It is without a doubt that the 1985 acquisition of InSpeech by Foster Management Company presented insurmountable business opportunities. Since the acquisition, the number of patients had increased seven fold to over four thousand, making it the largest speech, physical and occupational therapy provider in the US. This was fuelled by the aggressive acquisitions but unfortunately, by 1988, things were not going well at InSpeech, Inc. (Katz and Paine, 1996; pp1).
The main issue was attributed to the fact that InSpeech had failed to integrate the different administrative systems of the acquired companies as a result, administrative and support expenses rose and consequently lead to the decline of profit margins. They failed at creating an organizational culture that would be a representation of the umbrella body and so, all the different entities held on to their ways. Further, the company completely failed at employee retention; the company turnover was marked at a whooping 50% per annum. The general feeling by the employees was that InSpeech lacked the necessary leadership to steer it forward. With the high employee turnover rate came low customer retention. Inevitably, the public lost faith in the services of InSpeech to the extent that university students were forbidden from seeking clinical internships at InSpeech. It was only a mater of time before the issues reflected on their finances and soon, this was noted at Wall Street. From an average stock price of $27 in 1987, the stock price fell to around $7 by the1988 summer. This raised some concerns and the top management was on its toes to stop the meltdown and turn over the company ((Katz and Paine, 1996; pp1).
There was also the matter of the organizational structure and corporate management. The organization’s functions such as human resources, marketing, finance among others were centralized at the corporate headquarters in Valley Forge by the senior management. There was limited contact between the employees and senior management and this meant that proper communication channels had been compromised and so there was limited information transfer. The importance of investing in both human and social capital cannot be understated. While human capital entails the capitalization on the full potential of an individual, social capital is characterized by the increased productivity of individuals as a result of human interaction that fosters good relationships, trust, goodwill and cooperative efforts. The development of the social capital ensures that there is a sense of collective human effort aimed at the attainment of the organizational objectives (Kinicki and Kreitner, 2008).
In 1986, the InSpeech strategy was to capitalize on some neglected areas by other industry players, with speech therapy being their main priority. Through speech therapy, they sought to increase the profit margins through increasing the productivity of the speech therapists, nursing homes and the caseload per facility. Eventually, they planned to diversify into occupational and physical therapy within customized healthcare facilities. Under the leadership of John Foster, InSpeech aimed at becoming a leader in the industry through the consolidation and expansion of therapy services provision through a series of strategic acquisitions and synchronized growth. Foster was aware of the importance of value added service delivery in the provision of efficient services (Katz and Paine, 1996; pp3). To a large extent, InSpeech had many basics right; their vision, mission and values. For example, their finance and claims’ systems were under developments, together with personnel training, productivity management and marketing schedules. This ensured the InSpeech would be in a position to identify and treat ideal patients while exposing the therapists to training opportunities and management opportunities. On the other hand, the hospitals and nursing homes would benefit from the services of highly trained personnel and assistance with the tedious reimbursement documentation processes.
The organizational culture at InSpeech did not favor the organization in that what should have been the common ground for the organization was not unanimous. Kinicki and Kreitner (2008) define organizational culture as the representation of the share assumptions that is held by a group and influences the perceptions and behaviors of the employees. The case of InSpeech demonstrated an espoused culture which is characterized by a contradiction of the management’s behavior and the set values. InSpeech was in an industry that required sensitivity and respect for human values yet they contradicted the norms of the industry. According to the Carroll global social responsibility pyramid, four levels of responsibility must be attained in order to attain progress; legal, philanthropic, ethical and economic levels (Kinicki and Kreitner, 2008). InSpeech did not attain these interlinked levels.
In the period between 1987 and 1988, Tim Foster was forced to over multitask as most the recruited managers were incompetent in their functions and this was also reflected in the fields managers. The Wilson effective manger profile describes an effective manager as clear about the organizations objectives, a good organizer, posses administrative and technical expertise, encourages interaction and communication, delegates, has realistic ideas of possible accomplishments and rewards good work (Kinicki and Kreitner, 2008). However, the managers at InSpeech failed because they went contrary to the profile; for example, they were overwhelmed with the work load, were poor communicators, insensitive, failed to recognize effort and were unavailable. The staff needed both intrinsic and extrinsic rewards so as to experience a sense of self worth and accomplishment (Katz and Paine, 1996; pp1).
The clinicians and therapists had high qualification and were passionate about their cause. They were required to cover several geographic locations and when they were not at it, they worked in unappealing settings. Initially, the for-profit nature of InSpeech was appealing. However, over time, it lost its appeal because the therapists and clinicians were being pushed to rack in the profits at whatever costs. To many, this was robbing them of the sense of collective social sense to help their patients and many developed negative attitudes. According to the Goleman model, human beings need a sense of social awareness, self awareness, self management and a relationship with the management (Kinicki and Kreitner, 2008). All these were lacking at InSpeech and this soon made the job more of a routine, rather than a relevant experience for both the providers and the clients. This was coupled the fact that some of the managers lacked the necessary leadership skills and trained to handle both their subordinates and the clients. This limited creativity and innovation by the staff, leaving no accommodation for inevitable changes. Kinicki and Kreitner (2008) established that it is preferable for employees to work in settings that encourage held efficacy, flexibility and customer satisfaction over control and stability. Eventually, the increased employee dissatisfaction led to the increased staff turnover as they did not identify with the organization’s values (Katz and Paine, 1996; pp1).
InSpeech failed at attaining acceptable total quality management (TQM) levels. According to Kinicki and Kreitner (2008), TQM is characterized by listening and learning form the employees and customers, integrating continuous changes, teamwork and mutual respect and the effective implementation of tasks with the aim of getting the work done correctly in the first attempt.
InSpeech had failed in creating an organizational culture with which its employees could identify with. The essence of organizational culture is to create a sense of collective identity, commitment and stability (Kinicki and Kreitner, 2008).
InSpeech completely failed its employees most of them experienced occupational stress and were not offered any social support. They were therefore left to find their own means of dealing and the stress had detrimental effects to the productivity of the individual.
The following recommendations have been arrived at:
Incorporate a common organizational culture that will form the basis of common understanding. Emphasis must be placed on a collectivist culture that encourages a sense of ‘we’ rather than ‘I’.
Emphasis must be placed on Total quality management with the objective of improving the organization’s performance.
Acknowledgement of the inevitability of change and must be a well organized and planned process involving the identification of the components that need change, assessment of the compatibility of the proposed changes with the organizational objectives and the actual implementation of the proposed changes.
Embrace global social responsibility requirements. Ethics must be a priority rather than an after-thought.
Introduce training programmes the management with the aim of grooming them into world class managers. This will restore the faith and trust of current and potential employees. The recommended approaches include communication, respect, equality, competence and predictability (Kinicki and Kreitner, 2008).
Proactive socialization and mentoring of new employees to ensure that they are fully integrated into the organization.
The use of 360-degree feedback would be instrumental in maintaining an effective performance management program.
These recommendations represent the solutions to the problems facing InSpeech and by addressing them, headway in the right direction will have been made.
The following considerations should be applied during the recommendation implementation phase:
SMART Goals must set; they must be specific, measurable, attainable, result oriented and time bound. The commitment to the attainment of the set goals must be clearly conveyed to the entire organization with a clear explanation of the importance of the goals. There must be clear communication channels that would ensure continuous communication through out the process.
There should be increased interaction between the senior management staff, especially through training and social interaction forums. This is bound to increase communication and idea exchange. The management must ensure that mutual trust and respect is established.
Resistance to change is inevitable but can be overcome through communication, participation, negotiation agreements, explicit implicit coercion and even manipulation.
These are three instrumental factors that would encompass the general restructuring theme of the organization.
STRATEGIES TO SELL RECOMMENDATIONS TO THE MANAGEMENT
1. Demonstrate the importance and relevance of the recommendations to organization. This should communicate the sheer importance of adapting a new management approach so as to help in the turn around. Emphasis must e placed on taking an ethical point of view, rather than being entirely economically inclined as the rehabilitation business was sensitive.
2. Demonstrate the cost minimization and profit maximization properties of the recommendations both in the short and long run.
Katz, J. and Paine, L. (1996). Problems at InSpeech. Harvard Business School. Case#9-394-109.
Kinicki, A. & Kreitner, R. (2008) Organizational Behavior. 8th Ed, McGraw-Hill/Irwin.