Eu Design's Rise in the Apparel and Fashion Industry: Formalizing Management and Incentive Systems

Case 1:

EU Design’s Rise in the Apparel and Fashion Industry:

Formalizing Management and Incentive Systems

Table of Contents

Introduction 3

Management Risks associated with Growth in Creative Industries 3

The Move from an Informal to a Formal Management Style 4

Reorganizing the Organizational Structure 5

The new Incentive System 8

Implementation Plan for the new Management Control System 10

Conclusion 10

References 11

Appendix 12

Appendix A 12

Appendix B 12

Introduction

Since its foundation in 1999, EU Design has been growing slowly, but steady. Nonetheless, some strategic and operational decisions in the past may have fostered problems, which increasingly hampered daily business. These problems have induced the management to rethink whether a mainly informal management style was still appropriate to meet future challenges, and if not, which measures could be taken to amplify the company’s performance.

Management Risks associated with Growth in Creative Industries

The most common risk in expanding companies is the unintended adherence to informal structures that do not sufficiently cover newly upcoming needs. Examples are decision trees, rewarding and training systems, responsibilities, and/or communication channels that do not support a growing organization. Since creativity is supposed to be endorsed by an atmosphere of freedom and flexibility, and considered vital in the creative industry, managers might, more than in other growing businesses, be tempted to abstain from implementing necessary formalities. This behavior, often outcome of a lack in overall strategy, leads to a more successive allocation of newly occurring tasks and responsibilities in daily business. However, the farther this development goes, the more employees are likely to be faced with double responsibilities, time-consuming complexities and frictions, and/or poor communication. These undesired disorders pose a serious problem, since they...