MARKS: 80
SUB: ORGANIZATIONAL BEHAVIOUR
N. B.: 1) Attempt any Four cases2) All cases carry equal marks.
No: 1
Albertsons is a huge grocery and drug company. It has
more than 2,400 supermarkets, and it’s Osco and Sav-on brands
make it the fifth-largest drugstore company in the U.S. In a
typical year, shoppers will make 1.4 billion trips through its
stores.
Albertsons competes in tough businesses. Wal-Mart, in
particular, has been eating away as its market share. In 2001,
with revenues flat and profits falling, the company hired Larry
Johnston to turn the business around.
Johnston came to Albertsons from General Electric. And it
was while he was at GE, that Johnston met a training specialist
named Ed Foreman. Foreman endeared himself to Johnston
when the latter hired Foreman to help him with a serious
problem. At that time, Johnston had been sent to Paris to fix GE
Medical Systems European division. The division made CT
scanners. Over the previous decade, four executives had been
brought in to turn the division around and try to make it
profitable. All had failed. Johnston responded to the challenge
by initiating some important changes – he made a number of
acquisitions, he closed
down inefficient plants, and he moved factories to Eastern
European Countries to take advantage of lower labor costs.
Then he brought in Ed Foreman to charge up the troops. “After
we got Ed in,” says Johnston, “people began to live their live
differently. They came to work with a spring in their step.” In
three years, the division was bringing in annual profits of $100
million. Johnston gives a large part of the credit for this
turnaround to Foreman.
What is Foreman’s secret? He provides motivation and
attitude training. Here’s an example of Foreman’s primary
program – called the Successful Life Course. It lasts 3 days and
begins each morning at 6 A.M. The first day begins with a
chapter from an inspirational handout, followed by 12 minutes of
yoga – like stretching. Then participants march up a hill,
chanting, “I know I can, I know I can.” This is followed by
breakfast and then a variety of lectures on attitude, diet and
exercise. But the primary focus of the program is on attitude.
Says Foreman, “It’s your attitude, not your aptitude that
determines your altitude.” Other parts of the program include
group hugs, team activities, and mind-control relaxation
exercises.
Johnston believes strongly in Foreman’s program. “Positive
attitude is the single biggest thing that can change a business,”
says Johnston. He sees Foreman’s program as being a critical
bridge linking employees with customers. “We’re in the
business of the maintenance and acquisition of customers.” And
with so many shoppers going through his stores, Johnston says
this, “provides a lot of opportunities for customer service.
We’ve got to energize the associates.” To prove he’s willing to
put his money where his mouth is, Johnston has committed $10
million to this training. By the end of 2004, 10,000 managers
will have taken the course. They in turn, will train all 190,000
Albertsons “associates”, with the help of tapes and books.
Foreman claims his program works. He cites success at
companies such as Allstate, Milliken & Co. and Abbott Labs.
“The goal is to improve mental,
physical, and emotional well-being.” he says. “We as individuals
determine the success of our own lives. Positive thoughts
create positive actions.”
Questions:
1. Explain the logic as to how Forman’s 3-day course could positively influence Albertson’s profitability.2. Johnston says, “Positive attitude is the single biggest
thing that can change of business.” How valid and generalizable do you think this statement is?
3. If you were Johnston, what could you do to evaluate the effectiveness of your $10 million investment in Foreman’s training program?4. If you were an Albertson’s employee, how would you feel about going
through Foreman’s course? Explain your position?
No. 2
Mahendra Singh loves what he does. He just isn’t crazy
about how others see him. Singh is the owner of J & J
Automotive Sales, a used car dealership in Karol Baugh, West
Delhi, with about 30 cars on his lot any time.
“Used-car dealer’s deal with a pretty bad reputation,” says
Singh. Just why, he isn’t sure. He didn’t realize there was such
a stigma attached to used-car dealers until he opened his
dealership in 1997. “At Diwali, when family members would ask
what I was doing, I’d tell them, and they’d ask me why I’d want
to do that.
Regardless of the public’s impression of used-car dealers,
Singh loves his business. He enjoys being his own boss. He
likes being the sole salesman on his lot. He realizes the
diversity of his work – he does everything from buying the
vehicles, to fixing them up to sell, to helping buyers arrange
financing. And, very importantly, Singh likes the opportunity to
work with customers, “There are a thousand guys out there
selling cars who are better at selling than I am,” Singh says.
“I’m more interested in having a relationship.
One of Singh’s strengths is that he loves cars. It’s in his
blood-his father worked for a new-car dealer and frequently
traded the family’s cars. Singh believes his intimate knowledge
of cars makes it easier for him to sell them. “I can tell you
whether the car has 75 percent of its brake pad left or if the
brake pads are new, because I did it.”
To build a meaningful relationship with a customer, Singh
has to overcome the stereotype of a used –car sales-man. He
thinks this might be coming from the hard-sell techniques used
by some in his
business. “ I don’t think it would take a customer long to get
jaded if they’re out shopping for a car. That is a hard thing to
overcome.”
It’s frustrating to Singh when potential customers are him as
just another shady salesman. Because he works hard to build a
customer’s trust, it hurts him when he realizes that he’s failed.
“If they (customers) question my integrity that is the hardest
thing.”
Questions:
1. Explain how you think the stereotype of used-car dealers developed 2. What, if anything different, can Singh do to counter this Stereotype?3 In what ways might this stereotype be beneficial to
Singh? To potential customers?
NO. 3
Nafis Wadia is facing a dilemma. And he’s not alone. Like
many managers, Nafis is struggling to find creative ways to keep
his employees motivated.
Nafis is CEO of a robotics’ manufacturing firm located in the
Bangalore. The company prospered in the 1990s – sales
revenue nearly tripled and the company’s workforce doubled.
The price of the company’s stock rose from under Rs. 200 a
share to more than Rs. 3000. And his employees prospered
because the firm had a pay –for-performance compensation
system. Specifically, every year, 20 percent of the company’s
profits were set aside in a bonus pool and used to reward
employees. Profit sharing provided the typical employee with an
extra Rs. 5.5. lacs in 1998 and Rs. 8.4 lacs in 1999. Then it
dropped to just Rs. 2 lacs in 2000. The company lost money in
2001 and 2002, so there were no profits to share. Meanwhile,
Nafis’s executive team was not spared from watching their profit
– sharing bonuses disappear. The average executive bonus in
1999 was over Rs. 150 lacs. Like the company’s operating
employees, in 2001 and 2002, executives got nothing over and
above their basic salaries.
Nafis’s situation seems to be common among many firms.
While employees in 2002 and 2003 were often glad to just have
a job, the incentives they enjoyed in the 1990s were eroding.
For instance, many companies suspended contributions to
salaried employee’s retirement plans and merit raises for about
hundreds of senior executives; others froze wages and cut
senior managers’ pay by 5 percent; and some eliminated profit
sharing. A 2002 survey of 391 companies found that 48 percent
planned to lower performance – based rewards for both
managers and workers in the next 12 months.
Questions:
1. What implications can you draw from this case
regarding pay – for– performance?
2. If you were Nafis, what can you offer employees as
an alternative to compensation that will not place an
undue hardship on your organization’s bottom line?
Be specific?
NO. 4
Raj Gopalan, Anil and Deepshikha have something in
common. They all were promoted within their organizations into
management positions. And each found the transition a
challenge.
Raj Gopalan was promoted to director of catering for the
Sagar Group of restaurants in New Delhi. With the promotion,
he realized that things would never be the same again. No
longer would he be able to participate in water-cooler gossip or
shrug off an employee’s chronic lateness. He says he found his
new role to be daunting. “At first I was like a bulldozer knocking
everyone over, and that was not well received. I was saying,
‘It’s my way or the highway.’ And was forgetting that my friends
were also in transition.” He admits that this style alienated just
about everyone with whom she worked.
Anil, a technical manager at Satyam computers, talks about
the uncertainty he felt after being promoted to a manager from
a junior programmer. “It was a little bit challenging to be
suddenly giving directives to peers, when just the day before
you were one of them. You try to be careful not to offend
anyone. It’s strange walking into a room and the whole
conversation changes. People don’t want to be as open with
you when you become the boss.”
Deepshikha is now president of Maxlife Insurance, Mumbai.
She started as a customer service representative with the
company, then leapfrogged over colleagues in a series of
promotions. Her fast rise created problems. Collegues “would
say, ‘Oh, here comes the big cheese now.’ God only knows what
they talked about behind my back.”
Questions:
1. A lot of new managers err in selecting the right
leadership style when they move into management.
Why do you think this happens?
2. What does this say about leadership and leadership
training?
3. Which leadership theories, if any, could help new
leaders deal
with this transition?
4. Do you think it’s easier or harder to be promoted
internally into a formal leadership position than to
come into it as an outsider?
Explain.
NO. 5
For 32 years, Southwest Airlines has used the same formula to
maintain its position as the most profitable airline in the U.S. It
offers low fares, high-frequency fights, and good service; it files
only Boeing 737 s; it doesn’t offer connecting flights, reserve
seating; or free meals; it often relies on less expensive,
secondary airports; and it prides itself on having the hardest-
working and most productive employees in the industry. The
company believes its true competitive advantage is its
workforce.
Most of the major airlines ‘cost per seat-mile is nearly 100
per cent higher than Southwest. The company gets this cost
advantage by paying its pilots and flight attendants considerably
less than the competition and having them fly more hours. It
has made up for the lower pay with generous profit sharing and
stock option plans. In addition, because of Southwest’s rapid
growth, it has provided its employees with something rare in the
airline industry; job security. Because a large portion of a
Southwest employee’s compensation comes in the form of stock
options, they have worked harder and more flexibly than their
peers at other airlines. For instance, pilots will often help
ground crew move luggage and work extra hard to turn plane
around fast. Of course, many Southwest employees originally
joined the company and have stayed because of its spirit of fun.
The company has always encouraged employees to work hard
but to also have a good time. A sense of humor, for instance,
has long been a basic criterion in the selection of new
employees.
In the last couple of years, the environment has been
changing for Southwest. First, it faces a number of new, upstart
airlines in many of its markets. JetBlue, Frontier, Air Trans, Song
and Ted are matching Southwest’s low prices but offering
benefits like reserved seating and free live-satellite T.V. They’re
able to do this because they have newer, more fuel-efficient
planes and have young, lower paid workforces. In many
markets, Southwest’s planes and
service look dated. Second, the declining stock market of 2001 -
02 took much of the air out of Southwest’s stock. The
company’s stock option plan no longer looked so attractive to
employees. Third, Southwest has to deal with the reality that it
is no longer the underdog. For decades, employees enjoyed the
challenge of competing against United, American, Delta and
other major airlines. They loved the role of being the underdogs
and having to work harder to survive. Southwest’s employees
are increasingly vocal and aggressive in demanding higher
wages and shorter hours. In the past, workers were willing to go
beyond the call of duty to help the airline thrive. It’s harder for
management to motivate employees now by portraying the
airline as the underdog. Finally, as the company has grown and
matured management ha s become more remote from the rank
and file. When the company had a few hundred employees, it
was easy for management to communicate its messages. Now,
with 35,000 workers, it’s much tougher.
Southwest’s management realizes that times have changed.
Now they face the question of whether they need to make
changes in their basic strategy and, if they do, the effect it will
have on the company’s culture. For instance, in the fall of 2003,
the company was considering adding in –flight entertainment,
although it would cost millions to install and many more millions
to maintain; and purchasing smaller jets to maintain
competitiveness in smaller markets. The operating costs of
these smaller jets would be 15 to 25 percent higher than those
of its current fleet.
Questions:
1. What has sustained Southwest’s culture?
2. Do you think upstart airlines can successfully
duplicate this culture?
3. No longer the underdog, what can southwest’s
management do to retain its high-productivity
culture?
4. What does this case imply about sustaining culture in
a changing environment?
NO. 6.
Mark Colvard, a United Parcel manager in San Ramon, California,
recently faced a difficult decision. One of his drivers asked for
two weeks off to help an ailing family member. But company
rules said this driver wasn’t eligible. If Colvard went by the book,
the driver would probably take the days off anyway and be fired.
On the other hand, Colvard, was likely to be criticized by other
drivers if he bent the rule. Colvard chose to give the driver the
time off. While he took some heat for the decision, he also kept
a valuable employee.
Had Colvard been faced with this decision six months
earlier, he says he would have gone the other way. What
changed his thinking was a month he spent living in McAllen,
Texas. It was part of a UPS management training experience
called the Community Internship Program (CIP). During his
month in McAllen, Colvard built housing for the poor, collected
clothing for the Salvation Army, and worked in a drug rehab
center. Colvard gives the program credit for helping him
empathize with employees facing crises back home. And he
says that CIP has made him a better manager. “My goal was to
make the numbers, and in some cases that meant not looking at
the individual but looking at the bottom line. After that one-
month stay, I immediately started reaching out to people in a
different way.”
CIP was established by UPS in the late 1960s to help open
the eyes of the company’s predominantly white managers to the
poverty and inequality in many cities. Today, the program takes
50 of the company’s most promising. Executives each summer
and bring them to cities around the country. There they deal
with a variety of problems – from transportation to housing,
education and health care. The company’s goal is to awaken
these mangers to the challenges that many of their employees
face, bridging the cultural divide that separates a
white manager from an African-American driver or an upper-
income suburbanite from a worker raised in the rural South.
Questions:
1. Do you think individuals can learn empathy from
something like a one month CIP experience? Explain.
2. How could UPS’s CIP help the organization better
manage work / life conflicts?
3. How could UPS’s CIP help the organization improve
its response to diversity?
4. What negative, if any, can you envision resulting
form CIP?
5. UPS has 2,400 mangers. CIP includes only 50 each
year. How can the program make a difference if it
includes only 2 percent of all mangers? Doesn’t
this suggest that the program is more public
relations than management training?
6. How can UPS justify the cost of a program like CIP if
competitions like FedEx, DHL, and the U.S. Postal
service don’t offer such programs? Doesn’t this
increase costs or reduce UPS profits?