Crown Point Cabinetry Case Study

December 16th, 2016

Muhamad Zakky Alif
Class of International Program 31
Lecturer: Supriyadi, M.Sc., C.M.A., Ph.D.
Master of Business Administration,
Universitas Gadjah Mada

Case Summary
Crown Point Cabinetry has transformed itself into a profitable company with a
motivated, content workforce which should be a role model for other small
companies. Brian Stowell implemented changes in 1993 that have greatly reduced
absenteeism and made turnover almost nonexistent. This was accomplished with
programs such as gainsharing which also reduced labor costs and wage increases.
Management level was eliminated in favor of employee based management teams
which control employee reviews and hire and termination of employees. This
reduced cost and increased employee participation. These changes have
transformed Crown Point Cabinetry into a profitable, admired company that people
want to work for which was Brian Stowells goal. No changes need to be made at
this time as what Brain did was successful. Continuing to focus on its employees is
all that Crown Point needs to do at the present time.

Problem Identification
Crown Point does not have any noticeable problems. It has addressed the issues
that it was facing in 1993 when Brian Stowell became lead executive and has
become a more profitable company. This is due mainly to a much happier workforce
that is involved in the management process. Line employees now have a stake in
reducing labor cost, reducing backorders and reducing absenteeism. Employee
management teams are also responsible for safety and the hiring and termination of
employees. This has made Crown Point Cabinetry a more profitable company with a
more stable workforce. Clearly Brain Stowell has addressed the problems Crown
Point had with its workforce and it is now a model for what a company can do when
it addresses employee issues.

Analysis of Solution Alternatives

Crown Point Cabinetry was founded in 1979 by Norm Stowell when he began
making cabinets in his garage. Crown Point was a family run business which
included all seven of his children and expanded to 100 employees by 1992. Brian
Stowell, with his fathers and siblings agreement, became lead executive in 1993.
When Brain Stowell took over, things were not running smoothly at Crown Point.

Annual worker turnover was 300 percent and absenteeism was a major problem.
Employee/management relations were described as horrible. Managements
solution to handle the situation was to wield a heavy hand but this had little effect.
The greatest problem at this time was poor in-process quality control. Some
cabinets were built three or four times before they got out of the shop. Brian
decided to take a different approach.
Brian called a company meeting and announced that he would be making changes.
Brian wanted people to say that they loved to work at Crown Point (which was not a
desirable place to work at the time).He encouraged his skeptical workers to trust
him.
From 1994 to 2002, Brian Stowell and his wife Becky, introduced many changes to
Crown Point Cabinetry. First he reduced payroll from 76 to 53 people. This increased
unit and dollar sales. The management system was then revamped. The
management layer was removed and replaced by a team-based management
approach. These employee-based management teams were empowered with
personnel and management decision-making responsibilities. These teams held
daily meetings to facilitate communication, air grievances, suggest work
improvements and schedule production. Co-worker review sheets were created to
evaluate team member performance and recommend salary increases. These teams
also had the power to hire and fire teammates.
In an effort to reduce labor costs (which constitute 25 percent of costs) a program
termed gainsharing was introduced. A set percentage was multiplied by sales
figures for each month, labor cost were subtracted from this amount and the
remaining funds were distributed evenly among employees. Gainsharing bonuses
were paid out 95 percent of the time averaging 11-20 percent of annual
compensation from 1997 to 2001.
Other changes were also introduced by Brian and Becky Stowell. A penalty of $1000
to the gainsharing pool for every backorder was implemented. If no backorders were
incurred during the week a lunch was held for the workers. This reduced backorders
noticeably. Wages were increased in 1998, 2000 and 2001. This increase contained
gainsharing bonuses at less than 25 percent on an annual basis and gave workers a
more stable wage. Safety teams were also introduced, which determined penalties
(including dismissal) for violators. Retraining on safety standards for all employees
(even the founder) was also introduced. In 1992 experience mods (a measure of
worker injury claims) were 40 percent above the state average; by 2002 it had
dropped to 32 percent below the state average. Crown Point introduced a 401K
retirement plan in 1996 and now provided its employees with annual picnics, a box
suite at the sports arena and a downhill skiing program.
Crown Point Cabinetry has now completely transformed itself from its low times of
1993. Crown Point is now a desirable place to work and the Stowell family is now
viewed as truly caring for their employees. Employee turnaround has been reduced
to near zero, absenteeism is negligible and management employee relations are at
an all time high. Sales have more that tripled between 1993 and 2001. Gross

margin has increased 6 percent and is more than 15 percent over the U.S. average
for cabinetwork plants. Net margin has moved from breakeven to over 10 percent.

Recommendation
Crown Point could go back to the way things were in 1993 but this would only cause
the problems it had to come back. Crown Point could create a new management and
compensation program but there does not seem to be a need to do this at the
current time. The most logical solution is to keep everything the way it is. These
changes have increased productivity and profit as well as decreasing employee
absenteeism and turnover. The programs that Brian Stowell has implemented may
not work in all industries but they are working well for a manufacture the size of
Crown Point and in the cabinetry business. Crown Point should continue the
programs that it has implemented and continue to focus on treating its employees
as its priority.
For the future, Crown Point Cabinetry should continue the programs it has started.
They must continue to monitor the companys financial results and employee
attendance and turnaround records. If Crown Point notices an unacceptable decline
in these figures, new programs should be examined and implemented to correct
these drops. If Crown Point continues to treat its employees well and reward them
for making a quality product they should continue to be a successful company.