At first, I would like to determine the background of both senior managers. Joze Stanic was a great leader for Gorenje company at the time of the breakup of the Yugoslavia. Slovenia declared independence and Gorenje had to act in new economical and political environment.
From my point of view, Stanic was the right man at the right time. He prevented Gorenje from the bankruptcy and developed the company to the position as eighth largest household appliance producer in Europe. He was more a leader than a manager, because it was the critical time for Slovenian people, who worked at Gorenje. He rallied the employees and gave them hope for better future.
Stanic reached his objectives and gave his successor, Franjo Bobinac, a great boost in development, but the time changed and the world, particularly Slovenia, changed.
Franjo Bobinac was a young executive who had been Stanic`s second in command for five years. Bobinac focused on marketing and managed Gorenje`s French subsidiary. He knew Gorenje well and had strong knowledge of export markets.
Bobinac was under constant pressure, because shareholders wanted more development following Stanic`s successful management period. He was following in the path of a dynamic, charismatic and respected leader. Everybody waited further improvement of the company. Bobinac was more a manager than a leader in contrast to Joze Stanic.
Now, I will compare and contrast their leadership styles:
I can determine Stanic`s leadership style as affiliative + some democratic issues. Stanic style was in this phrase - He is a warm person and discussed issues with the workers in the factory like they were his colleagues. He had a very clear idea of what needed to be done, but never talked in high-tech terminology. He had the ability to explain very complicated issues in a simple manner that comes to the level of everyone.
But in contradiction, this is my opinion, Bobinac has an authoritative style with some issues of Stanic`s style. There is clear need to change and Bobinac has his own view how to change (different from Stanic`s view). Bobinac wanted the company to develop in new economical circumstances, in the direction of his own view, but with the old Stanic`s employees commitment and confidence.
In the end, comparisons between Stanic and Bobinac`s leadership styles created more employee unrest in the company.
Stanic is direct, informal, and looked for people who can move things. Energy is coming from the top. With an open-door policy, Stanic`s leadership created energy within the company.
In contrast to Stanic`s leadership style. Bobinac is more closed, not so direct, and his doors were not as opened as those of Stanic`s.
Stanic remained close to people in the production. Stanic frequently visited the production line communicating further down the chain.
Bobinac was not expected to be seen on the production floor.
Stanic had trust of his employees and his employees accepted him. Stanic enjoyed formal and informal social activities. He stayed close to his people in important moments of their lives. His attitude earned him undisputed respect. I can say that the company was like a little village, where everybody supported each other.
Employees thought that they were not important for the board in Bobinac`s time and I think, his employees did not expect to see Bobinac in important moments of their lives. But in Bobinac`s time, employees had a mixed view on the situation and basically, these employees changed.
Stanic focused on production.
Key factors of Bobinac`s view ââ‚¬" it is all about cost, distribution and brand. Support of a solid brand position in the target markets. (marketing + brand)
One of Stanic`s biggest achievements was the ability to influence and change people`s mentality and behavior. He delivered clear messages about the traditional values he believed in, and which the company had embedded deep into its culture. Stanic was able to count on the strong dedication of Gorenje`s employees. (employees high commitment).
But Bobinac included two members who were relatively new in the company, in contradiction to Stanic`s policy. By doing this, Bobinac ruins the whole Stanic`s policy, because employees think that they have a life-long jobs in the company. He loses their trust, confidence and high commitment.
What are the major leadership and organizational challenges for Bobinac as he assumes the presidency following a charismatic leader?
It was a good time for Gorenje, after Stanic`s retirement. Stanic left a great background for the company and for Bobinac. Shareholders wanted Gorenje to develop further and to prove that small companies can survive in these new European economical circumstances.
Bobinac had knowledge of marketing, sales and branding. He thought that Gorenje can cover a wide range of prices.
But to move forward, Bobinac had to overcome the major leadership and organizational challenges, after the retirement of the charismatic leader. Strong leaders and managers were always vital for the company`s development, especially in such difficult business environment.
The challenge of Bobinac`s leadership style after the Stanic`s era. Bobinac should show his employees that he is also a great leader for the company and he can keep that high level of commitment and confidence, because employees will always compare him with Stanic.
Slovenia wanted to be the part of the Europe. It is clear for me that Bobinac wanted to move part of Gorenje`s production to non-EU countries. So, the company faced many problems with legal, labor, economical (tax, customs, logistics, etc.) and political problems, when Slovenia joined to the European Union.
As I sad in comparison of leadership styles, Bobinac supported solid brand positions in target markets. So, Gorenje faced with the problem of building such brand position.
Bobinac had another problem with companies` shareholders. Soon state will lose its majority of shares. Bobinac faced with the problem of a possible takeover. He wanted to be more accurate in development through acquisitions.
The challenge of Gorenje`s growth. As I sad, Bobinac wanted to the company to be strong on the target markets (expansion in North America and through the whole Europe). But here, he faced the problem multicultural environment and doing business in different cultures. He wanted to implement the strategy of shifting from surviving mentality to winning mentality and it would need multilingual, dynamic, competitive young professionals who were willing to relocate quickly across Europe.
Bobinac wanted Gorenje not to be so diversified (Hyundai cars, consumer electronics), because it was very complicated to manage such a huge organization.
The challenge of partnering with competitors (BSH, German Quelle, the French Carrefour, English Kingfisher). Bobinac was aware of the risk of producing goods for such big market players.
And one of the most important challenges is the willingness of the employees to take more these challenges. Bobinac believed he could still count on the fighting spirit of his employees with the right mix of challenges, vision and job security.
What impact would change management have on the company? On the employees? On other stakeholders?
In my opinion, the company, that does not have any problems to solve, is the
company with weaknesses in improvement and ability to change. Particularly in this case study, Gorenje faced the constant, rapid need to change, because it did not have that secured European political and mostly business environment, but it had a complete shift from socialist to capitalist political and business environment. Gorenje senior management should identify the new approaches, in order to fit in this new system. Many Eastern European countries faced such challenges, especially Russia, because it was the core element, which supported economically these Eastern European Countries.
The change management appears in the new way in this case study. Bobinac defined his strategy for future development and his action had an impact on the company, employees and stakeholders.
The impact on the company:
Bobinac wanted to have a solid brand position, but he had few resources to support it. He could only count on the products quality. So, the main impact on the company will be that its brand will be promoted through the partnership with the competitors and retail chains (BSH, German Quelle, the French Carrefour, English Kingfisher, etc.).
The part of company`s production lines will be moved out of Velenje in order to globalize company`s products on the new growth markets.
As, a result of the accession to the European Union, it will be easier to move products across the European Union companies, and the movement of the production lines will also help to improve logistics in the new markets.
In my opinion, the company should not be so heavy, as it was in Gorenje`s case, but company should have some diversification in its business, in order to prevent risks. So, in this aspect change management will help Gorenje to keep its core business in pretty good shape.
The change management will help Gorenje to be more multicultural and flexible in the new globalized environment. It will help the company to bring new young specialists without losing its core culture (if Bobinac will act accurately).
All these actions will help Gorenje in optimization of its structure in order to increase its ROS. Investments in development of production lines will give future impact in ROA, Asset side and COGS.
The impact on the employees:
The behavior of the Slovenian employees has changed. Young employees had more expectations, less loyalty and they want to have everything at once. As, it is said in the case study - average wages in Gorenje were lower than in the other Slovenian companies. Bobinac should do something about it.
Employees will not make comparisons between Stanic and Bobinac`s leadership styles
The change management will increase labor mobility and make labor restrictions more clear
The cost of labor will be decreased in order to be more competitive on the core markets.
The change management will bring give employees fresh corporate culture, young employees will bring new values and attitudes.
The impact on the stakeholders:
As it is stated in the case, the state was the major stakeholder of Gorenje till 2007. It was a great problem for the management, because the risk of hostile takeover occurred.
In this aspect, change management will bring new views for the company`s management, because the change in stakeholders structure will bring value delivery capability to the company`s organization.
Change management will help to understand new value position and anticipate expectations.
It will also give a certain boost to the company`s development, because the withdrawal of the state from the stakeholders structure will give foreign investors more confidence in company`s future.
The stakeholders will on the first place, employees on the second.
Should the change that Bobinac is considering be evolutionary or revolutionary? Why? Why not?
It is a very interesting question, because this case study is a great example of the company`s development in different types and under different management.
I think that Bobinac did not show the complete evolutionary or revolutionary change (in this case everything is not divided into black and white only). In my opinion, it was a mixed changes, both evolutionary and revolutionary.
Stanic left Bobianc a good legacy and it was a great background, in order to complete Bobianc`s ambitious goals, even if the middle management had mixed emotions.
Bobinac was from the Stanic`s team. So, it was vital to him to keep and evaluate some approaches in the company, because the total changes on the first phase of his management will lead to unpredictable consequences. Especially, because the employees had fresh memories about Stanic1s management.
Stanic employed a carrot-and-stick policy to demonstrate his obsession with quality. Stanic focused on quality, because it was a great competitive advantage for Gorenje. Stanic pushed to develop internal control systems as well.
Bobinac just used these legacy and tried to evaluate it. Bobinac counted on the quality of company`s products in order to promote these products through the partners and on targets markets, because customers got used to this quality.
Stanic also realized the importance of the growth on the new markets, especially Central and Eastern Europe, because Gorenje generated most of the revenue on these target markets.
So, Bobinac continued this strategy of the growth on new markets.
Stanic counted on the employees` confidence and high commitment. He tried to keep it, because they relied on him.
Bobinac wanted to use and evaluate this confidence and high commitment in order to develop his own strategy.
It is obvious, that new General Manager will bring changes and vision to the company. And Bobinac did it he revolutionary changed Stanic`s approaches:
Bobinac`s key values were in marketing, branding and sales. He wanted cooperation with other companies and retail chains. He wanted Gorenje`s brand to be more important for the young generation. As a result, he changed company`s approach in branding and marketing in order to make Gorenje`s brand more solid, like Bosch, Siemens, Indesit and Electrolux.
Bobinac wanted to move part of production to the non-EU countries to get more advantages in the target markets, not to concentrate the whole production in Slovenia (as in Stanic`s time).
Bobinac wanted to make the companies structure more flexible and mobile, to decrease diversification segment of the company.
Slovenian accession to the European Union will force Bobinac to make more rapid decision in the HRM sphere. He will not offer life-long jobs (like in Stanic`s time), he will have to revolutionary change the whole labor approach.
This accession will bring new tax, customs and transportations revolutionary changes.
Also, Bobinac changed his attitude to the employees. It was a revolutionary change for the employees and they lost their confidence in the management.
What would you do if you were Bobinac?
It is always interesting to analyze, how you would develop Gorenje in those circumstances and that time.
At first, I wouldn`t change the whole system radically, because most of the employees got used to the Stanic`s way of management. I would change the company step by step.
Then, I would avoid hostile takeover from the competitors, because our company has strong positions in the European markets.
I would clearly define company`s goals, vision, mision and values on the 5-year period
I would make a strong connection to the middle managers in order to keep high level of commitment.
Then, I would try to develop company`s HRM system:
Increase number of high-potential employees.
Prevent these employees from moving to other company
Improve expectation of employees, especially young employees, in better salaries, career prospects and expectations
Develop values of the multicultural business environment
Increase value of the each employee to the company
Invite consultants to the company in order to create a learning organization, because constant learning will give Gorenje competitive advantage.
Improve mobility and flexibility of the workforce.
I would support my brand policy (high brand positioning) with the quality of the products, but I would like to increase user-friendliness and simple in use, especially for young generation.
Our products should cover all price segments
I would develop our products in innovative way, process excellence way and more designed based way. Also, Gorenje would expand to the business areas with high return.
Also, I would focus on generating free cash flow and more profitability.
Our company should develop our connections with retail chains all-over the world.
People like eco-friendly products. So, our company should develop our products in eco-friendly way.
Improve stakeholdersââ‚¬â„¢ satisfaction by development of the proposition to customers.
ROIC must exceed WACC in middle time perspective
Accession to the European Union gives our company many advantages. So, Gorenje can use the values of the European company in order to promote and sale our products on the foreign markets.