Question

how America Latina Logistica changed its organizational culture to remove impediments to good strategy execution.

America Latina Logistica (ALL) is a Brazilian logistic company, mainly focused in the railway line logistics in Brazil. In 1997, ALL was losing money, struggling from decades of underinvestment, and encumbered by bureaucratic management. Half the network’s bridges required repairs, over three-quarters of its rails were undersized for supporting standard-sized loads, and the system still relied on 20 steam-engine locomotives to move industrial customers’ cargo. CEO Alexandre Behring’s priority was to transform ALL into a performance-oriented organization with the strong cost discipline necessary to support an overdue modernization program. He decided that this would require a complete cultural transformation for the company. His first step was to recruit a new management team and fire the dozens of political appointees previously administering the railroad. In his first 10 days, he and his COO interviewed the top-150 managers to evaluate their suitability. They selected 30 for additional responsibility and removed those who did not embrace the new direction. The company established a trainee program, and in four years hired 500 recent college graduates. In Behring’s first year, he introduced a performance-based bonus program; in his second year, the company began comparing performance on operational indicators like car utilization and on-time delivery between divisions. The top managers also took symbolic steps to demonstrate their commitment to the new culture and to reinforce the personnel and process changes they implemented. They sold cars previously reserved for officers’ use and fired the chauffeurs retained to drive them. Behring became certified as a train conductor and spent a week each month working in the field, wearing the conductor uniform. For the first time, managers visited injured workers at home. The company created the “Diesel Cup” to recognize conductors who most effectively reduced fuel consumption.

Behring’s new direction energized the company’s middle managers and line employees, who had been demoralized after years of political interference and ineffectual leadership. In three years, Behring transformed a company that had not made a hire in over a decade into one of the most desirable employers in Brazil, attracting 9,000 applications for 18 trainee positions. In 2000 ALL achieved profitability, enabled by the company’s cultural transformation.

Please answer to the following questions with no more than 100 words per question:

1) Which were the main causes of the presence of an unhealthy organizational culture before the arrival of Alexandre Behring?

2) Which steps have been taken for changing the organizational culture of America Latina Logistica?

Answer 1

Answer 1:

The main reason for the unhealthy culture in America Latina Logistica(ALL) company was its bureaucratic management. They did not have any reward programs to reward employees and improve the existing system as well as increase the overall productivity of the organization. America Latina Logistica (ALL) is a Brazilian logistics company focusing primarily on Brazil's railway line logistics. Laws and rules are often restrictive and inflexible in a bureaucracy. It may also provide the shield to prevent responsibility for failures. Bureaucratic processes entail unnecessary delays and disappointment in job results. Because of this, Everyone was losing money and dealing with decades of underinvestment. Half of the network's bridges needed repairs, more than three-quarters of its rails were undersized to carry standard-sized loads, and the system continued to rely on 20 steam engine locomotives to transfer freight from industrial customers. Rigid compliance with rules and regulations discourages innovation and creativity. Red tape, sluggish and one dimensional decision making , low worker honesty make it unmanageable for a extremely bureaucratic enterprise to react quickly in a quick-paced business situation which settles a company at a problem for its competitors.

Answer 2:

The new management introduces the necessary organizational improvements in the field of performance assessment (performance-related compensation and incentive related to car usage and time delivery as indicators), training, and development for workers to enhance their skills and guidance to implement best practices. Newly appointed CEO goals were turning ALL into a performance-oriented company with the clear cost control required to sustain an overdue program of modernization. He decided this would allow the organization to undergo a full cultural change. The first move was to hire a new management team and fire the hundreds of previously railroad-administering political appointees. The business has begun supplying freshers as well as other workers with proper training. The biased recruiting process has been eliminated from the framework and the whole framework has been made open/transparent that helps bring collaborative efforts into action. The whole initiative to create new management and monitor the practices involved in the best possible way is the best convergence of cultural transitions.

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