Case Study:
Change in the Waste Industry
One company, Waste Management, acquired over 1,600 smaller waste
disposal companies from 1995 to 2004. All of the acquired companies had
their own financial systems, pay scales and benefits, trucks and equipment,
and operating procedures. None of the IT or financial systems could “talk”
to each other, drivers followed different operating procedures and had
different performance standards and compensation packages, many of the
companies were former competitors that now had to collaborate in order to
achieve overall company goals, and few if any supervisors had been through
any type of leadership training.
The board of directors brought in an outsider, Maury Myers from Yellow Freight,
to integrate all these acquisitions into a single company. As CEO, Myers’s first task
was to create a common financial system so that all the company’s revenues and
expenses could be consolidated into a single financial statement. Given the large
number of acquired companies, this in itself was no small task. He also created a
system that allowed supervisors and drivers to set goals and measure daily
productivity and customer satisfaction rates, and he introduced other major
organizational change initiatives to improve safety and vehicle maintenance,
optimize vehicle use, and reduce operating expenses.
The results of these change initiatives were spectacular. By 2004, Waste
Management had become the industry leader in the waste industry, consisting
of approximately 50,000 employees who created $1.5 billion in profits on a
$12 billion annual revenue stream. Driver productivity, customer satisfaction,
and driver safety improved over 50 percent, and operating expenses were
reduced dramatically. Maury Myers retired from the CEO role in November
2004 and was replaced by David Steiner, the former CFO.
Since taking the reins at Waste Management, David Steiner has focused on
three critical
initiatives-operational excellence, growth,
and
rebranding.
In
terms of operational excellence, the company has implemented a number of
companywide initiatives to improve the safety and productivity of employees.
Some of these include the Mission for Success Safety Program, the Business
Process Improvement Initiative, and Waste Route, a route optimization
program. These initiatives have helped Waste Management become the best in
the industry in terms of safety and worker productivity.
The company is vigorously pursuing organic growth opportunities to
generate additional profits, such as capturing landfill gasses to fuel garbage
trucks, taking the lead in electronic recycling and disposal, placing power–
generating windmills at landfills, and developing new waste–to–energy power
plants.
In terms of rebranding, Waste Management has been repositioning itself
with its “Think Green” television, radio, and magazine ads; the use of natural
gas-powered trucks; and an aggressive landfill remediation program. It is
looking at how it can play a lead role in sustainability because many
companies, such as Walmart, have corporate goals of reducing store waste by
95
percent in the next five years. If these customers dramatically reduce their
waste streams, what will Waste Management have to do to remain a good
investment for shareholders?
Although Waste Management has seen dramatic changes since 1995, waste
stream reduction, alternative energy sources, and global warming may force
Waste Management to undergo even more dramatic changes.
Change in the Waste Industry
Objective:
This case focuses on the myriad of changes involved with the consolidation of
1600 companies into one organization, “Waste Management.”
Summary:
The changes needed to make one organization, i.e., Waste Management from 1600
small waste disposal companies required: one financial system; improved
productivity and customer satisfaction based on input from supervisors and drivers;
improved vehicle maintenance and safety; vehicle use optimization; and reduced
operating costs. These initiatives were led originally by Maury Myers and later by
David Steiner. Steiner focused on; 1) operational excellence; 2) growth; and 3)
rebranding.
The leaders were excellent at developing the necessary “cooperation” required in
making these significant changes. Due to changes occurring outside Waste
Management, the leadership had to develop new strategies for dealing with such
areas as: global climate changes; customers such as Walmart who were trying to
contain the amount of waste they generated; redefined landfill usage; using
products produced from dumping sites by capturing organic gases from the
landfills for vehicle fuel; and creating processes for developing new waste energy
for power plants. Thus, leadership had to grow new opportunities in their efforts to
rebrand the organization for future growth as they became community partners
with their stakeholders.
Questions:
1.
What would you do if you were running a waste disposal company that
made most of its money from landfills and the country adopted a
strong sustainability mind-set?
2.
What would you do to lead Waste Management going forward? 106
Change in the Waste Industry
Teaching Points:
✓ Query the students as to their opinions of their local waste management
company and what the organization might do to enhance its productivity
and image in the communities they serve.
✓ Discuss with your students how their local waste management company
might provide better leadership or what good practices should they
continue.
✓ Have the class discuss the profile of the type of leader Waste Management
should be looking for to continue their success story.
✓ Tap the power of your class by asking them to identify opportunities their
local waste management company should be exploring relative to the
current economy, protection of the eco-system, and the future of waste
management as a business.
✓ Discuss the recycling component of Waste Management.
✓ Discuss the current vision/mission statement of your university pertaining
to waste management.
Related AOL 6 Text Information to Support Your Class Discussion:
o You can make minor changes in processes for quality product or service
delivery daily. However, you might consider exploring with your students
the process for understanding Complex Organizational Change that Waste
Management went through when they consolidated 1600 smaller companies
into one. Please see Figure 17 – 2 on p. 397, “The Eight-Stage Process of
Creating Major Change.”
o You will want to caution your students concerning “common errors” that can
occur during the change process during a major acquisition program such as
Waste Management. p. 398.
o The word “change” often creates fear among employees even if it is a minor
one since it can affect their sense of job stability. You will want to address
how to handle the change “fear factor” with your class. p. 404.
o Your students will need to exhibit strong leadership with their employees, so
we discuss how to lead people through the change process as it occurred at
Waste Management. pp. 394 – 396.
o See Figure 17 – 5 “Changes in Today’s World” and relate these changes to
the challenges faced by the new Waste Management organization. p. 403.
NOTE: We routinely research the subject of our specific case assignment to
determine changes in vision, mission, leadership team, new product development,
financials, current national/global news events, etc., prior to the class discussion.
An example of this is found in the Introduction section preceding our suggestions
for using Case Analyses in your class. We have used Hewlett-Packard as a sample
for all the cases since this form of organizational information is fluid and possibly
time sensitive.