Topic
Exam OBD (Question 1 and 2)
Instructions
QUESTION 1
Scenario A.
Steve Fisher is the owner of Cin-Made, a small packaging plant in Cincinnati. Fisher had no desire to carry all his company’s burdens by himself, so he decided to share the responsibilities and rewards with his workers. But the workforce said ‘no thanks’. They wanted nothing to do with it, even if it really did mean profit-sharing on a generous scale, which they very much doubted was the case.
Fisher had purchased the company with a partner, and at first his relations with employees had been adversarial and hostile. He had openly implied that they were not particularly intelligent, and he had declared their jobs to be so easy that even a child could do them. Even worse, he had refused them their annual wage increment, promised by the previous owner of the firm. The workers went out on strike but eventually caved in when their war chest ran dry and Fisher threatened to close the factory permanently. Fisher wouldn’t take any of the workers back until each one had accepted an individual work contract with reduced vacation time and an annual pay cut of 12.5 percent. Beaten and humiliated, the workers hated him.
Fisher himself soon realised that even if his cost-cutting measures had been necessary, his manner had been arrogant, heavy-handed, and rather short-sighted. He lay awake at night wondering if the company was going to survive. He wanted his employees to take on some of that worrying. He realised that the work they did was far from easy, as he’d discovered first-hand when he’d tried to do it himself, and he desperately needed their knowledge of equipment, products, and customers. He never admitted this openly though.
Regardless of his mistakes in the past, Fisher was determined to turn his present predicament on its head and win the confidence and involvement of his workforce. He began consulting them and tapping into their expertise, and he started holding monthly state-of-the-business meetings to let them know exactly where the company stood financially. He also began to study profit-sharing plans. By the end of the new work contract’s first year, the business was again making a profit, and Fisher restored a big piece of the pay cut that he had imposed. Toward the end of the work contract’s second year, Fisher announced that he would restore the remainder of the pay cut, and would immediately begin a profit-sharing plan that would distribute 30 percent of pre-tax profits to employees; half of this would go to the hourly workers. To give the plan substance, Fisher declared that he would open the company’s books to union inspection and audit.
But most of the hourly workers resisted these suggested changes because they didn’t want more responsibility or change. They wanted higher wages all right, but they wanted guarantees, not risks. Fisher was relentlessly straightforward. He gave new responsibilities to his best people, with merit raises to match, and he found a factory manager who was good at coaxing people to study maths and such techniques as statistical process control. Fisher announced that learning new skills would entitle people to raises. But he firmly refused to increase wages across the board beyond restoring the pay cut that had helped get the company back on its feet.
Fisher was sure that he and his workforce would continue to be adversaries until they all shared a common interest in the company’s success. To that end, he wanted them to understand where wages came from and to grasp the trade-offs between benefits and profits. He wanted them to earn more money than they had ever earned before, but only on the condition that extra money would come from profits.
Accordingly, Fisher made two public announcements: “I do not choose to own a company that has an adversarial relationship with its employees” and “Employee participation will play an essential role in the management of this company”. He began losing his temper every time someone refused to participate in decision making or said, “It’s not my job”. He started using the monthly meetings to share more and more complex information, look at profit projections, and examine numbers such as scrap rates and productivity—areas over which factory workers had direct control. Sometimes his explanations were just too complex though, and many of the workers simply couldn’t comprehend them.
Fisher met with union leaders, told them exactly what he was trying to accomplish, and swore he was not out to break their union influence within the organisation. He ignored resentment, absorbed a great deal of criticism, delegated relentlessly and even did his best to listen and treat people with visible respect. Several of his workers began to see his intentions as genuine. Some of them even liked his enthusiasm, and wished they could understand his financial presentations better. Others were wary of his temper and couldn’t forget his initial highly dogmatic management style. The union delegates were still very suspicious of Fisher and continued to tell the workers in no uncertain terms to absolutely resist Fisher’s initiatives because these changes were ultimately designed to create a two-tiered workforce, with the first tier earning much higher wages at the expense of the second tier whose wages would progressively be eroded.
ANSWER THE FOLLOWING QUESTION IN RESPONSE TO SCENARIO A
Imagine you were hired as a consultant by Fisher to help accomplish his plans. What advice would you give him and why? You must draw from at least 3 main theories from the field or organisational behaviour to inform your response.
QUESTION 2
Scenario B.
Steve Hoffman glanced through his company’s quarterly reports. Productivity had halved in the last three months, reported manufacturing defects had escalated, absenteeism had increased considerably, and three long-term clients had stopped placing orders for his firm’s custom designed engines and exhaust systems.
Hoffman had inherited a successful manufacturing business from his uncle just three years ago, and had managed to grow the organization from 80 employees to 220 full-time workers in his first 18 months as the new CEO. Morale at the manufacturing site was high and many long-term workers enjoyed the high-end wages that the company offered. The client list had grown from just 40 regular customers to more than 70.
Eighteen months ago, a major industrial accident at the work site caused the destruction of several important machining tools, and although they were immediately replaced, the workplace safety issues greatly concerned Hoffman. Accordingly, he had hired a management consultancy firm to conduct an analysis of his operations and to make recommendations for organisational improvement initiatives.
Following a series of useful industrial engineering recommendations, the consultants pushed for the introduction of a performance-based pay scheme which saw machinists graded individually and ranked according to their respective productivity levels. Some workers accepted the new system, while others objected bitterly, claiming that it created unnecessary pressure. All three foremen found difficulties in implementing this new system without having to play favourites.
Twelve months ago, two of the foremen left Hoffman Enterprises, taking up employment at a large cannery across town. Hoffman quickly replaced them both with two new team leaders; Eric Davidson and Hassan Zammit.
Hassan was immediately accepted by his team and proved to be one of the best foremen in the company’s history. His team’s productivity increased each week over the next several months as he implemented a self-managed working group system. In this system, workers designed their own team-roster and members worked collaboratively to ensure that both production and maintenance tasks were carried out efficiently.
Meanwhile Eric Davidson’s team struggled, as workers joked that their supervisor had no idea what he was doing. Eric’s demands for faster productivity led to machines being over-worked and under-serviced. When machines suffered breakdowns, the workers joked about it and usually took it as an invitation to have an extended tea break. Team productivity declined progressively and more and more workers refused to participate in the individual appraisal systems by failing to complete their log-book entries. Eric himself struggled to gain the respect of his team and became a laughing stock among his workers.
Suspected acts of sabotage ensued, as a bitter rivalry developed on the manufacturing site between these two teams. Eric’s team accused the Hassan’s workers of putting in too much unpaid overtime and considered them to be “cheating the system”. Hassan’s team resented this criticism and viewed Eric’s workers as lazy and very untrustworthy. Steve Hoffman wondered what to make of all this. He again called on the advice of the management consultants, who assured him that the performance appraisal system was actually working well because it was producing healthy competition and that there was really nothing to worry about. That piece of advice, together with a week-long period of expert observation, cost the company $50, 000 in consultancy fees.
One afternoon shortly after the consultants had disappeared, a fight broke out on the factory floor and the police were called. Although the matter was soon forgotten, product defects began to emerge. Each manufacturing team blamed the other for sloppy maintenance of the machine tools, and the matter was never properly resolved. Steve Hoffman tried hard to listen to all sides of the story, but was unable to get to the bottom of it all. Hassan suggested that Eric Davidson simply lacked manufacturing experience. Eric assured Hoffman that Hassan was trying to ruin the company so that he could buy it out and run the enterprise himself. Further investigations suggested that this allegation was without foundation, but the allegation nevertheless played on Hoffman’s mind, clouding his ability to understand the whole situation properly.
As absenteeism started to become a problem, an important client’s order was missed, and word got out that the company had problems with the reliability of its manufactured goods. Several high-profile clients pulled major orders and had them filled by rival manufactures hundreds of miles away instead.
Steve Hoffman glanced again at the company’s quarterly reports. He decided that something had to be done immediately to address the downward spiral.
ANSWER THE FOLLOWING QUESTION IN RESPONSE TO SCENARIO B.
If you were Steve Hoffman, what would you do and why? You must draw from at least 3 theories from the field of organisational behaviour to inform your response.
Answer preview
Fisher needs to apply three steps for change, including Unfreezing, changing and refreezing, introduced by Kurt Lewin. Lewin argues that since it is more likely that many people would naturally resist change, the goal for unfreezing stage is to develop awareness concerning how current status quo and its acceptability level is hindering the progress of the organization. At this level, Fisher needs to create a channel of open discussion meetings whereby Cin-Made managerial team, him included, meets with the employees in a meeting that offers everyone equal, non-consequential chance to raise main concerns and solution they consider viable to correct the initial and current issues hindering the company’s seamless progression.
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