LETTER OF TRANSMITTAL

03 March, 2014
Igor Ivanovic,
Iggys Bread of the World,
Boston, Massachusetts.
Subject: Analysis of the situation at Iggys Bread of the World and recommendations.
Dear Ivanovic,
Pursuant to the details provide y you during our discussion, I have analysed the
prevailing situation at Iggys Bread of the World and have come up !ith viale options. "he
situation !as seen from the perspective of the oard of advisors and all the facts !ere analysed
from that vie!point to narro! do!n on recommendation that Mc#ae should e fired and a
person !ith similar $ualification and capaility ut suited to the culture of the organisation
should e hired to replace Mc#ae.
"he trailing report details the analysis in support of the aove recommendation, giving due
consideration to various other possiilities.
%ours sincerely,
1 | P a g e
EXECUTIVE SUMMARY
&Iggys Bread of the World !as founded y Igor Ivanovic along !ith his !ife 'udmilla Ivanovic, !ith a
vie! to pursue his passion for a(ing and create $uality product. "hey too( many initiatives for employee
!elfare and provided a nurturing and respectful environment at !or(place fostering cooperation,
communication and sense of accomplishment. As demand for its products increased, Iggys e)panded y
ta(ing loan and hired Matthe! Mc#ae as the *++. Mc#aes lac( of consultation !ith Ivanovics on
hiring and the increasing employee dissatisfaction in the organisation led to a hostile situation and Mc#ae
presented his resignation letter. ,o!ever, the ne)t day Mc#ae approached the o!ners stating that he
!anted to re-oin the organisation ut demanded a significant increase in his salary and onus.
After evaluating the various options availale, I propose that Mc#ae shouldnt e reinstated. instead
another person of the same capaility !ho comply to the companys culture should e hired as the *hief
+perating +fficer.
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TABLE OF CONTENTS
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SITUATION ANALYSIS
Iggys Bread of the World !as founded y Igor Ivanovic and 'udmilla Ivanovic in Boston as
a manufacturer of highest $uality read. In si) years, Iggys gre! into a large organi>ation !ith
??9 employees and annual gross sales of over 52 @ 9 million. "hey used all organic ingredients,
(ept their prices as lo! as possile, did most of the !or( y hand and spo(e to a(ing e)perts for
help in ne! areas. Iggys success !as uilt on the ideology of creating a Anurturing and
respectful environment at !or(place that fosters cooperation, communication and a sense of
accomplishment for all employeesB as mentioned in the mission statement.
With the demand gro!ing at a rapid pace, they decided to e)pand operations ut the
Ivanovics !ere finding it difficult to manage the usiness. 2o they hired Mathe! Mc#ae as the
*hief +perating +fficer. 2oon after his appointment, Mc#ae egan assemling his o!n
management team, !ho !ere either his friends or relatives.
But the employees !ere dissatisfied as the ne! management team !as too isolated from the
operations and culture that !ere at the heart of the organi>ation. As a result tension et!een the
employees and the ne! management team started to rise !hich in turn led to decrease in the
overall morale of the employees. 'udmilla Ivanovic !ho had ta(en leave from !or( decided to
return to Iggys after t!o years to resolve these issues. But she !as instructed y *oleman on the
ne! hierarchy she should follo! at the company !hich !as not !ell received y Mrs. Ivanovic.
"he Ivanovics !ere generally unhappy !ith the !or( of *oleman and the direction in !hich the
company !as moving. A series of disagreements evolved et!een the Ivanovics and Mc#ae and
finally Mc#ae handed over his resignation letter in !hich the Ivanovics !ere critici>ed
personally. ,o!ever, the ne)t day Mc#ae decided to !ithdra! his resignation. In the suse$uent
oard meeting held to resolve the crisis, Mc#ae stated that he !as not re!arded sufficiently for
the amount of !or( he !as doing and as(ed for a significant raise in his salary along !ith
onuses ased on profit generated y the organisation.
1o! the oard of advisors is facing a dilemma aout the ne)t course of action that is in the est
interest of the company. should they agree to Mc#aes demand or thin( of other alternatives to
salvage the situation.
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PROBLEM STATEMENT
<iven the current situation, ho! should the oard memers respond to the option of reinstating
Mc#ae and accepting his compensation demands (eeping in mind the core culture and e)pansion
plans of Iggys.
OPTIONS
?. #einstate Mc#ae, paying him the compensation he demanded, !ithout changing the
autonomy had efore resignation
3. #einstate Mc#ae after negotiating compensation pac(age and clearly defining his po!ers
and responsiilities
7. 0ire Mc#ae immediately and hire another person !ith similar $ualification, capailities
and fit for the culture of the organisation
CRITERIA FOR EVALUATION
?. Maintaining the culture of the organisation
3. 2uccessful operation and e)pansion of the organi>ation
7. Preserving employee morale
C. Mc#aes contentment if he re-oins the organisation
8. 2ustainaility of the option after implementation
9. Decision ma(ing po!er for the Ivanovics.
EVALUATION OF OPTIONS
Evaluation Citeia Po!o"e# "olution"
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Assigned
Weight
#einstate Mc#ae
!ith full
compensation and
autonomy
#einstate Mc#ae after
negotiating
compensation pac(age,
!ith redefined
autonomy
0ire Mc#ae and
hire ne! person
suitale for the
organisation
culture
Maintaining the
culture of the
organisation
7DE
$ % &
2uccessful
operation and
e)pansion of the
organi>ation
7DE
' % (
Preserving
employee morale
?8E
$ ' (
*ommitment of
other senior
managers
?DE
( ( %
2ustainaility of
the option
?DE
$ % &
Decision ma(ing
po!er of the
Ivanovics
8E
$ % (
"otal 2core $)* ')+& ()%
$) Rein"tate McRae ,it- .ull co/!en"ation an# autono/01 If all the demands put for!ard y
Mc#ae are accepted and he is given full autonomy to do the -o, then it !ill e a serious
threat to the culture of the organisation and employee morale !ill fall drastically. "his
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may adly affect the gro!th of the company also. Also, the Ivanovics !ill further loose
hold on the company. ,ence this is not a viale option.
') Rein"tate McRae a.te ne2otiatin2 co/!en"ation !ac3a2e4 ,it- e#e.ine# autono/01
"hough implementing this option !ould cause negative impact on employee morale,
there is chance that Mc#ae !ould alter his management style to suite the culture of the
organisation. ,o!ever, he may not maintain the relationship !ith the Ivanovics due to
!hich his !or( may suffer and further conflicts may arise et!een the o!ners and
Mc#ae !hich !ill e detrimental to the companys fortunes.
%) Fie McRae i//e#iatel0 an# -ie ne, !e"on .it to t-e cultue o. I2205"1 +f the three
options evaluated aove, this seems to e the est option availale to the oard of
advisors as the continuing !ith Mc#ae !ill lead to further conflicts and discontent
among employees. It !ould e in the est interests of Iggys to hire a ne! person !ith the
same capaility !ho !ould e accepted y all the employees and shares the same passion
and culture of the organisation.
RECOMMEN6ATION
Based on the $uantitative and $ualitative analysis of all the availale options !ith the oard
of advisors, it is recommended that they should not agree to Mc#aes demands. Instead the oard
should accept his resignation and hire a ne! person for the position !ith similar $ualification
and capaility ut fit to the companys culture. "his is the sustainale solution to gro! the firm
in a !ay that is in sync !ith its mission and vision.
PLAN OF ACTION
"he oard of advisors should not agree to Mc#aes demands and accept his resignation.
"hey should inform him that his actions have gone against the culture of the organisation.
Igor Ivanovic may assume Mc#aes position until a suitale replacement for Mc#ae is
appointed.
"hey should also assess the approach and capaility of the management team recruited y
Mc#ae as there !as discontent among the employees regarding these people also.
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"hey should immediately start recruitment process for a ne! person !ith similar
capailities (eeping in mind the culture of the company as the firm is in rapid
development phase and re$uire a strong senior management team.
CONTI7ENCY PLAN
In the situation !hen none of the proposed options are acceptale, the oard of advisors
should e)tend the Mc#aes term of service temporarily to another three months paying salary at
par !ith the industry standard and !ith limited autonomy. Mc#ae should e !arned that it is a
temporary e)tension of his term of service and the oard of advisors reserves the right to ta(e
action against him at any time if his performance or cultural fit is found nonFsatisfactory. Within
these three months, the oard may recruit another person to replace Mc#ae and fire Mc#ae at the
end of his e)tended term of service.

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