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Case in Point

Bitter Sweet Chocolate- Sumeet Verghese

A leading chocolate manufacturing company is facing allegations that its

products are infested with worms. The media has been going hammer and

tongs after the company for showing laxity in adhering to quality norms.

However, Mr. Agrawal who heads the quality control department says that

his department never compromises on standards. In fact, he points out that

products bought at outlets that do not abide by storage requirements prescribed

by the company get infested. Based on this assumption, the sales team carries

out surprise checks on stores all over the country. Terming the checks asindiscreet and malicious, shopkeepers all over the country decide to stop the

sale of products of the chocolate company altogether. What can the CEO of

the chocolate company do in this case?

In order to analyse the chocolate

companys case, it is important to

first isolate the major actors

involved in the situation. These in

terms of their order of importance

are:

1. The CEO

2. Mr. Agrawal, the Quality

Control Head

3. The Shopkeepers

4. The Media

The CEO is faced with theenormous responsibility of

managing on the one hand, the

shopkeepers and their

resentment towards the sales

team and the company and on the

other, the deteriorating relations

between the organisation and the

media. Clearly, both call for a

diverse set of responses not to

mention diverse styles of

management. And before the CEO

decides on a course of action, it

would be wiser to take stock of the

welter of motives that operate in

each actors case.

Mr. Agrawal, the man who

perhaps advised the CEO to order

surprise checks on stores in the first

place, is likely to face the

maximum fire if it turns out thathis quality control department has

not been meticulous or stringent

enough in its procedures. His

confidence in his department is

welcome but not immune to an

official or unofficial scrutiny. The

CEO should first initiate an inter-

departmental inquiry, which

independently looks into the

claims made by Mr. Agrawal and

the media and then ascertains

whether the company can shift the

blame to its retailers. Accordingly,

due care must be exercised so as to

not antagonise Mr. Agrawal,

should the inquiry prove that the

quality control department did err

in its operations. The media would

love to have a few scapegoats

especially in such over-charged

circumstances. This exercise will

immensely benefit the CEO in

that he will be assured that he has

followed the due procedures

diligently and therefore whateveraction he takes is warranted.

The shopkeepers are probably

hurt because they may not have

liked the manner in which the

checks were done. Some hygienic

shopkeepers might be offended

by the insinuation levelled at

them. Accordingly, they may

have perceived the entire action

as a game of one-upmanship.

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Case in Point

Perhaps as far as they are

concerned, the company wants to

wriggle out of the mess it has got

itself into by passing the buck onto

the retailers. The CEO must first

ensure that this negative

perception is taken care of.

If the company has as a matter

of policy specified certain storage

requirements, then the CEO must

first find out whether the

shopkeepers have followed them.

This can be done by taking the

shopkeepers into confidence and

explaining the purpose the

investigation will serve. The sales

team may have behaved in a high-

handed manner in their eagerness

to fish out the culprits and

consequently created more

misunderstanding among theranks. The CEO could seriously

look into the charges levelled and

then ensure that the genuine

grievances of the retailers are

redressed. It should also be

explained to the retailers that the

company does not wish to

selectively target an X or a Y and

that these checks the company is

forced to conduct can only take

place with their support. The very

fact that these checks were not

undertaken earlier indicates that

the trust between the company and

retailer didnt necessitate it until

the issue came to light. The absence

of regular checks, which should

have been conducted as preventive

rather than post-mortem, already

shows the sales team and

consequently the company in poor

light. In fact the raids have all the

makings of a witch-hunt, a kind of

knee-jerk reaction partly to ward

off the criticism from the public

and the media. To make amends,

the CEO should look at the retailer-

company interface and if

necessary, call off the searches or

continue with them only if the

shopkeepers agree to such checks.

Such openness on the part of the

company will clear the air of

mistrust that has developed

between the two parties.

Since the retailers are the

backbone of the supply-chain

network, the relationship between

them and the companyis a delicate one and

hence fraught with

risks. This is the turf

that the CEO must

tread most cautiously.

When the air is thick

with allegations, it

would be best to take an

objective stance

keeping the media from

blowing the matter out

of proportion.

If the chocolate

company is confident

about the popularity of

its products, it can use

that information to

negotiate with the

retailers. Clearly, no shopkeeper

would consider it wise not to stock

goods that sell. But at the same

time the company cannot forget

that it can reach its customers only

through the retail chain. This

symbiotic relationship or mutual

dependency should be asserted

while negotiating. The CEO must

make it clear to the dissenting

shopkeepers that the need of the

hour is to protect their mutual

interests and that they and the

company should collectively own

up for what has happened. The

company, on its part, may come

clean and honestly declare that it

was a little late in carrying out the

checks and if it was a case of the

retailers not abiding by the

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prescribed norms, it will ensure

that appropriate action is taken

against the erring parties. Also,

should the company find fault

with its quality control

department, it should make a clean

breast of the issue. This action is

expected to be most damaging to

the company immediately, but in

the long run is likely to bolster its

reputation as a corporate house

that stands for integrity and

stringent adherence to business

ethics.

Most scams are so much a part

of the public imagination because

they are reported in a spicy and

sensational manner by the media.

This is not to discount the role of

the media as a watchdog but for

the CEO of the chocolate company,who is obviously at the receiving

end, the medias reporting of the

incident mandates that he go into

damage control mode as soon as

possible.

First of all, he should examine

the version of the press and the

media and ascertain whether the

charges against the company are

trumped up and baseless. If on the

basis of his findings, he comes to

the conclusion that the statements

by the press are not unwarranted,

he can declare that he wishes to

first find out for himself to what

extent the claims are true. He can

then begin his communication

with the media by issuing a press

statement that does not implicate

any party as such retailers or the

company, but which promises to

match the companys words with

desired action.

Rather than assigning blamebefore the inquiry is over, he could

notify that the people responsible

for the episode would in due

course of time be found and

made accountable.

Meanwhile, he could clarify,

that the company is

considering a countrywide

recall of the particular batch

of chocolates in which

worms have been found.

This action, costly

nonetheless, will only raise

the companys esteem in the

eyes of the public and the

media.

Since the popularity of the

companys products has

Case in Point

been heavily jeopardised, the CEO

may have to launch a publicity

blitz involving leading

personalities to salvage the

reputation of the company and the

brand in particular. This may take

the form of a media campaign and

extensive use of pamphlets that

make the customers aware about

the production process, the quality

safeguards that are ensured and

the storage requirements that are

necessary at the retailers end.

Ultimately, it is how the CEO

manages the conflicting and

convening interests of all the actors

named in the analysis that can earn

him plaudits or brickbats. What

must not be lost track of in the

ensuing melee of negotiations and

bargaining is the principle that thecustomers are always looming in

the background. And therefore,

any compromise, which affects

their interests, is bound to prove

detrimental to the company. In the

final analysis, due regard must be

paid to their choices and wishes.

After all, if the experience leaves a

bitter taste in the mouth of the

consumers, they may not have the

will to buy the companys

chocolates, sweet tooth or not.

The author is currently pursuing

PG in HRM besides serving as a

Trainer and Instruction Designer

with Godrej Lawkin ITES.