Rumors at New Home

CASE 9
Rumors at New Home
New Home has 180 employees. The company specializes in the production of household electrical appliances: bread makers, juicers, mixers, coffee makers. The company's headquarters is located in Bautzen, a small town in Saxony. In 1992, the founder and current director of the company, certified engineer Hans
Mayer, drew attention to the increased interest in natural food products that do not contain additives, and designed a new bread machine. He gave an order for its production to one small enterprise in Thuringia, and then bought this enterprise and equipped it with a small assembly line. It assembled parts made in the Czech Republic.
Every six months he put into production a new modification of his bread machine. Mayer opened his own business in 1992, then the company employed eight people. After this, the company developed very dynamically. This rapid growth is explained by two reasons: the excellent quality and reliability of the equipment produced and taking into account timely trends in the market. But the main reason for such stunning success was the sales system. Mayer sells its products directly to households.
The sales force currently operates in six regions of Germany, employing a total of 120 people, and is generally managed by Mr. Thomas, who was once Mayer's first sales representative. The sales system is based on strict organization, employees receive only commissions, all employees are very well trained; for each unit of goods sold they receive 50%.
In addition, New Home provides a 5-year warranty on all products sold; During this period, faulty equipment is not repaired, but replaced with a new one. The customer simply sends the faulty device to the company along with a warranty card and receives a new one in return. That is, marketers do not deal with complaints. The return rate of faulty equipment has been 1.5% in the last two years.
Recently, rumors have spread that Mayer is going to sell the company to his Swedish competitor. He allegedly made him a very lucrative offer. Thomas, who spends almost all his time traveling and leading in the regions, heard about this from one of his employees in southern Germany during a dinner together. The employee, in turn, heard about this from his wife, who works at Mayer's company in quality control.
Employees in this region immediately said: if this is true, then they will look for a new job. They will not work under Swedish leadership, and besides, the Swedes will probably buy the enterprise only to then sell it. This is exactly what usually happens when a company buys its competitor. Therefore, it is better to immediately start looking for a new job. Thomas is worried. He goes to the authorities. The next morning he learns from the secretary that Mayer apparently had a fight with his wife and is going to get a divorce. Rumor has it that he simply threw her out into the street at night.
As for the story of the sale of the enterprise to Swedish competitors, in her opinion, it is all chatter. She is Mayer's secretary and would probably know if he 5 was conducting such negotiations. By the way, no one has been able to contact the boss for a whole week. The company's commercial director, Mr. Holtz, tells Thomas that Mayer is currently in Basel, this is the only thing he knows.
A week after this conversation, Mayer returned to his company. On the same day - for the first time in the history of the company - the director appoints a deputy. His name is Urban, he studied economics and production organization. For the last two years he has worked in Denmark for a wholesale company selling electrical goods. When rumors reach Mayer, he issues a circular to the company's employees, in which he states that he is not going to sell anything. These are all baseless rumors. On the contrary, he plans further expansion: in the near future the company will include sports and fitness equipment in its product range. Therefore, he hopes that all employees will continue to take their work as seriously as before. In addition, in the circular, Mayer schedules a production meeting for the last working day of the current month. Throughout the month, the most incredible rumors have been circulating: allegedly Mr. Holtz is going to Hamburg to conduct secret negotiations with the Japanese. The sales system will supposedly be disbanded and completely restructured exclusively for wholesale trade.
All sales people remaining in the company will receive the status of employees. Their salary will consist of a fixed and bonus part depending on sales volume. Thomas is very concerned about these rumors and in the middle of the month he starts a frank conversation with the boss. As expected, Mayer reacts very strongly. He always believed that the company's policy, in particular its sales policy, was his personal business.
Workers - both in production and in the sales system - should rejoice and be grateful to him, Mr. Mayer, for the fact that he, an engineer from God, designed the ideal equipment, which, thanks to its excellent quality and reliability, became a real bestseller. He is still not going to ask anyone for permission if he decides to change anything. At the meeting, Mayer states the following: He doesn't understand where these stupid rumors come from.
Everything at the company remains unchanged, with one exception: instead of its own new development, New Home is launching a multifunctional device for monitoring the functions of the human body for pre-Christmas sales. We will assemble this device under a Japanese license from integrated circuits manufactured in Japan. We will not repair this device, like all the equipment we produce. In case of malfunction, it will also be exchanged for a new one. The commission has been reduced to 25% of the sales price, but the device is very easy to sell, because does not go into trade. Mayer finished his speech and the staff remained silent; they expressed neither approval nor displeasure. Nobody wanted to speak, including managers. Mayer shook his head with displeasure and left the workshop without saying goodbye.
Exercise:
Since the situation has escalated, and Mayer does not want to deal with it himself, he instructs a certain consulting firm to deal with it. Imagine that you are an employee of this consulting firm and give your recommendations!