Crown Point Case Study

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In 1997, after the formation of the new vision, strategy and structure of the organization Brian and Becky announced a new incentive system through a programme termed gainsharing. The new method led to undesirable consequences as individuals who worked overtime received a disproportionate share of the gainsharing bonus. However, the Team-based management structure of Crown Point resulted in resolving this paradox, by counselling out of individuals who work the most overtime hours due to consistently unfinished work.

Despite the many advantages and to certain extent a self-correcting nature of the team-based management approach, there were many areas that constantly required Brian’s attention and provisions. The satisfaction of customers and good word-of-mouth advertising was essential for the success of Crown Point. Company prided itself on on-time and complete delivery. Undesirably as gainsharing bonuses were paid, the number of backorders was increasing. To prevent this from happening Brian introduced and subsequently increased penalty provision to $1000 and also promised a free lunch. It was this combination of penalty threat and incentive offered that brought a desired outcomes. It is a good example of continuous evolution of control in order to align the company and employees objectives.

When Brian and Becky decided to raise wages, employees were delighted. Some of them, however, feared the increased labour rates could result in job losses. Brian assured them that was not the case and that the increase was direct consequence of increase in productivity. It can be argued that these wage increases reasserted the link between work performance, company performance and resources available for the reward.

Sales and marketing also evolved greatly. While in 1994 direct sales accounted for less then 25 percent of sales, it reached 95 percent in 2001. Brian felt the 30 percent margin captured by dealers could be better used internally to fund and in house design/sales team and increased advertising. Also new safety rules and guidelines were introduced and employees were empowered to remove others from the shop floor for safety violation. Even the founder and president was retrained on safety standards. This stresses the fact that everyone in the company was subject to the same rules. As a result of improved safety policy, the company’s safety record became the best in New Hampshire by 2001.

Communication in the company has improved dramatically as a result of the team-based structure. Brian introduced an open-door policy, came to know all employees by name, and interacted with his employees on daily basis. It can be argued that the openness and honesty in his dealings with the employees created very positive company culture. This positive culture together with team-based management approach, clear vision and strategy all contributed to the success of Crown Point. Also communication among Stowell family members had been good. Despite the fact that Norm, the founder of the company, did not support many changes that took place in Crown Point between 1993-2002, he chose to take a hands-off approach. It is for his attitude that Brian and Becky enjoyed the freedom to succeed or fail.

After 9 years of continuous hard work and change, what was once only Brian’s vision, now became an reality. The financial results have been solid. Sales more than tripled. Gross margin increased 6 percent and is over 15 percent better then an US average for cabinetwork plants. Net margin moved from breakeven to over 10 percent. All of this occurred while base wage rates increased 2.5 fold. By 2001, ninety-five of employees participated in the retirement plan. Company was able to provide its employees with additional benefits such as picnics, downhill skiing program and many others.

The Employees perception of the company and their loyalty improved tremendously. Employee turnover has been reduced to near zero, absenteeism is negligible and management employee relations are at an all-time high. In 2001 Crown Point won the Claremont Chamber of Commerce’s first annual Company of the Year award. Many of the nominations were reportedly from Crown Point employees. Not only the employees, but also the wider community enjoy the successful story of the company. In 2002 a committee of employees was formed to collect funds from employees, matched by the company, for distribution to community initiatives.

Future Prospects and Option for Crown Point

There is plenty more Crown Point can do. The most successful businesses know that there is always space for improvement no matter how long you have been in the business or how successful you are. As Crown Points experiences have proven it pays to look outside the box in terms of implementing next practices to improve areas within he organisation. They should continue to do so to ensure its continuing success in an increasingly competitive market. As Crown Point’s products designs are largely determined by residential trends, it would be a key to unlock future success for the market leader to be able to predict and adapt their design and processes in line with expected future trends. Perhaps focusing on eco-friendly manufacturing processes and materials as a unique selling point. This may require further investments in equipment or resign teams. If the Crown Point organisation wishes to experience continued growth it ay need to look at increasing the size of its facility to allow for bigger work-in-progress and inventory capacity as this is cramped at present. Also, to look at ways to reduce its lead time from sales/order to production time as actual manufacturing time is good (10 days) but overall order to delivery is quite long. Crown Point would also need to ensure if it increased the size of its workforce or production facilities the quality control systems in place remained effective – with a strong emphasis on first time quality. It would be in Crown Point’s interest to continue to maintain and grow strong ties within the community to keep a strong presence and to be held in high regard within the community as a reputable organisation and employer by looking a new and fresh ways to expand upon its community initiatives. Other options are to encourage referrals from past customers, for example by creating a cooking club and host parties in kitchens completed for customers and have them invite their friends and neighbours. Also Crown Point could build a showroom and make it available for fund-rising events such as luncheons, cocktail parties and celebrity chef demonstrations in order to build awareness, generate good will and encourage referrals. They can also attempt to increase traffic into the showrooms by inviting website visitors and home show attendees to sign