Introduction

Gateway, Inc. is a computer manufacturing company located in North Sioux City, South Dakota that has grown considerably since inception. The organization started in 1995 with the introduction of inexpensive personal computers developed by Ted Waitt and Michael Hammond on a farm in Iowa. The two partners decided to develop the business into a customer-oriented operation that focuses on providing the best possible products for the lowest prices. This idea was indeed a huge step in the development of the company because of the unexpected boom in the personal computer market during the late 1980's and early 1990's and the need for an organizational staff that would be required for the operation to grow. Gateway began its quest for skilled labor by initially hiring local personnel and providing training in the areas of sales, marketing, customer service, and technical support. It was the goal of the company to provide complete service to the consumer before, during, and after the sale of each and every personal computer. In order for the company to meet this goal, it was necessary to hire enough people to support the growth of the organization and this is when the hiring frenzy began. The organization advertised employment positions in newspapers and trade magazines hoping to generate enough responses to meet the demands of the growing sales and support operations of which the result were overwhelming. This paper is generated to describe the results of an organization that under estimated the growth of the market that they were a part of and how the appropriate staffing strategies could have alleviated numerous issues that had to be dealt with when the market slowed down. In addition, the discussion of implementing the seven practices of successful organizations within the company will show where the strengths and weaknesses of staffing the business became evident.

The Problem

Gateway had experienced tremendous growth during the first decade of business operations because of the demand for inexpensive personal computers in both the home and office environments. The company operation began as a simple add on parts operation for Texas Instruments, but Ted Waitt's goal was to build computers himself and market them directly to the public through catalog and trade magazines. This idea was very successful because the customer base liked the idea of being able to custom configure personal computers to fit their needs. . The basic problem here is that the company was located in South Dakota and the employment prospects were extremely limited to farming and agriculture. It was extremely difficult to hire people with the necessary skill sets required for the business operation. The company began hiring almost anyone off of the street just so they could get people to answer the non-stop ringing phones and make the sales. Usually this would be a good thing, but there are drawbacks to this situation, specifically on the support side of the business. There were also issues with the production side of the business such as having such a large demand for custom configured computers that the manufacturing department could not build the systems fast enough to meet the orders. All of the issues experienced by the support operations and the production and manufacturing departments were a direct result of the sales operations, which ultimately posed gridlock within the company. The support staff could not keep up with the customers demand for customer service and technical support, which led to very unhappy customers and the manufacturing staff could not supply the computers fast enough, which led to customers calling in to cancel orders. It seemed that the solution to this problem would be to hire more people from other sources. This is where the staffing strategies come into play and where the operational growth began. It is also the beginning of the end for Gateway's success.

Organizational Staffing

During the growth frenzy of the late 1980's and early 1990's, the company was initially able to keep up with the demands of supporting the operations. However, it soon became evident that the need for a larger workforce was inevitable. The company employed approximately 1000 people in 1991 and was experiencing a heavy workload that required many hours of overtime and additional weekend responsibilities. The result was wearing on the workforce and productivity was decreasing. Through numerous management meetings, it was decided that the company would expand its operations into other geographical areas in order to alleviate the employment prospect issues experienced in the South Dakota region. The company sent human resource professionals and members of various management teams to different locations in the attempt to discover desirable locations for business operations as well as a well-educated and skilled workforce. The process began by selecting a location and hiring the necessary personnel to support the operations. Human resource personnel collected resumes and applications and screened potential employees through various testing methodologies. Upon passing the HR screening, candidates were then interviewed by the management teams and selected based on positional criteria. Through internal selection processes, a skeleton crew of management was developed and moved to the new location, then additional personnel for the management team were selected through external selection in order to facilitate the new expansion into the area. When the management staff was fully developed and ready for operational activity, the selection process began for front-line employees. One of the first areas for expansion was Kansas City, a large metropolitan area with a versatile workforce that easily supplied the necessary candidates for the positions that needed to be filled. At the same time that Kansas City facility was opening, the company was also expanding into other areas such as Sioux Falls, South Dakota, Hampton Roads, Virginia, as well as several other national locations. While all of this was going on, the company was also seeking a break through into the global markets and started business operations in Europe, Japan, and Australia. As if it was not difficult enough to populate the organization with the professionals necessary to provide the original vision and goals set by Ted Waitt, it was even more demanding trying to achieve this process on a global level. Human resource specialists were hired at the international locations and significant research results on business operations and culture were utilized to staff the necessary positions required by each specific location. The global scene was expanding and through the use of external sources in the various locations became a success. However, the national strategies were not moving along quite as well as desired. The company's motive to hire as many people as possible in order to fill seats and answer phones was beginning to take a toll on the consumers and the negative media was hitting an all time high. Even though the company now had multiple sites throughout the United States, the problems experienced in the early days of operations were compounded on a much larger scale. Orders were not being properly filled, customers were put on hold for hours in order to obtain technical support, and customer service was overwhelmed by complaints. It was decided in the midst of these issues that the company would have to realign its processes in order to better serve the customer base and get back to the original thought processes that Waitt put forward when the company was founded. So, we take a look at the situation, the company now employs well over 15000 people, has sales in excess of one billion dollars, and is experiencing large profits, but has extremely high general and administrative costs. The solution to the seemingly complex problems was not to hire more people, but to train and promote the business objectives to the personnel already in place. The company decided to restructure operations and more efficiently manage the processes. This was achieved by merging the customer service and technical support operations into a single entity that would be called customer support as well as developing self managed teams that were responsible for their own productivity. The realignment meant laying off a number of people, but the new processes were a much more effective method of resolving the issues. Personnel became motivated to achieve the goals of the business and were rewarded through bonuses and additional paid time off. This is where the seven practices of successful organizations allowed the company to experience a paradigm shift and business was beginning to experience a positive force unlike anything that had been experienced in prior years of operations.

Implementing Success

Gateway needed to emphasize that the lay offs that were necessary to realign the business strategy did not mean that the company was on a massive downsizing spree and that there was an upside to the new operational methods. This was accomplished through the introduction of new values to be experienced by employees and through the introduction of several new ideas. One of the most important areas to be addressed was that off employment security. Employees were initially frightened that they may be on the list for reduction and it was critical to reinforce them with confidence in their positions. This was accomplished through company meetings where Ted Waitt himself assured the employees of his dedication to them and their families for their loyalty to the company and as long as the company continued to operate, their jobs were not in jeopardy. The next area that showed improvement was in the hiring and selection process. The company started selecting employees with more experience and skills trough external recruiting and staffing organizations, which allowed for a more selective workforce and one that was well-prepared for positions that needed to be filled as the company continued to grow. As previously mentioned, the implementation of self-managed teams changed the entire support mechanism within the company ant the employees felt empowered to make the necessary decisions required to satisfy the customer. Of course this was within reason and not to be taken out of context. Yes, there were still supervisors and managers that would allow specific situations to be approved when there was a considerable amount of money or product concerned, but generally the front-line employ made the decisions. Gateway also restructured the job descriptions through complete job analysis and provided comparable compensation for each level of employment. Positions were classified into various categories and the increases in compensation provided a huge impact on the motivation and initiative of all the employees. It certainly appeared to the employees as if there were a complete change in the organizational culture. More like the company and its executive management actually cared about them rather than feeling like they were just a warm body filling a seat or being just a number in the organization. Along with the increases in compensation, the increase in a more formalized training environment provided professional workshops on customer satisfaction, time-management, as well as extensive technical training on the products that they were supposed to be selling or supporting. This was a huge step forward within the company in that the employees actually knew what the company was selling before the consumer. This used to be a big problem because the customers would call in and seek support on products that the employees did not even know anything about, problem solved! Even more important than all of the other newly implemented items discussed above were the elimination of hierarchical employment levels and the implementation of a newly developed and highly automated system for the sharing of information throughout the company. The standardization of supporting the consumer through the new knowledge based system proved to be the largest factor for employment satisfaction of all. It seems funny that this would be the power punch, one would think it would be higher compensation or better benefits, but it actually turned out to be the items that allowed the employees to perform their job functions through optimization that created the biggest impact. All of these items are in line with the seven practices of successful organizations and proved to be a motivating factor within Gateway as well.

Business as Usual

What would the consequences been had the company not invested the time and money into a new strategic alignment? Disastrous! The organization was on a downhill spiral that was out of control, without an implemented change in procedures and policies the employee's motivation would have continued to deteriorate and customer satisfaction decrease. The company would also experience new markets in retail through the introduction of Gateway Country Stores, which also had an impact of staffing because now there was a need for personnel with previous retail experience. However, this was a direct deviation from the original business model founded by Waitt and would ultimately change Gateway's future. Gateway's original business model of direct marketing is what allowed the organization to become so successful, is this really the appropriate direction the business should be headed? This is actually a difficult question to answer because of the nature of the competition in the computer manufacturing industry. Only after appearance in the retail market will the answer be revealed. Gateway continued to make changes and modify business procedures throughout the millennium change as evidenced by dropping the 2000 off the original Gateway 2000 name and going public with the company. In addition, the company officers were rearranged and structured into more predominant roles within the organization taking on new responsibilities and providing more presence within the daily activities. Ted Waitt stepped down as president and CEO and assumed the role of chairman, which allowed a new president and operations officer to be selected and assume the helm of daily operations within the business. All of the ongoing change in the business operations certainly made a difference that would be evident over the next few years.

Concluding Solutions

As mentioned earlier, the deviation or integration from the direct market model to retail model is a very costly venture and must be completely and thoroughly analyzed prior to making the initial entry. This is an area that seemed to have had a major impact on the Gateway business operation. The organization opened hundreds of these retail showrooms at a significant cost to the company as well as overhead in staffing and training technicians, supervisors, and general manages to operate them. This was a huge mistake! Gateway, for a number of years, was Dell's largest and most reputable competitor in the direct personal computer market and today we can see where Dell is at in the marketplace. Gateway's involvement in the retail market has, for all intensive purposes, killed them. They are seeking to gain market share in electronic component sales such as PDA's, TV's, and who knows what else in order to try and be competitive in the markets again. The previous name recognition associated with Gateway has fallen to an all time low and people are just not interested in the product line any more. The company has laid off over 17 percent of its workforce, so much for the employment security that was emphasized in the earlier stages of restructure. Headquarters for the company has been moved from North Sioux City, South Dakota to Poway, California and the entire management team has been completely overhauled, which includes the return as CEO for Ted Waitt. The executive management team is much smaller; the Gateway Country Store idea is being nixed, the company decided to terminate its Gateway.net Internet provider operation, and the worse part of all is that this has really accomplished nothing. The company is planning on closing a number of global operations and completely eliminate itself from the European market, a number of call centers and manufacturing facilities in the United States are closing or under consideration to be closed, and reducing the workforce again by another 25 percent. What is the real solution? In reflecting on the operational aspects of the business in the earlier years, the solution would be making the appropriate business decisions on staffing correctly and appropriately, managing the growth of the organization in a more conservative manner, and not deviating from your success (direct market model). Michael Dell has maintained the same basic model and foundation that his company was built on and we can see the success of the Dell Computer business. Maybe the only solution left for Gateway is to be acquired by another company such as Compaq or Dell; at least there will still be a need for the jobs that are currently left. The company is still conducting business operations, but they are struggling to stay above water. There are numerous internal and external forces that are preventing the company from ever seeing the days of the early 1990's again, but hopefully they can recover to at least a profitable status. This assignment has influenced me in the areas of organizational staffing, management involvement in the staffing process, and to seek the advise of others that have already been down the same paths of fast growing organizations. I worked for Gateway for a number of years and experienced the issues discussed in this paper directly, which has also provided me with insight to avoid particular issues of staffing the workforce, employment security, and not forecasting the future. All of these items are critical to the success of the business and must be addressed appropriately. Gateway has experienced the highs of a successful corporate organization and is now experiencing the trenches brought on by poor decisions in staffing, managing, and business in general, which ultimately may be the end of their success.
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