OB case study for Shelton student Apr 2014

Assignment: Case study

Team Productivity at A. E. Leeson’s Ltd.

Allister McPherson is the general manager of A. E. Leeson’s, a small UK-based electronic

sub-component assembly facility. It is a part of a larger conglomerate which imports a variety of computer hardware and software. Reporting to Allister are three key managers of the facility: a production manager who oversees three work shifts; an office manager who oversees 15 specialists including two marketing staff members; and a manager in charge of human resources and plant safety.

The production facility is designed for work teams. Team members have very clear expectations about the extent of team authority to make production-related decisions. For instance, members make their own decisions about work scheduling and production planning. The teams understand their work assignments and managers leave the teams alone so that they can get their jobs done. At times a team may refuse to follow the orders of a supervisor if they think he is impeding team performance or decision making. A team might also complain if a supervisor is using discipline unfairly or is trying to force employees to obey the wishes of management.

An informal ‘tradition’ at the facility is ‘job-bidding’ in which a worker applies for an unstaffed position in the facility. Some managers view the process as a cop-out: a way for workers to avoid certain bosses. Employees think of job bidding as a way to get a better work schedule, e.g., moving from the night shift to the day work shift. Supervisors resent this system because they feel that they should have the right to choose their subordinates rather than having a system which allows employees to circumvent their requirements.

As an informal job benefit, employees were allowed to use company tools and materials

for personal use. Employees have grown used to the fact that the company will provide

hardware and software to them at cost and they have come to expect the company to let them use tools for fixing personal equipment and for home repairs. In turn, the company enjoyed a very low rate of pilferage and generally all company tools and equipment are returned in good shape.

The company has just decided to buy $15m worth of new production equipment and Allister will integrate it into the assembly facility. Allister had found a replacement, Rudy Washington, for his production manager who was retiring soon. Rudy had served with distinction in the Royal Navy during the Falklands War and he had excelled in two industrial positions before joining Leeson’s two years ago. Allister believed that facility productivity and profitability could rise significantly with new equipment and a new production manager who was familiar with all the latest management techniques.

Soon after his arrival, Rudy began to leave his mark on the facility and its production

practices. He scrapped the practice of allowing employees to borrow company tools

for personal use. He reasoned that a few unethical employees could steal the tools and

resell them because the control process governing their use was extremely lax. He also

replaced the job-bidding system with a military-like seniority system. Managers and

supervisors throughout the facility avidly supported the system, but it soon became

evident that it has led to resentment and frustration among the facility’s production

workers. Workers have been overheard saying ‘Rudy is still in the Navy and he thinks

we are all new recruits’. Rudy, of course, believed that management should not be

questioned and workers had a duty to obey legitimate orders from supervisors.

Rudy was fond of making ‘rounds’ through the production facility on an hourly basis. During his first four months, he reduced labour-hours for assembly and increased product quality and dependability. During this period, five employees left and in exit interviews they cited the termination of the job-bidding system for their decisions. Three employees who resigned had obtained excellent job performance ratings on a regular basis.

The installation of the new equipment had gone smoothly, but it was clear that employees

were unhappy because their productivity had generated more profits for the company

but no wage increases for them. Rudy began to notice that losses of company

equipment and tools began to rise above historical averages. He decided to install

metal detectors and a system for random employee locker inspections to deter any

further theft of company equipment and tools.

After a year on the job, Rudy was called back to company headquarters for a month long seminar on leadership and organisational quality improvement. During his absence,

Allister decided not to fill his position with a temporary production manager. Instead,

he told all shift supervisors that they were each responsible for their shifts with no

further direct supervision. Shortly after Rudy left, Allister learned from the third shift

supervisor that night employees wanted a slightly longer break at 3 a.m. because

humid work conditions were causing some employees to experience drowsiness. To

avoid defective assemblies Allister granted the request and he told the three shift

supervisors to use their own judgement to handle minor employee requests. He later

learned that several other changes had been made, but none of Rudy’s major management

decisions had been altered.

Two weeks later, employees complained loudly about the company’s policy of mandatory

overtime to meet production output requirements. Demand for sub-assemblies had been so robust that workers were regularly working 15–18 overtime hours each week. Allister considered the problem and announced that if the work shifts could boost production by 15 per cent, then he would suspend the mandatory overtime requirement. Within two days, production rose to the required level and Allister kept his promise. Much to his surprise, the company received several large orders which once again put his facility under a back-order requirement and he reluctantly had to reactivate the mandatory overtime rule. Within a week the work-force had eliminated the back-order problem and Allister, once again, dropped the overtime rule.

Employees were soon complaining about the metal detectors and random employee locker searches because they thought management did not trust them. They called the policies ‘unjust’ because the majority of honest workers should not have to submit to these humiliations just to root out a few bad apples’.

Allister agreed and he proposed a ‘four-week trial period’ in which the detectors and

searchers would be suspended while tool and equipment numbers were closely monitored

by designated employees. With little debate, workers accepted this offer as a realistic compromise.

Two days before Rudy’s return, Allister was studying his monthly report and he was

startled to see that production was up 20 per cent and product defect rates had fallen

five per cent below the running six-month averages. In effect, production output and

product quality had increased without the presence of a production manager. Allister

knew that he faced a dilemma. He could report these findings to corporate officials

and he could make a strong case for eliminating the production manager’s position.

This would cost Rudy his job and Allister was genuinely concerned by this because he

considered Rudy to be his friend. Or he could show Rudy these results and work with

him to change his management style. He knew that his ‘Navy man’ would be hard

pressed to change.

Source: Adapted from R. Steers and J. Black, 1994. Organizational Behavior, 5th edn. New York: Harper Collins, pg 276–7.

Answer the following questions:

1)     Why was production output up 20 per cent and product defect rates down five

percent? (40 marks)

2)     Once Rudy returns, what should Allister tell him and what actions should he take

with respect to Rudy’s position and management style? (50 marks)

Presentation format and Harvard reference style (10 marks)                                                     

                                                                                                                Total [100 marks]