staff able to continue growing and meeting the ever evolving demands of the business, compensation must be structured and fair for all involved.  

In reviewing the org chart, staff feedback and negative aspects within the system, there is a need for some basic and fundamental leadership restructuring. Currently, most of the leadership communication is coming out of the New York office to the Hong Kong office. But, it would appear that little communication is openly received by the New York office, which is causing a point of contention and friction with the staff in Hong Kong. Communication channels need to be established either between the account managers and their senior merchandisers, or additional leadership needs to be established to facilitate the needed flow in communication. Having better communication structures in place will facilitate to speed up processes, and thus reduce the frustration and exhaustion employees are having as a result of the lack of effective and efficient communication.  

As margins are needed to increase for EU to continue their rate of increase, employee motivation and commitment must increase as well. One way this has happened, and will continue to happen, is through competitive compensation. Since you see yourself as a teacher rather than a boss, you must strive to model and teach your staff how to better market EU and drive sales. With compensation dependent on your perceptions of employee productivity, it is becoming increasingly necessary to better define how you plan to structure bonuses. A positive effect of this is that staff have set expectations, tangible goals, and the ability to project their own value within the company; in short, an employee must know what it is they are aiming to accomplish and what the reward may be. According to the staff survey, the lack of a rewards system resulted in the lack of higher achievement. If you have the goal of desiring your staff to perform at an increased rate, you must take accountability and ownership in properly equipping them with the tools to achieve this. In that same vein, they need to be given tangible work-life goals to have on their trajectory and be aiming for. In doing so, you will increase staff drive and commitment to the company, which ultimately will result in better relations with clients, greater satisfaction, and a better bottom line.  

Conclusion 

While it may seem that this analysis is critical, please know that is not the intent. However, it is only through a critical eye that we are able to properly assess what is working for a group of people, and what is not. With this knowledge we gain the valuable tools in knowing how to best move forward and make changes that improve your desired result. It is my desire that this provides you a spring board to begin the process of opening dialogue with all your employees. Together, maybe you begin seeking tangible small changes that may grossly impact the positive development of the company. Let this serve as a road map as to how EU can better operate and grow in the future. Through collective discussion and open communication, your employees will become even more committed to the organization and dedicated to its growth and success.  

 

Sincerely,  

 

Matthew D Blythe