CASE 1 Kathy McCarthy was the manager of a production department in Alvis Corpor

Question

CASE 1
Kathy McCarthy was the manager of a production department in Alvis Corporation, a
firm that manufactures office equipment. The workers are not unionized. After reading an
article that stressed the benefits of participative management, Kathy believed that these
benefits could be realized in her department if the workers were allowed to participate in
making some decisions that affect them. Kathy selected two decisions for an experiment
in participative management.
The first decision involved vacation schedules. Each summer the workers are given two
weeks’ vacation, but no more than two workers can go on vacation at the same time. In
prior years, Kathy made this decision herself. She would first ask the workers to indicate
their preferred dates, then she considered how the work would be affected if different
people were out at the same time. It was important to plan a vacation schedule that would
ensure adequate staffing for all of the essential operations performed by the department.
When more than two workers wanted the same time period, and they had similar skills,
she usually gave preference to the workers with the highest productivity.
The second decision involved production standards. Sales had been increasing steadily
over the past few years, and the company recently installed some new equipment to
increase productivity. The new equipment would make it possible to produce more with
the same number of workers. The company had a pay incentive system in which workers
received a piece rate for each unit produced above a standard amount. Separate standards
existed for each type of product, based on an industrial engineering study conducted a few
years earlier. Top management wanted to readjust the production standards to reflect that
fact that the new equipment made it possible for the workers to earn more without
working any harder. The savings from higher productivity were needed to help pay for the
new equipment.
Kathy called a meeting of her 15 workers an hour before the end of the work day and
explained that she wanted them to discuss the two issues and make recommendations.
Kathy figured that the workers might be inhibited about participating in the discussion if
she were present, so she left them alone to discuss the issues. Besides, Kathy had an
appointment to meet with the quality control manager. Quality problems had increased
after the new equipment was installed, and the industrial engineers were studying the
problem in an attempt to determine why quality had gotten worse rather than better. When
Kathy returned to her department just at quitting time, she was surprised to learn that the
workers recommended keeping the standards the same. She had assumed
they knew the pay incentives were no longer fair and would set a higher standard. The worker speaking for the group explained that their base pay had not kept up with inflation and the higher incentive pay restored their real income to its prior level.
On the vacation issue, the group was deadlocked. Several of the workers wanted to take their vacations during the same two week period and could not agree on who should go. Some workers argued that they should have priority because they had more seniority, while others argued that priority should be based on productivity, as in the past. Because it was quitting time, the group concluded that Kathy would have to resolve the dispute herself. After all, wasn’t that what she was being paid for?
Answer all the questions (3 x 10=30marks)
1. Were the two decisions appropriate for a group decision procedure?
2. What mistakes were made in using participation, and what could have been done to avoid the difficulties the manager encountered?
3. Were these two decisions appropriate ones for introducing participation into the department?

Explanation / Answer

1)

The both decisions were not appropriate to be introduced in a group decision making structure. Since the decisions involved repercussions for the group which directly impacted their wellness in terms of being financially well off or having leisure time off, it was expected that the group behavior would be defensive and that is how it eventually turned out to be.

So this decision should have been taken by an executive using relevant benchmarks and data and then the decision should have been communicated to the entire team.

2)

The mistakes that were made during participation were:

3)

While participative decision making is important and good, it has its limitations especially when enforcing executive decisions.

In this case, the decisions were of the nature which meant that the management had to take tough calls and then these had to be adhered to keeping in view the requirements of the organization.

So clearly these two decisions were not appropriate ones for introducing participation into the department.

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