Ohlins Chemicals: Leadership and Communication Problems
Read the following case study and then answer the four questions immediately following the case.
ÖHLINS CHEMICALS: LEADERSHIP AND COMMUNICATION PROBLEMS
Ulrik Johansson is a salesperson for Öhlins Chemicals, a Swedish-owned distributor of industrial chemicals and solvents in the European Union and the United States. Öhlins Chemicals has developed a favorable reputation in both Europe and the United States for its high-quality industrial products and excellent customer service. Ulrik realized early that selling industrial products requires excellent interpersonal skills because you must deal with a small number of customers whose upper management is often involved in making the purchase decisions. Because there are relatively few customers, salespeople need to be flexible and creative in solving specific customer needs—something that Ulrik realized would give him an advantage over some competitors’ salespeople.
A few years ago, Öhlins decided to widen its product mix and enter the textile market, starting first in the United States. If Öhlins succeeded there, the plan was to introduce the textile products into European markets. To implement this basic strategy, Öhlins acquired several small independent companies in the United States and formed a new division—the Textile Products Division. Its group of textile products includes specialty woven, knitted, and braided fabrics for aerospace, marine, industrial, recreational, and medical applications. These products have similar industrial characteristics, and the same selling approach is typically effective. Twenty-four sales territories were set up to sell the new line of textile products, and two salespeople were reassigned or hired for each sales territory. Ulrik Johansson was one of the salespeople assigned to this new division based on his excellent track recordselling textile-related products for other companies before joining Öhlins.
The Öhlins textile sales force is separate from the industrial chemicals sales force. While both share the district offices, warehousing, and delivery facilities, management of the two sales forces is handled differently. Each office has a district sales manager for the industrial chemicals salespeople and another district manager in charge of the textile salespeople. In addition, Öhlins created a national sales manager position to lead the forty-eight salespeople handling the textile products line. Mike Page—a highly productive industrial chemicals salesperson who has been with Öhlins for ten years—was promoted to fill this position, which reports directly to the executive vice president.
Ulrik respects and likes Mike Page, and he feels comfortable communicating directly with him, even though he reports on a day-to-day basis to Joan Fleming, his district sales manager. Joan, in turn, reports directly to Mike. Ulrik’s interactions with Joan are often through informal, oftentimes somewhat irreverent communications, which are common in the Swedish culture. These informal communications include jokes, wisecracks, things said in jest, or sardonic comments as well as serious discussion of issues, so Joan frequently has to read between the lines to interpret the subtle real meaning of some communications from her salespeople. What’s more, Joan is frustrated and irritated by some of her salespeople, who seem to feel that it’s acceptable to communicate directly with Mike without even talking to her first or sending her a copy of the communication. Oftentimes, in follow-up with her about an issue raised by her salespeople, Mike has assumed that she had already seen the communication, and Joan sometimes is too embarrassed to tell Mike that this is the first time she’s hearing about the issue.
A highly energetic and self-motivated salesperson, Ulrik has been quite successful at Öhlins. Each year he has reached or exceeded all his assigned sales volume and financial quotas. Overall, he is probably one of the top-performing salespeople in the Textile Products Division. Currently, he ranks third in this year’s national sales contest for Wearever, a group of new products in the textile line. Öhlin’s senior management is determined to make the Wearever products successful, and substantial resources have been committed to their promotion. Wearever was a departure from the usual for Öhlin because these products are purchased in bulk from suppliers, then repackaged and branded under the Öhlin’s Wearever brand.
Recently, Ulrik has noticed a significant attitude change toward Öhlin products among his customers and an increasing number of complaints. In their drive to successfully sell the Wearever brand of products, Öhlins senior management seems to be ignoring or in denial about any problems. At first, the Wearever products sold well, but then distribution and warehousing problems began causing delays in shipping orders. Growing numbers of customers are not receiving their orders on time and they are becoming increasingly upset with Öhlins as a supplier. At the same time, Öhlins management insists on maintaining its profit margins on the Wearever product line and avoid hurting its quality image, so they have remained inflexible in pricing strategy for the line, even while competitors are giving discounts for similar textile products. Ulrik’s customers cannot understand why Öhlins refuses to offer discount terms like other suppliers and some have started buying more competitors’ products. Another concern for the Öhlins sales force, in general, is the outdated customer relationship management (CRM) system being used to support sales force activities. Ulrik and other salespeople frequently have to respond to customer inquiries or plan sales calls without having important account information. As a result of these compounding problems, Ulrik is losing some of his best customers.
Even beyond his declining earnings due to customer defections, Ulrik wants to be proud of his company and the products he sells, so he has contacted Öhlin’s management (first Mike, then Joan) to share his concerns about the growing problems. From talking to other Öhlin salespeople, Ulrik knows they are having similar frustrating experiences. It’s been several months since Ulrik initially alerted Öhlin management to the Wearever product line problems, but he has heard nothing back from either Joan or Mike except perfunctory thank-you notes from each for expressing his concerns to them. But no management action has been taken or promised to correct the continuing situation. It’s almost like Öhlin management doesn’t want to hear about the problems because so much is riding on the success of the Wearever product line.
Finally, Ulrik has become so exasperated with unresponsive Öhlin management that he has decided to accept a sales position with an Öhlin competitor. He is now preparing his resignation letter, which he plans to submit to Joan and Mike this coming week. As he writes, Ulrik struggles to find exactly the right words to explain his reasons for leaving.
Questions
1. How would you rate the leadership and communication skills of Öhlins management? Explain your rating.
2. What suggestions do you have for improving the leadership and communication skills of Öhlins sales managers?
3. What do you think Öhlins management might have done to keep Ulrik from leaving, even if all his suggestions could not readily be implemented?
4. What do you think Ulrik should say in his resignation letter to Joan and Mike? Explain your reasoning.
Case prepared by Ossi Pessama, Luleå University of Technology, Sweden.
