Case Study

“Okay, we are now officially in a crisis” Carla said out loud to herself. She knew she was about to
face the toughest leadership challenge of her career- but she was not sure how she would
handle it.

After a successful seven-year career in the field, Carla now has been district manager for
Spectrum Health for just over two years. She supervises 10 territory reps across her district, the
state of Maine. But this is new, because just last week, she was the supervisor of 12 reps. Two
were laid off by Spectrum as part of its initiative of reducing its US sales force by 24 percent.
According to Mohsen, Spectrum’s new CEO, the layoffs were necessary to stay competitive.
“This will make us a leaner, more efficient organization,” Mohsen wrote in a memo. Carla knew
that other factors contributed to the decision to eliminate salespeople. The included a downturn
in the economy, specific government cutbacks of health care funding for most of Spectrum’s
customers, and the emergence of a tough foreign competitor.

Spectrum Health, Inc., is a $3.2 billion medical equipment manufacturer. The company produces
a wide range of medical supplies and devices for health care providers such as physicians,
hospitals, and health maintenance organizations. Products range from expensive heart—lung
machines to inexpensive stethoscopes, thermometers, and wound closure products.

Carla felt that the morale of her sales force was never especially high. The reps were unique
individuals who did not seem to interact much with each other. They were each motivated by
different goals. She never sensed any animosity among them and had been hopeful that
somehow she could make them more of a team. But in her first two years on the job, she has
focused primarily on learning her administrative duties, such as quantitative analysis,
forecasting, and budgeting.

In fact, the sales executive who performed her recent evaluation told Carla that she needed
SPECTRUM HEALTH, INC. to do a better job communicating with her sales- people especially
through coaching and individual contact, She had told the executive, “l’ve never been good with
that touchy-feely stuff. But I’ll try to do better!”

Carla also had been told that her unit’s over- all sales levels were disappointing. Market research
indicated that Spectrum held a 5.2 per- cent share of the market in Maine. This was well below
the company’s current national aver- age of 8.5 percent market share.

What stood out more than anything else was Carla’s unit’s lack of success in selling the more
expensive health care products, such as the heart-lung machine. To effectively sell such complex
devices, team selling is required. That is, Spectrum reps must coordinate the efforts of
engineers, cardiopulmonary experts, and other high-tech colleagues.

Carla knows she is in a very difficult situation. She needs to try to improve the morale of an
underachieving group of people who have a long history of not being committed to anything
other than their own individual goals. Further. she has to do this in a tough business climate ii:
which the company is laying off her salespeople Commitment to the organization is clearly at
all—time low among reps. How can she get these reps excited about working toward a common
company goal when they do not trust the company?

Even before the announced layoffs, Carla had taken the advice of superiors and booked more of
her work time for individual contact with her reps. In fact, she has devoted next week
exclusively to this. She will address all 10 reps first thing Monday morning in a one-hour: sales
meeting. She then plans to spend the reps of the week, through Friday, coaching them
individually. She plans on accompanying at least some of them on sales calls.

Her first challenge is to decide what kind of leadership to provide to—-and how much time I:
spend with——each of her 10 reps... After reviewing her reps’ unique needs and talents, Carla
feels that they can be categorized into five distinctive groups:

1. Two reps, Farah and Malak, are high performing and experienced. They sell all Spectrum
products the way they should be sold. In fact, they are the only two reps who consistently sell
the big items such as the heart-lung machine. This success stems in part from the close bonds
that the two have formed with some of the non-sales (technical) people at Spectrum.

2. Four reps, Alaa, Ashry, Andrew and Omar are solid performers but lone wolves. The
performance is average to above average across these four reps. Carla appreciates much of
what they do, but she is disappointed in their sales of big-ticket items such as the heart-lung
machine. These reps love their jobs especially the autonomy. They generally have little
interaction with others at Spectrum, including both sales and non-sales personnel.

3. Two reps, Daniel and Sherifa, are low-performing rookies. Actually, these two reps have been
with Spectrum for almost one year now. They are the only two reps left that Carla personally
hired (two other reps she hired were laid off). They were bright and energetic, but they still lack
experience. Carla feels that they could be much better performers if they improve their selling
technique.

4. One rep, Eman, is a mediocre-performing misfit. To Carla, Eman stands out as being a loner
among loners. The reps are generally not very close to each other, but Eman seems to be the
least interactive. Her sales levels are a bit higher than those of the rookies, but they should be
since she has been with Spectrum for almost five years. Eman never seems happy. Carla
suspects that this stems for the fact that she was born and raised on the West coast, over 3,000
miles away.

5. Finally, the one remaining rep, Robert, is a low performing, burned-out veteran. Now
approaching 60 years old, Robert was a solid performer in the past years. Since Carla became
sales manager, however, Robert’s performance has dropped significantly. Carla gets the sense
that Robert is looking forward to his retirement; and, in fact, she is, too.
Carla wants to develop a strategy for effective leadership of her sales force. She understands
there are different styles of leadership, and that most leader behaviors are either transactional
or transformational. She also understands that her leadership style should be appropriate for
the current crisis situation. Carla wants to develop a specific plan for each of the five groups of
sales people but she needs your help.

1. What is the general message that Carla should give all the reps in the Monday morning
meeting?

2. List and discuss the main leadership styles. What are the specific leader behaviors that Carla
should exhibit towards each of the five different categories of reps and why? Be specific.

3. What do you think of Carla’s method of grouping the members of her team? Is every member
in the right team? If you were in Carla’s shoes, would you have grouped them differently based
on the descriptions given about each one?

4. What would you advise Carla to do in order to fix the ‘crisis’?

5. What do you think of the new CEO’s vision? Does it make them more competitive? Or does it
weaken the business given the nature of Spectrum as a business?