Case in Point

Bitter Sweet Chocolate

- Sumeet Verghese

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 that his 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 interdepartmental 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,

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 as indiscreet 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. 2. 3. 4. The CEO Mr. Agrawal, the Quality Control Head The Shopkeepers The Media The CEO is faced with the enormous 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

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 whatever action 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.

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 highhanded manner in their eagerness to fish out the culprits and consequently created more misunderstanding among the ranks. 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 retailercompany 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 company is 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

Case in Point

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 blame before the inquiry is over, he could notify that the people responsible for the episode would in due course of time be found and made that the accountable. company is Meanwhile, he could clarify, 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

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 the customers 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.