Leadership and HCM Midterm: Acme I and II Case Study Analysis

This assignment analyzes the Acme I and II case studies, focusing on the human capital management challenges faced by the company. The analysis addresses the issues surrounding the launch of Seat Plus, the departure of the Director of Research, and the resulting problems with the R&D and Marketing & Sales departments. The response provides an executive summary, identifies the issues, analyzes the causes, and offers recommendations and solutions to address Dr. Bogen's concerns, including creating a compensation package for the next Director of Research, aligning the R&D and Marketing & Sales departments, and ensuring the retention and attraction of top talent. The analysis utilizes concepts from Chapters 1-4 of the HCM textbook and material covered in class to provide a comprehensive and insightful response to the case study questions.

Mid Term Exam Human Capital Management
The exam is due back by 8 p.m. Tuesday, November 1, as an email attachment.
Please read the attached case, John Harrington, (Acme I and Acme II – see below) and
answer the assignment.
Assignment: Please come up with a response to what Dr. Juliet Bogen wants from Greta
Flaherty at the end of Acme II.
You are expected to use Chapters 1-4 of our text, HCM, and material covered in class to
write your response.
Please use the following format: 1. Executive Summary (this summarizes the major
points of your paper in no more than 100 words); 2. Statement of issues/problems; 3.
Analysis of causes regarding these issues/problems; 4. Recommendations and solutions
to solve the issues/problems that you have identified.
No more than 5 pages in total, not counting any exhibits you add.

Acme I
John Harrington was extremely pleased as summer 2009 rolled around. His research
group at Acme, Inc. had just been awarded a prize for their new application software,
Seat Plus, used in managing airline seat reservation systems. He was extremely proud and
gratified that June morning as he felt he had been instrumental in the development of the
software and in motivating his research group into producing the award-winning
application. As colleagues, heads of other departments, and finally, the President of
Acme herself came by to congratulate him on the award, he basked in his success and
reflected that it had been worth it to leave his previous company and join Acme. Hadn’t
the President herself said while congratulating him, “The sky’s the limit here at Acme,
John, if you create successful products!”? The rewards were coming to him pretty quickly
and he was pleased with results of his performance on the job.
John had come to work at Acme Inc. in January 2009 as the new Head of Research. He
had been hired away from his previous employer with a 20% increase in salary, the
promise of interesting work, a great deal of freedom and latitude on how he ran the
research department and the promise of a lucrative annual bonus for superior
performance. He had set ambitious targets for his research group and had been active in

the work that had won the prize. Now he had to get together with marketing and sales to
figure out the best way to present and sell the product to clients. He felt the award was a
good beginning as it would allow them use the prize to sell the software.
Acme was a software company that specialized in applications software for the airline
industry. In particular, they made software to manage the sale of seats to maximize
revenue. Using Acme software, an airline could decide how to price seats right up to the
day and time of departure. Past patterns of seat bookings and other factors were used to
set up the algorithms that decided on the price for any day. The program also decided
how many seats to allot per day for any particular price. Seat Plus was designed to
maximize yields for any flights, being particularly sensitive to past patterns for any
specific day combined with any current market developments.
Acme’s strategy was to sell their products as premium ones yielding especially high
yields for seat management. Its brand was managed through close contacts in the airline
industry, personal selling and the cultivation of an image comprising of highly reliable
products. Seat Plus was rolled out into the market along the lines of this strategy. And
that is when the problems began.
Software glitches that had not been apparent during development and limited-use Beta-
testing became apparent with intensive and extensive customer use. Customers were
calling constantly about bugs and failures in the application program. Acme responded
with quick patches to remedy problems, but the patches themselves created new problems
and failures. Customers began deserting Acme and abandoning Seat Plus.

Acme II
In December 2009 Acme faced a problem in the marketplace and worse, its Director of
Research, John Harrington, had just resigned in the middle of serious issues with the
launch of a new flagship product, Seat Plus. The President of Acme, Dr. Juliet Bogen,
was very unhappy with what had happened and called in the head of Human Resources,
Greta Flaherty, to analyze what had transpired and chart the next step to deal with the
crisis. Acme had counted on Seat Plus to take them into the future, but now, with its
problems and the departure of the Head of the Research Department, Dr Bogen wanted to
know what solutions HR would and could offer. At the meeting with Greta, Dr Bogen’s
first question was, “Why did John leave? We need someone like him desperately to get us
out of the crisis we are in with Seat Plus. Can we find someone who can come aboard and
quickly take over and solve the problems we face with Seat Plus? What happened,
Greta?”
Greta responded with her version for the problems Acme had had with Seat Plus and the
reasons for John’s resignation. The award for Seat Plus had left John’s research group too
comfortable with the application’s robustness. They assumed that it was ready for sale

with a few minor revisions. However, even those revisions had been hurried as Marketing
and Sales felt they had a winning product on their hands and wanted to capitalize on its
winning status while it was still a newsworthy feature in the airlines application software
market. The result was that Marketing and Sales oversold and overpromised on Seat Plus,
selling it before it was ready. In turn, the Research Department felt pressured to allow the
product to be sold, even though they felt it wasn’t quite ready. And when the complaints
started pouring in from upset customers, Marketing and Sales blamed the Research
Department for a bad product and not coming up with solutions and patches quickly
while the Research Department felt constantly cornered and hounded by Marketing and
Sales overpromising and overselling.
In the end John felt he couldn’t work here any more as the pressure to sell half-ready or
unready products proved too great for him. Besides, he felt the problem required more
new hires for the application to solve problems quickly, but he faced budget constraints.
Dr. Bogen responded by stating that Acme still faced problems with Seat Plus, the R&D
department was demoralized, and worst of all, the brand image had been tarnished. We
are a premium-products company, said Dr. Bogen, but after what had happened in the last
six months, she wasn’t sure they could maintain that posture unless things turned around
pretty fast with Seat Plus. She said she wanted a plan from the HR department the next
day covering the following points: (1) A compensation package and profile for the next
Director of Research; (2) a way to align the R&D Department and Marketing and Sales to
the firm’s strategy; (3) how to make sure that Acme continued to retain and attract the

best talent in the industry. In particular, Dr. Bogen did not want to see a mass exodus
from the R&D department in the next few weeks and months.