Human Resources Management
Symposium Case Study
Part II – Cyber-Med Systems Company Information
COMPANY BACKGROUND
Cyber-Med Systems is a company that develops cyber-security software for the health care
industry. It was founded by four college roommates at Cal-State Long Beach in 2010. It now
operates in four locations across California and Oregon (San Francisco, Los Angeles, San Diego
and Portland).
From the start, the company has experienced consistent growth. It currently has over 400
employees, annual revenues of $215 million and is experiencing double-digit annual revenue
growth. Now, due to the pandemic, the growth of tele-medicine and what is expected to be the
“new normal” in healthcare, the company is positioned for exponential growth over the next five
years.
To date, however, even though they’ve grown rapidly, they continue to “just break even” on making
any profits. This is primarily due to adding more employees, offices and product development
costs.
ORIGINAL LEADERSHIP AND COMMUNICATION STRUCTURE TO DATE
When the company first formed, the executive structure was as follows:
‣ Paul was the Chief Executive Officer (CEO) because of his strong technical and sales skills.
‣ John was the Chief Financial Officer (CFO) even though his financial skills are average. He
has strong sales and business development skills.
‣ Jim was the Chief Marketing Officer (CMO), heading sales and strategy. His financial and
marketing skills are strong, with average sales skills.
‣ Karen was the Executive Vice President (EVP) of Operations. Her technical and operational
skills are strong.
Of the four founders, Jim (CMO) and Karen (EVP) have superior leadership skills. They are both
located in the Portland, Oregon office.
Paul works in San Francisco and John in San Diego. There is no direct leadership in the Los
Angeles office.
Other than Karen and Jim, the founders rarely meet in person and typically FaceTime, Zoom or
Skype each other when they need to talk. Paul has sent an email to the founders and Board each
quarter on how the business is doing.
The company has an intranet site managed by marketing which provides very basic company
information. Employees seem to find more company information on the internet from sites like
Glassdoor.
STATUS OVERVIEW
As noted, the company has offices in the City of San Diego, City of Los Angeles, City of San
Francisco and the City of Portland. Each location has over 100 employees. The company has a
programmer trainee position that starts at only $20.00 an hour. All four cities have different
employment regulations, which has caused morale issues with trainee employees, who are asking
why others in their role in other locations are treated differently in regards to pay.
The office locations are all located near downtown areas and employees frequently get harassed
by panhandlers asking for money. There have been situations at all four offices where employees
have been physically threatened. These encounters have resulted in several workers compensation
claims due to stress of coming to work. In response, the company sent employees text messages
on how to avoid “dangerous” people. However, some employees feel sorry for the panhandlers
and bring them sandwiches every day. This has resulted in employee relations issues, between
supporters of the panhandlers and employees who want the company to provide more security
and to tell the supporter employees to stop interacting with the panhandlers. Three key technical
employees have left due to their security concerns.
Even with their growth, Cyber-Med Systems has not promoted from within and is continually “going
outside” to hire managers and directors. This has resulted in poor morale and turnover issues, with
current employees seeing limited growth opportunities.
This is especially true among the women employees as the trend has been to bring in male
managers and directors, while overlooking the female talent existent within the organization. There
are quiet but growing discussions among the women about bringing suit against the company.
These discussions are further exacerbated as Jerry, one of the directors in the San Francisco
office, has had affairs with a number of entry level women – some of whom have stayed with the
company and others who have left. When the issue was brought to Paul’s attention, he said he’d
“talk with him” – but no one knows whether that conversation ever took place.
Due to the growth of the company and limited office facilities, the company had already started to
allow employees to work from home pre-pandemic through to the present. This includes hourly
employees who perform IT work and customer service. Employees generally like working from
home and it has been good for retention and employee morale. There have been some issues on
tracking time worked and overtime hours have increased. Some employees have complained
about not taking any breaks for days at a time.
HUMAN RESOURCES
There has been no formal Human Resources department up to now. Instead, HR has been treated
as an extension of the Finance function under John’s leadership. For the most part, the HR
functions are outsourced to a number of different vendors. One of John’s direct reports is
supposed to be overseeing and coordinating the vendors, but no one is sure whether that is
happening – and no one at the executive level has ever asked.
BENEFITS
The company has great benefits – medical, dental, vision, and employees only pay $25 a month for
all benefits. They also have a 100% 401k match up to 8% of their contributions. Benefits are only
offered for employees; spouses/partners and dependents are not covered. Eighty-five percent
(85%) of the employees are single. This employee-only coverage has saved the company money;
however, they get a lot of complaints from the fifteen percent (15%) of employees who have
dependents. They also offer an unlimited vacation hours policy, with the philosophy that “as long as
the works gets done, we’re cool.” Some employees rarely take time off while others take vacation
time every month. There has been some abuse of this benefit by some lower-performing
employees.
The company spends an annual total of $900K for employee development. The money is allocated
out to each location equally, who in turn spend the money as they deem fit. The company also has
a very generous tuition support policy of $15,000 per year and the employees are free to pick any
degree they wish to pursue. Employees have become lawyers, chiropractors and librarians at the
expense of Cyber-Med Systems. The company is spending upwards of $1.5m a year on tuition
support. The rationale of the program is to keep employees happy.
Ratings on Glassdoor are 3.3 and their Indeed rating is 2.9.
WHAT HAS CHANGED
The original Board of Directors – which included Paul, John, Jim (but not Karen) and
representatives from each of the Venture Capital firms that invested in Cyber-Med Systems –
recently met to discuss the company’s preparation for the expected growth.
On asking deeper questions about what’s going on, the Venture firm representatives demanded
some immediate changes in the management structure, the Board membership and, among other
things, the way the Human Resources function is handled.
The changes include:
‣ A new Co-CEO structure with Jim and Karen each holding the position of Co-CEO
‣ Karen being added as a member of the Board of Directors
‣ A new internal Human Resources function to be established for the company.
Symposium Case Study
Part III – The Case Study Scenario
Your team belongs to a Human Resources consulting firm specializing in helping growing
technology companies establish world-class HR function inside their organizations.
You have been hired by a Sub-Committee of the Board of Directors (i.e., the panel of experts) – all
of whom are from the Venture Capital investment firms that funded Cyber-Med Systems – to
assess and make recommendations including but not limited to:
‣ Cyber-Med System’s “organizational effectiveness” to see what’s working and what’s not
working
‣ How to make Cyber-Med Systems profitable and efficient, including any guidance on how
to streamline the business
‣ How the new internal HR function should be designed and staffed
‣ Identifying any “rabbit holes” that the new co-CEOs and Board should be concerned with
as the company grows.
You will be making your presentation to that Sub-Committee and fielding their questions at an
upcoming meeting.
Your Process
Your firm has a “Big Fish” (as in, “Where are the Big Fish opportunities?”) list of questions that you
typically go through when first beginning a consulting engagement.
Your process is, as a group, to go through the questions and then:
‣ Identify the four or five questions to focus on first – including justifying why those areas
would be the priority
‣ Factor in, as thoroughly as you can, the costs to implement your recommendations, as well
as the return on investment and the timing needed to implement your recommended
changes
‣ Prepare to present what your team considers to be the optimal HR Department structure
and priority actions (immediate, mid- and long-term) for Cyber-Med Systems.
The outcomes of those discussions are the presentation you make to the Board Sub-Committee
members.
The “Big Fish” Questions
‣ Where and what are the biggest risks and obstacles to creating and maintaining a high-
performing organization?
‣ Where and what are the biggest opportunities to drive organization business performance?
‣ Where and what are the opportunities with employee development?
‣ What are the opportunities on benefits offerings, if any?
‣ How do we handle the unlimited vacation time policy without upsetting employees? How
do we improve its implementation? Or, do we replace the policy? If so, with what?
‣ With operations in California and Oregon, are there any special issues to consider?
‣ Are you satisfied with the employee communications and overall internal communications?
‣ How should the relationship between the founders be addressed now that the
management/Board changes have been made and, most likely, more changes to come?
‣ Why don’t they have a pipeline of employees ready for management roles? What can be
done to fix this?
‣ Should employees be allowed to work from home or should that option be stopped?
‣ How is employee morale and employee engagement managed based on your team’s
recommendations?
‣ What is the impact to the work culture based on your recommendations?