Overview and Executive Summary
This case analysis mainly focuses on Organizational behavior, Decision making, Organization’s culture, Diversity, Values, and Leadership behavior. Today relatively small differences in performance between companies, such as in the speed at which they can bring new products or services to market or in how they motivate their employee to find ways to reduce costs or improve performance, can combine to give one company a significant competitive advantage over another. Managers and companies that use proven management techniques in their decision making and actions increase their effectiveness over time. Companies and managers that are slower to implement new management techniques and practices find themselves at a growing competitive disadvantage that makes it even more difficult to catch up. This case is all about implementing new management techniques like empowering employees and engaging in adaptive organizational culture. Culture leads to predictable behaviors and attitudes that set one company apart from others. Strong agreement to the values, beliefs and norms that constitute culture results in strong relationship to behavior. When culture is well match to strategy, it become the most powerful strategy implementation tool available
This case study mainly concentrates on the challenges faced by Simmons in implementing the change program. There is a resistance to change from both individuals and organization. On top of the resistance to change dominant organizational culture exists in Simmons. Leaders can reinforce desirable behavior and discourage undesirable behavior. Culture can be a major asset or liability to an organization depending on whether or not culture leads to desired behaviors. Simmons had the competitive advantage over competitors for almost a century. But due to dysfunctional organizational culture in the organization, Simmons has lost the competitive advantage. In this case study we can discuss and analyze how we can make Simmons competitive again using the organizational behavior and management techniques.

Simmons History

Simmons, a mattress manufacturing family run company, with a history of over 130 years, started manufacturing in 1876 with nine employees and a $5000 investment. The founder of the company Zalmon Gilbert Simmons in 1875 decided to change their business from wood products to woven wire mattresses, which resulted in great profits to the company. Zalmon Gilbert Simmons was not the inventor or first manufacturer of bed springs. His contribution was in lowering the price so that everyone could afford them. In the early 1920s Simmons had factories in Mexico City, London, and Paris with international operations which was unusual for the era. By 1936, the firm’s overall sales reached $42 million with more than 16,000 retailers carrying Simmons products. By 1978, the company was operating in 15 countries around the world and this is the time Simmons started early forms of Employee Stock Ownership Plans (ESOPs) although it was formalized in 1989. As a socially responsible company, Simmons also contributed products like bunk beds, tents, parachutes and more, for soldiers during war times, World War I, World War II, and Korean War. Simmons multiple contributions to public life and society raised the profile of the company with endorsements from public figures. Simmons also introduced programs like “zero waste” projecting its environmental responsibility.

In 1975, the Simmons corporate headquarters moved to Atlanta, Georgia followed by the research and development team. In 1978, Simmons ceased to be a family-run business and Theodore Greeff became the first person outside of the Simmons family to become CEO of the company and thereafter, the company had come across succession of many owners, leaving Simons unstable and without long term vision. This is the first point where the fear of the unknown started among the employees and the top managers. Simmons reduced its concentration to the 18 bedding manufacturing facilities that made mattresses from start to finish with the help of over 2,800 full-time employees. The most recent owners, Fenway Partners, bought Simmons from Investcorp in October 1998 and Charlie Eitel has been appointed the new CEO of the company as he has the track record of turning companies around. Charlie has bought about a number of changes in the organization since he assumed the office. His endeavor is to make the company a place where people are eager and love to work and with whom customers like to deal with.

I. Insight of problems faced by Simmons

i. Diversity, role of conflict and no organizational structure
Of several problems faced by Simmons, the major problem was that there was no clear organizational structure for the company and also role conflict existed. Most of the associates were reporting to General Managers who were basically Sales Managers, and according to Charlie Eitel, did not have business acumen. All the manufacturing units were running as per the General Managers whims. This control vs. commitment situation can be clearly seen when Bob Hellyer President and Director of Simmons conversed with the new incoming CEO Charlie Eitel. He had a track record of turning companies around. He had worked at five different floor-covering companies and was successful turning around three companies. By 2001 Simmons had undergone several changes of fortune, and bought and sold multiple divisions. Simmons management has a business goal: reduce costs, improve performance/productivity, and raise profits, which made its main task to refocus on its historical roots, making mattresses. In 2001 Simmons introduced a new mattress size, 10% bigger than the queen but that fit the frame of queen, and also developed the Pocketed Cable Coil for a more durable, comfortable mattress. Charlie Eitel made a heavy bet on a re-designed version of the Beautyrest, Simmons’s 75-year old flagship brand and Charlie Eitel knew very little about mattresses. Simmons rolled out a $9 million ad campaign in May 2000 and enjoyed an immediate 25% increase in sales attributed to the new Beautyrest. Six weeks after taking the helm and getting input from Hellyer, a longtime company veteran, Eitel completely reorganized management, spending $3.8 million in severance pay to lighten the executive ranks by 14 people He hired 4 top executives in 2001. He reduced the company’s concentration to the 18 bedding manufacturing facilities that made mattresses from start to finish with the help of over 2,800 full-time employees. In his first meeting addressing the corporate employees Charlie Eitel dressed in Khaki pants and a polo shirt which was a huge cultural shock to employees.

In addition, along with the rest of the U.S Economy from the fallout of the September 11th terrorist attacks, which is External Locus of Control, Simmons had to deal with the declaration of bankruptcy by three of its biggest customers in the prior few months. Those three customers had represented $110 million of Simmons’ roughly $658 million in sales. To make things worse one of Simmons’s main suppliers had shipped defective foam which started to give off a terrible smell after it had been incorporated in products (this is Internal Locus of Control). Getting rid of the products and raw material resulted seriously in compromising the production schedules and presented a threat to company’s profitability.
Simmons was in its toughest period of time ever in history. For the first nine months in Charlie Eitel’s leadership there was a sales decline of 6.1%. Despite the sales decline in the initial stages of Charlie Eitel’s management the company made profits. Charlie Eitel said "Although our sales levels were impacted by the weak economy and the failure of several key customers in the last year, we are pleased with our third quarter operating performance." (Simmons company report exhibit 99.1 page 1 http://www.secinfo.com/dsVS7.4fDM7.d.htm) Eitel continued "As a result of our efforts, our operating margins improved over the last year despite the reduced sales volume. The ongoing effort of our associates to reduce waste in manufacturing has resulted in a reduction in material costs as a percentage of sales. Additionally, we were able to lower our labor costs as a percentage of sales by adjusting manning levels and work hours to current levels of demand." (Simmons company report exhibit 99.1 page 2)