Contents

• This assignment is based on the following case study –
• You may not admit to reading it but you’ve undoubtedly seen the undersized magazine at your grandparents’ house or in your doctor’s waiting room. It is the world’s number one general interest magazine translated into 19 languages for over 100 million readers worldwide. The Reader’s Digest Association Inc publishes the magazine, in addition to books, music, videos’ TV movies and special interest magazines. The company’s products are marketed through well targeted direct mailings and an extensive customer database that is considered one of the world’s best. Even with some significant marketing and operational strengths, the company has struggled through difficult times. In the mid 1990’s, revenues and profits in key businesses were falling. Even the venerable flagship publication, Reader’s Digest, had declining circulation and readership. Thomas O Ryder CEO had some serious changes to make. However, getting a company with a long history and longstanding traditions to change was not an easy assignment.
• The Readers Digest Association was founded in 1922 by Lila and DeWit Wallace. The Wallaces published their first issue with articles of enduring value and interest out of their apartment in Greenwich Village. That purpose is still pursued today but in a broad range of media formats. The company is committed to enriching, informing, entertaining and inspiring people of all ages and cultures. Over the years, the company established itself as a solid publisher and grew by moving into different areas both geographically and in terms of products. However, along with the growth in size, the association developed a slow moving, entrenched bureaucracy with a culture described like “molasses”. The employees grew accustomed to a genteel way of doing business and enjoyed a work lifestyle that was paternalistic and cultured. For instance, a $100 million art collection graced the company headquarters and the founder was known to give rides on the corporate jet to employees who had never flown before. And at 4.30pm sharp, bells rang to signal the end of the working day. It was a company clinging to the trappings of a bygone era. As the company’s performance continued to deteriorate, strategic and management changes were attempted. The company’s board of directors hired and fired 4 CEO’s in as many years. These individuals tried and failed to reshape the company. Then Ryder was hired in 1998. He was the shot in the arm that the company needed although this was difficult for many of the company’s long term employees.
• Coming from American Express, Ryder had a much more relaxed management style that the typical Reader’s Digest executive. He was open, accessible and sociable. However, he knew that the company had to make some serious changes and that these were not going to be easy. A $350 million cost cutting 2 Source: Robbins et al, Management 3rd edition, Pearson Education Australia 2003 program led to 1000 people being laid off, the sale of the corporate jet and the elimination of senior executive perks such as club memberships. There was the sale of the company’s art collection. Many long term employees were upset by the sale but Ryder believed that the art collection was an amenity that the company could no longer afford if it was going to be a web-savvy, nimble publisher and direct marketer. Then Ryder tackled the company’s way of working. On discovering that it took almost 1 year to develop mailing campaigns, he hired outside firms to do some of the work. Some employees resisted this tinkering with decades of standard procedure. Ryder says the cost cutting strategies were signals that everyone would have to change the way they worked. To further instil a sense of moving forward, Ryder entered into several strategic alliances to expand the company’s strong brand, including life insurance and credit cards.
• Even though the changes seem to have made a difference in the company’s financial performance, some long time employees say that Ryder’s attempts to create a sense of energy and drive are no different from other previous failed attempts. They don’t think the enthusiasm shown at top levels has filtered down to lower levels. As Ryder’s predecessor said, “when you have a company as successful as digest was, the processes become embedded and trying to change them is hard”. Ryder counters this by saying that his changes are different because he respects the Reader’s Digest brand and the talents of its workforce, which he says had “simply lost its way”.

Description

This paper answers the following questions on the case study –
1. What internal and external forces created the need for the Reader’s Digest Association to change? Explain these forces.
2. What conditions for facilitating cultural change existed in this company?
3. What problems did Ryder encounter in trying to change the company and its culture?
4. Why did employees seem to be resisting change?
5. What could this situation teach you about managing change in organisations?