Introduce the value system of your generation

07 Sep

Organisational Behaviour

Question 1: Leadership is said to be a vital quality which is becoming very rare in the organisations. It would not be wrong if we say that it is a progression where an individual solicits the backing of other entities for the completion of mutual objectives. The leaders are the visionaries and also act as a catalyst in terms of influencing and inspiring others. Based on the above statements discuss the significance of leadership in any organisation. Conclude by answering that how the organisation would fare if leadership is not right?

Question 2: Politics is said to be an inevitable evil at any workplace, no matter how much one tries to be away from it, would always find to be embroiled in it. It is a proven fact that politics cannot be avoided at any cost but has to be coped. It becomes imperative to be well aware of the elements contributing to politics at workplace. Keeping in view the above statements introduce the concept of workplace politics. Also, list factors contributing to workplace politics. Give concluding remarks on the importance of workplace politics.

Question 3: Sanjay and Sam are co-workers. They both are working in the same project but their work values are quite contrast to each other. Sanjay belongs to GenX (The X Generation) and relies a lot on the team-work as well as its (team’s) upliftment, whereas Sam is from GenY (The Y Generation) or the Millennial and for him self-reliance is more important. Though they share a great personal rapport but they always find dissonance at work.

a) Explain the reason for their dissonance? It is natural to have such dissonance, give concluding remarks for the same.

b) Introduce the value system of your generation. Discuss the rest of the generations and their values?

Explain the reason for their dissonance

07 Sep

Organisational Behaviour

Question 1: Leadership is said to be a vital quality which is becoming very rare in the organisations. It would not be wrong if we say that it is a progression where an individual solicits the backing of other entities for the completion of mutual objectives. The leaders are the visionaries and also act as a catalyst in terms of influencing and inspiring others. Based on the above statements discuss the significance of leadership in any organisation. Conclude by answering that how the organisation would fare if leadership is not right?

Question 2: Politics is said to be an inevitable evil at any workplace, no matter how much one tries to be away from it, would always find to be embroiled in it. It is a proven fact that politics cannot be avoided at any cost but has to be coped. It becomes imperative to be well aware of the elements contributing to politics at workplace. Keeping in view the above statements introduce the concept of workplace politics. Also, list factors contributing to workplace politics. Give concluding remarks on the importance of workplace politics.

Question 3: Sanjay and Sam are co-workers. They both are working in the same project but their work values are quite contrast to each other. Sanjay belongs to GenX (The X Generation) and relies a lot on the team-work as well as its (team’s) upliftment, whereas Sam is from GenY (The Y Generation) or the Millennial and for him self-reliance is more important. Though they share a great personal rapport but they always find dissonance at work.

a) Explain the reason for their dissonance? It is natural to have such dissonance, give concluding remarks for the same.

b) Introduce the value system of your generation. Discuss the rest of the generations and their values?

Sanjay and Sam are co-workers

07 Sep

Organisational Behaviour

Question 1: Leadership is said to be a vital quality which is becoming very rare in the organisations. It would not be wrong if we say that it is a progression where an individual solicits the backing of other entities for the completion of mutual objectives. The leaders are the visionaries and also act as a catalyst in terms of influencing and inspiring others. Based on the above statements discuss the significance of leadership in any organisation. Conclude by answering that how the organisation would fare if leadership is not right?

Question 2: Politics is said to be an inevitable evil at any workplace, no matter how much one tries to be away from it, would always find to be embroiled in it. It is a proven fact that politics cannot be avoided at any cost but has to be coped. It becomes imperative to be well aware of the elements contributing to politics at workplace. Keeping in view the above statements introduce the concept of workplace politics. Also, list factors contributing to workplace politics. Give concluding remarks on the importance of workplace politics.

Question 3: Sanjay and Sam are co-workers. They both are working in the same project but their work values are quite contrast to each other. Sanjay belongs to GenX (The X Generation) and relies a lot on the team-work as well as its (team’s) upliftment, whereas Sam is from GenY (The Y Generation) or the Millennial and for him self-reliance is more important. Though they share a great personal rapport but they always find dissonance at work.

a) Explain the reason for their dissonance? It is natural to have such dissonance, give concluding remarks for the same.

b) Introduce the value system of your generation. Discuss the rest of the generations and their values?

Politics is said to be an inevitable evil at any workplace

07 Sep

Organisational Behaviour

Question 1: Leadership is said to be a vital quality which is becoming very rare in the organisations. It would not be wrong if we say that it is a progression where an individual solicits the backing of other entities for the completion of mutual objectives. The leaders are the visionaries and also act as a catalyst in terms of influencing and inspiring others. Based on the above statements discuss the significance of leadership in any organisation. Conclude by answering that how the organisation would fare if leadership is not right?

Question 2: Politics is said to be an inevitable evil at any workplace, no matter how much one tries to be away from it, would always find to be embroiled in it. It is a proven fact that politics cannot be avoided at any cost but has to be coped. It becomes imperative to be well aware of the elements contributing to politics at workplace. Keeping in view the above statements introduce the concept of workplace politics. Also, list factors contributing to workplace politics. Give concluding remarks on the importance of workplace politics.

Question 3: Sanjay and Sam are co-workers. They both are working in the same project but their work values are quite contrast to each other. Sanjay belongs to GenX (The X Generation) and relies a lot on the team-work as well as its (team’s) upliftment, whereas Sam is from GenY (The Y Generation) or the Millennial and for him self-reliance is more important. Though they share a great personal rapport but they always find dissonance at work.

a) Explain the reason for their dissonance? It is natural to have such dissonance, give concluding remarks for the same.

b) Introduce the value system of your generation. Discuss the rest of the generations and their values?

Leadership is said to be a vital quality

07 Sep

Organisational Behaviour

Question 1: Leadership is said to be a vital quality which is becoming very rare in the organisations. It would not be wrong if we say that it is a progression where an individual solicits the backing of other entities for the completion of mutual objectives. The leaders are the visionaries and also act as a catalyst in terms of influencing and inspiring others. Based on the above statements discuss the significance of leadership in any organisation. Conclude by answering that how the organisation would fare if leadership is not right?

Question 2: Politics is said to be an inevitable evil at any workplace, no matter how much one tries to be away from it, would always find to be embroiled in it. It is a proven fact that politics cannot be avoided at any cost but has to be coped. It becomes imperative to be well aware of the elements contributing to politics at workplace. Keeping in view the above statements introduce the concept of workplace politics. Also, list factors contributing to workplace politics. Give concluding remarks on the importance of workplace politics.

Question 3: Sanjay and Sam are co-workers. They both are working in the same project but their work values are quite contrast to each other. Sanjay belongs to GenX (The X Generation) and relies a lot on the team-work as well as its (team’s) upliftment, whereas Sam is from GenY (The Y Generation) or the Millennial and for him self-reliance is more important. Though they share a great personal rapport but they always find dissonance at work.

a) Explain the reason for their dissonance? It is natural to have such dissonance, give concluding remarks for the same.

b) Introduce the value system of your generation. Discuss the rest of the generations and their values?

Organisational Behaviour

07 Sep

Organisational Behaviour

Question 1: Leadership is said to be a vital quality which is becoming very rare in the organisations. It would not be wrong if we say that it is a progression where an individual solicits the backing of other entities for the completion of mutual objectives. The leaders are the visionaries and also act as a catalyst in terms of influencing and inspiring others. Based on the above statements discuss the significance of leadership in any organisation. Conclude by answering that how the organisation would fare if leadership is not right?

Question 2: Politics is said to be an inevitable evil at any workplace, no matter how much one tries to be away from it, would always find to be embroiled in it. It is a proven fact that politics cannot be avoided at any cost but has to be coped. It becomes imperative to be well aware of the elements contributing to politics at workplace. Keeping in view the above statements introduce the concept of workplace politics. Also, list factors contributing to workplace politics. Give concluding remarks on the importance of workplace politics.

Question 3: Sanjay and Sam are co-workers. They both are working in the same project but their work values are quite contrast to each other. Sanjay belongs to GenX (The X Generation) and relies a lot on the team-work as well as its (team’s) upliftment, whereas Sam is from GenY (The Y Generation) or the Millennial and for him self-reliance is more important. Though they share a great personal rapport but they always find dissonance at work.

a) Explain the reason for their dissonance? It is natural to have such dissonance, give concluding remarks for the same.

b) Introduce the value system of your generation. Discuss the rest of the generations and their values?

Organizational Behavior

02 Sep



Ask Suraj bhai about the dot-com burst and he may grin at you as if to say, “What burst?’’ Suraj bhai, a 38-year-old entrepreneur, owns an Internet business that sells loose diamonds to various buyers. Business is becoming for Suraj bhai. In 2004, he had sales of INR 3,500 million. Needless to say, Suraj bhai is optimistic about his business venture.

The future wasn’t always to bright for Suraj bhai, however. In 1985, Suraj bhai moved from his native town Suraj, to New Delhi, with little ability to speak English. There, he attended language courses and worked at the local mall to support himself. After graduation, his roommate’s girlfriend suggested that he work at a local jeweler. “I thought she was crazy. I didn’t know anything about jewelry,’’ says Suraj bhai, who took her advice. Though he worked hard and received his Diamonds and Diamonds Grading certification from the Gemological Institute, he wasn’t satisfied with his progress. `I quickly realized that working there, I was just going to get a salary with a raise here and there. I would never become anything. That drove me to explore other business ventures. I also came to really known diamonds – their pricing and their quality.’’

In 1997, tired of working for someone else, Suraj bhai decided to open his own jewelry store. However, business didn’t boom. `Some of my customers were telling me they could find diamonds for less on the Interest. It blew my mind’’ Surajy bhai recognized an opportunity and began contacting well-known diamond dealers to see if they would be interested in selling their gems online. Suraj bhai recalls one conversation with a prominent dealer who told him, `You cannot sell diamonds on the Internet. You will not survive.’’ Discouraged, Suraj bhai then says that he made a mistake. “I stopped working on it. If you have a dream, you have to keep working harder at it.’’

A year later, Suraj bhai did work harder at his dream and found a dealer who agreed to provide him with some diamonds. Says Suray bhai, “Once I had one. I could approach others. Business started to build. The first 3 months I sold INR 20 million worth of diamonds right off the bat. And that was just me. I started to add employees and eventually closed the jewelry store and got out of retail.’’ Although Suraj bhai does have some diamonds in inventory, he primarily acts as a connection point between buyers and suppliers, giving his customers an extraordinary selection from which to choose.

Suraj bhai is now a savvy entrepreneur, and his company,, went public in October 2003.

Why is Suraj bhai successful? Just ask two people who have known Suraj bhai over the years. Yogesh bhai, a realtor who helped build Suraj bhai building, says, “Suraj bhai is a very ambitious young man. I am not surprised at all how successful he is. He is an entrepreneur in the truest sense of the world.’’ One of Suraj bhai former real-estate instructors, Arun Jain, concurs. `I am not surprised at all at his success,’’ says Arun. “Suraj bhai has always been an extremely motivated individual with a lot of resources. He has a wonderful personality and pays close attention to detail. He also has an ability to stick to things. You could tell from the beginning that he was going to persevere, and I am proud of him.’’

Suraj bhai is keeping his success in perspective, but he also realizes his business’ potential: “I take a very small salary, and our overhead in INR 25 million a year. I am not in debt, and the business is breaking ever. I care about the company. I want to keep everything even until we take off, and then it may be another ball game.’’


1. What factors do you think attributed to Suraj bhai’s success? Was he merely “in the right place at the right time’’, or are there characteristics about him that contribute to his success?

2. How do you believe Suraj bhai would score on the Big Five dimensions of personality (extroversion, agreeableness, conscientiousness, emotional stability, openness to experience)? Which ones would he score high on? Which ones might he score low on?

3. Do you believe that Suraj bhai is high or low on core self-evaluations? On what information did you base your decision?

4. What information about Suraj bhai suggests that he has a proactive personality?




It got to where I was twitching, literally, on the way into work,’’ states Carrie Clark, a 52-year-old retired teacher and administrator. After enduring 10 months of repeated insults and mistreatment from her supervisor, she finally quit her job. “I had to take care of my health.’’

Though many individuals recall bullies from their elementary school days, some are realizing that bullies can exist in the workplace as well. And these bullies do not just pick on the weakest in the group, rather, any subordinate in their path may fall prey to their torment, according to Dr. Gary Namie, director of the Workplace Bullying and Trauma Institute. Dr. Namie further says workplace bullies are not limited to men-women are at least as likely to be bullies. However, gender discrepancies are found in victims of bullying, as women are more likely to be targets.

What motivates a boss to be a bully? Dr. Harvey Hornstein, a retired professor from Teachers College at Columbia University, suggests that supervisors may use bullying as a means to subdue a subordinate that poses a threat to the supervisor’s status. Additionally, supervisors may bully individuals to vent frustrations. Many times however, the sheer desire to wield power may be the primary reason for bullying.

What is the impact of bullying on employee motivation and behavior? Surprisingly, even though victims of workplace bullies may feel less motivated to go to work every day, it does not appear that they discontinue performing their required job duties. However, it does appear that victims of bullies are less motivated to perform extra-role or citizenship behaviors. Helping others, speaking positively about the organization, and going beyond the call of duty are behaviors that are reduced as a result of bullying. According to Dr. Bennett Tepper of the University of North Carolina, fear may be the reason that many workers continue to perform their job duties. And not all individuals reduce their citizenship behaviors. Some continue to engage in extra-role behaviors to make themselves look better than their colleagues.

What should you do if your boss is bullying you? Don’t necessarily expect help from coworkers. As Emelise Aleandri, an actress and producer from New York who left her job after being bullied, stated, “Some people were afraid to do anything. But others didn’t mind what was happening at all, because they wanted my job.’’ Moreover, according to Dr. Michelle Duffy of the University of Kentucky, coworkers often blame victims of bullying in order to resolve their guilt. “they do this by wondering whether maybe the person deserved the treatment, that he or she has been annoying, or lazy, they did something to earn it,’’ states Dr. Duffy. One example of an employee who observed this phenomenon firsthand is Sherry Hamby, who was frequently verbally abused by her boss and then eventually fired. She stated, “This was a man who insulted me, who insulted by family, who would lay into me while everyone else in the office just sat there and let it happen. The people in my office eventually started blaming me.’’

What can a bullied employee do? Dr. Hornstein suggests that employees try to ignore the insults and respond only to the substance of the bully’s grip. `stick with the substance, not the process, and often it won’t escalate,’’ he states. Of course, that is easier said than done.


1) Of the three types of organizational justice, which one does workplace bullying most closely resemble?

2) What aspects of motivation might workplace bullying reduce? For example, are there likely to be effects on an employee’s self-efficacy? If so, what might those effects be?

3) If you were a victim of workplace bullying, what steps would you take to try to reduce its occurrence? What strategies would be most effective? What strategies might be ineffective? What would you do if one of your colleagues was a victim of an abusive supervisor?

4) What factors do you believe contribute to workplace bullying? Are bullies a product of the situation, or are they flawed personalities? What situations and what personality factors might contribute to the presence of bullies?




Thought it may seem fairly obvious that receiving praise and recognition from one’s company is a motivating experience, sadly many companies are failing miserably when it comes to saying “thanks’’ to their employees. According to curt Coffman global practice leader at Gallup, 71 percent of U.S. workers are “disengaged’’, essentially meaning that they could care less about their organization. Coffman states. “We’re operating at one-quarter of the capacity in terms of managing human capital. It’s alarming.’’ Employee recognition programs, which became more popular as the U.S. economy shifted from industrial to knowledge-based, can be an effective way to motivate employees and make them feel valued. In many cases, however, recognition programs are doing “more harm than good’’ according to Coffman.

Take Ko, a 50-year-old former employee of a dot-com in California. Her company proudly instituted a rewards program designed to motivate employees. What were the rewards for a job well-done? Employees would receive a badge which read “U Done Good’’ and, each year, would receive a T-shirt as a means of annual recognition. Once an employee received 10 “U Done Good’’ badges, he or she could trade them in for something bigger and better—a paperweight. Ko states that she would have preferred a raise. “It was patronizing. There wasn’t any deep thought involved in any of this.’’ To make matters worse, she says the badges were handed out arbitrarily and were not tied to performance. And what about those T-shirts? Ko states that the company instilled a strict dress code, so employees couldn’t even wear the shirts if they wanted to. Needless to say, the employee recognition program seemed like an empty gesture rather than a motivation.

Even programs that provide employees with more expensive rewards can backfire, especially if the rewards are given insincerely. Eric Lange, an employee of a trucking company, recalls the time when one of the company’s vice presidents achieved a major financial goal for the company. The vice president, who worked in an office best of Lange, received a Cadillac Seville as his company car and a new Rolex wristwatch that cost the company $10,000. Both were lavish gifts, but the way they were distributed left a sour taste in the vice president’s mouth. He entered his office to find the Rolex in a cheap cardboard box sitting on his desk, along with a brief letter explaining that he would be receiving a 1099 tax form in order to pay taxes on the watch. Lange state of the vice president, “He came into my office, which was right next door, and said, `can you believe this?’’ A mere 2 months later, the vice president pawned the watch. Lange explains. “It had absolutely no meaning for him.

Such experiences resonate with employees who may find more value in a sincere pat on the back than gifts from management that either are meaningless or aren’t conveyed with respect or sincerity. However, sincere pats on the back may be hard to come by. Gallup’s poll found that 61 percent of employees stated that they haven’t received a sincere, “thank you’’ from management in the past year. Finding such as these are troubling, as verbal rewards are not only inexpensive for companies to hand out but also are quick and easy to distribute. Of course, verbal rewards do need to be paired sometimes with tangible benefits that employees value – after all, money talks. In addition, when praising employees for a job well-done, managers need to ensure that the praise is given in conjunction with the specific accomplishment. In this way, employees may not only feel valued by their organization but will also know what actions to take to be rewarded in the future.


1) If praising employees for doing a good job seems to be a fairly easy and obvious motivational tools, why do you think companies and managers don’t often do it?

2) As a manager, what steps would you take to motivate your employees after observing them perform well?

3) Are there any downsides to giving employees too much verbal praise? What might these downsides be and how could you alleviate them as a manager?

4) As a manager, how would you ensure that recognition given to employees is distributed fairly and justly?




What does it take to be a great U.S. president? A survey of 78 history, political science, and law scholars rated the U.S. presidents from George Washington to Bill Clinton. Here are the presidents who were rated “Great’’ and “Near Great.’’


George Washington

Abraham Lincoln

Franklin D. Roosevelt (FDR)

Near Great

Thomas Jefferson

Andrew Jackson

James Polk

Theodore Roosevelt

Harry Truman

Dwight Eisenhower

Ronald Reagan

Among recent presidents, Presidents Nixon, Ford, and Carter were ranked “Below Average’’ and Presidents G. H. W. Bush (the first President Bush) and Clinton were ranked “Average’’.

So what explains these ratings? The following are some qualities of presidents who have stood the test of time.

  1. Great presidents are transformational leaders who engender strong emotions – that is, you either love them or you hate them (it’s hard to hate someone who made little difference). And great presidents enact a vision that may not respond to popular opinion. Lincoln and FDR were beloved, and hated, by millions.
  2. Great presidents are bold and take risks, and almost all great presidents emerge successfully from a crisis. A great president is perceived as “being there’’ when a crisis emerges and taking bold action to lead the nation out of the crisis – for example, Lincoln in the Civil War and Roosevelt in WWII.
  3. Great presidents are associated with a vision. Most people, for example, are able to associate the great presidents with defining moment where a clear set of principles was articulated – for example, FDR’s speech to Congress after the attacks on Pearl Harbor, and Lincoln’s Gettysburg Address.
  4. Great presidents are charismatic. They are engaging, articulate, and expressive, which helps capture the public’s attention and rallies people around a president’s cause. One leadership expert argues that the best presidents create colorful personas with their language by using words with basic emotions – for example, good versus evil or love versus hate.

So what about President George W. Bush (the second President Bush)? Shortly after his second inauguration, President Bush embarked on an ambitious agenda of legal reform, transforming the Social Security system, tax reform, and revising immigration laws. One writer commented, “Bush has always thought big, and always believed you earn political capital by expending it.’’ However, the closeness of the 2004 election (Bush received 51 percent of the vote and Kerry received 48 percent) suggests that Bush may not have overwhelming support.


1. How would you rate President George W. Bush on the four characteristics outlined at the beginning of the case? How would you contrast his reaction to Hurricane Katrina with his reaction to the terrorist attacks of September 11, 2001? What do you think his handling of these two events says about his leadership?

2. Do you think leaders in other contexts (business’, sports, religious) exhibit the same qualities of great or near-great U.S. presidents?

3. Do you think being in the right place at the right time could influence presidential greatness?


Case V


Mark Colvard, a United Parcel manager in San Ramon, California, recently faced a difficult decision. One of his drivers asked for 2 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 rules. Colvard chose to give the driver the time off. Although he took some heat for the decision, he also kept a valuable employee.

Had Colvard been faced with this decision 6 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 cries 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 the bottom line. After that 1-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 brings 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 managers 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.


1. Do you think individuals can learn empathy from something like a 1-month CIP experience? Explain why or why not.

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 negatives, if any, can you envision resulting from CIP?

5. UPS has 2,400 managers. CIP includes only 50 each year. How can the program make a difference if it includes only 2 percent of all managers? Does 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 competitors like FedEx, DHL, and the U.S. Postal Service don’t offer such programs? Does the program increase costs or reduce UPS profits?

Organizational Behavior

02 Sep

CASE: I    Pushing Paper Can Be Fun

A large city government was putting on a number of seminars for managers of various departments throughout the city. At one of these sessions the topic discussed was motivation—how to motivate public servants to do a good job. The plight of a police captain became the central focus of the discussion:

I’ve got a real problem with my officers. They come on the force as young, inexperienced rookies, and we send them out on the street, either in cars or on a beat. They seem to like the contact they have with the public, the action involved in crime prevention, and the apprehension of criminals. They also like helping people out at fires, accidents, and other emergencies.

The problem occurs when they get back to the station. They hate to do the paperwork, and because they dislike it, the job is frequently put off or done inadequately. This lack of attention hurts us later on when we get to court. We need clear, factual reports. They must be highly detailed and unambiguous. As soon as one part of a report is shown to be inadequate or incorrect, the rest of the report is suspect. Poor reporting probably causes us to lose more cases than any other factor.

I just don’t know how to motivate them to do a better job. We’re in a budget crunch, and I have absolutely no financial rewards at my disposal. In fact, we’ll probably have to lay some people off in the near future. It’s hard for me to make the job interesting and challenging because it isn’t-it’s boring, routine paperwork, and there isn’t much you can do about it.

Finally, I can’t say to them that their promotions will hinge on the excellence of their paperwork. First at all, they know it’s not true. If their performance is adequate, most are more likely to get promoted just by staying on the force a certain number of years than for some specific outstanding act. Second, they were trained to do the job they do out in the streets, not to fill out forms. All through their careers the arrests and interventions are what get noticed.

Some people have suggested a number of things, like using conviction records as a performance criterion. However, we know that’s not fair—too many other things are involved. Bad paperwork  increases the chance that you lose in court, but good paperwork doesn’t necessarily mean you’ll win. We tried setting up the team competitions based on the excellence of the reports, but the officers caught on to that pretty quickly. No one was getting any type of reward for winning the competition, and they figured why should they bust a gut when there was on payoff.

I just don’t know what to do.


1. What performance problems is the captain trying to correct?

2. Use the MARS model of individual behavior and performance to diagnose the possible causes of the unacceptable behavior.

3. Has the captain considered all possible solutions to the problem? If not, what else might be done?


CASE: II    How Did I Get Here?

Something was not right. John Breckenridge opened his eyes, saw the nurse’s face, and closed them once more. Cobwebs slowly cleared from his brain as he woke up from his brain as he woke up from the operation. He felt a hard tube in his nostril, and tried to lift his hand to pull it out, but it was strapped down to the bed. John tried to speak but could make only a croaking sound. Nurse Thompson spoke soothingly, “Just try to relax, Mr. Breckenridge. You had a heart attack and emergency surgery, but you’re going to be OK.”

Heart attack? How did I get here? As the anesthesia wore off and the pain set in, John began to recall the events of the past year; and with the memories came another sort of pain – that of remembering a life where success was measured in hours worked and things accomplished, but which of late had not measured up.

John recalled his years in college, where getting good grades had been important, but not so much as his newly developing love for Karen, the girl with auburn hair who got her nursing degree the same year as he graduated with a degree in software engineering. They married the summer after graduation and moved from their sleepy university town in Indiana to Aspen, Colorado. There John got a job with a new software company while Karen worked evenings as a nurse. Although they didn’t see much of each other during the week, weekends were a special time, and the surrounding mountains and nature provided a superb quality of life.

Life was good to the Breckenridges. Two years after they were married, Karen gave birth to Josh and two years later to Linda. Karen reduced her nursing to the minimum hours required to maintain her license, and concentrated on rearing the kids. John, on the other hand, was busy providing for the lifestyle they increasingly became used to, which included a house, car, SUV, ski trips, and all of the things a successful engineering career could bring. The company grew in leaps and bounds, and John was one of the main reasons it grew fast. Work was fun. The company was growing, his responsibilities increased, and he and his team were real buddies. With Karen’s help at home, he juggled work, travel, and evening classes that led to a master’s degree. The master’s degree brought another promotion—this time to vice president of technology at the young (for this company) age of 39.

The promotion had one drawback: It would require working out of the New York office. Karen sadly said goodbye to her friends, convinced the kids that the move would be good to them, and left the ranch house for another one, much more expensive and newer, but smaller and just across the river in New Jersey from the skyscraper where her husband worked. Newark was not much like Aspen, and the kids had a hard time making friends, especially Josh, who was now 16. He grew sullen and withdrawn and began hanging around with a crowd that Karen thought looked very tough. Linda, always the quiet one, stuck mostly to her room.

John’s new job brought with it money and recognition, as well as added responsibilities. He now had to not only lead software development but also actively participate in steering the company in the right direction for the future, tailoring its offerings to market trends. Mergers and acquisitions were the big things in the software business, and John found a special thrill in picking small companies with promising software, buying them out, and adding them to the corporate portfolio. Karen had everything a woman could want and went regularly to a health club. The family lacked for no material need.

At age 41 John felt he had the world by its tail. Sure, he was a bit overweight, but who wouldn’t be with the amount of work and entertaining that he did? He drank some, a habit he had developed early in his career. Karen worried about that, but he reassured her by reminding her that he had been really drunk only twice and would never drink and drive. Josh’s friends were a worry, but nothing had yet come of it.

Not all was well, however. John had been successful in Colorado because he thought fast on his feet, expressed his opinions, and got people to buy into his decisions. In the New York corporate office things were different. All of the top brass except the president and John had Ivy League, moneyed backgrounds. They spoke of strategy but would take only risks that would further their personal careers. He valued passion, integrity, and action, with little regard for personal advancement. They resented him, rightly surmising that the only reason he had been promoted was because he was more like he president than they were, and he was being groomed as heir apparent.

On November 2, 2004, John Breckenridge’s world began to unravel. The company he worked for, the one he had given so much of his life to build was acquired in a hostile takeover. The president who had been his friend and mentor was let go, and the backstabbing began in earnest. John found himself the odd man out in the office as the others jostled to build status in the new firm. Although his stellar record allowed him to survive the first round of job cuts, that survival only made him more of a pariah to those around him. Going to work was a chore now, and John had no friends like those he had left in Aspen.

Karen was little help. John had spent nearly two decades married more to his job than his wife, and he found she was more of a stranger than a comforter as he struggled in his new role. When he spoke about changing jobs, she blew up. “Why did I have to give up nursing for your career?” she said. “Why do we have to move again, just because you can’t get along at work? Can’t you see what the move did to our kids?”

Seeing the hurt and anger in Karen’s eyes, John stopped sharing and turned to his bottle for comfort. In time that caused even more tension in the home, and it slowed him down at work when he really needed to excel. John would often drink himself into oblivion when on business trips rather than thinking about where his life and career were going. On his last trip he hadn’t slept much and had worked far too hard. Midmorning he had been felled by a massive heart attack.

All of this history passed through John Breckenridge’s mind as he woke after the operation. It was time for a change.


1. Identify the stressors in John Breckenridge’s life. Which ones could he have prevented?

2. What were the results of the stress? Would you consider these to be typical to stress situations and lifestyle choices John made, or was John Breckenridge unlucky?

3. Assume you are a career coach retained by John Breckenridge to guide him through his next decisions. How would you recommend that John modify his lifestyle and behavior to reduce stress? Should he change jobs? Do you believe he is capable of reducing his stress alone? If not, where should he seek help?


CASE: III    The Shipping Industry Accounting Team

For the past five years I have been working at McKay, Sanderson, and Smith Associates, a mid-sized accounting firm in Boston that specializes in commercial accounting and audits. My particular specialty in accounting practices for shipping companies, ranging from small fishing fleets to a couple of the big firms with ships along the East Coast.

About 18 months ago McKay, Sanderson, and Smith Associates became part of a large merger involving two other accounting firms. These firms have offices in Miami, Seattle, Baton Rouge, and Los Angeles. Although the other two accounting firms were much larger than McKay, all three firms agreed to avoid centralizing the business around one office in Los Angeles. Instead the new firm—called Goldberg, Choo, and McKay Associates—would rely on teams across the country to “leverage the synergies of our collective knowledge” (an often-cited statement from the managing partner soon after the merger).

The merger affected me a year ago when my boss (a senior partner and vice president of the merger) announced that I would be working more closely with three people from the other two firms to become the firm’s new shipping industry accounting team. The other team members were Elias in Miami, Susan in Seattle, and Brad in Los Angeles. I had met Elias briefly at a meeting in New York City during the merger but had never met Susan or Brad, although I knew that they were shipping accounting professionals at the other firms.

Initially the shipping team activities involved e-mailing each other about new contracts and prospective clients. Later we were asked to submit joint monthly reports on accounting statements and issues. Normally I submitted my own monthly reports to summarize activities involving my own clients. Coordinating the monthly report with three other people took much more time, particularly because different accounting documentation procedures across the three firms were still being resolved. It took numerous e-mail messages an a few telephone calls to work out a reasonable monthly report style.

During this aggravating process it became apparent—to me at least—that this team business was costing me more time than it was worth. Moreover, Brad in Los Angeles didn’t have a clue about how to communicate with the rest of us. He rarely replied to e-mail. Instead he often used the telephone tag. Brad arrived at work at 9:30 a.m. in Los Angeles (and was often late), which is early afternoon in Boston. I typically have a flexible work schedule from 7:30 a.m. to 3:30 p.m. so I can chauffeur my kids after school to sports and music lessons. So Brad and I have a window of less than three hours to share information.

The biggest nuisance with the shipping specialist accounting team started two weeks ago when the firm asked the four of us to develop a new strategy for attracting more shipping firm business. This new strategic plan is a messy business. Somehow we have to share our thoughts on various approaches, agree on a new plan, and write a unified submission to the managing partner. Already the project is taking most of my time just writing and responding to e-mail and talking in conference calls (which none of us did much before the team formed).

Susan and Brad have already had two or three misunderstandings via e-mail about their different perspectives on delicate matters in the strategic plan. The worst of these disagreements required a conference call with all of us to resolve. Except for the most basic matters, it seems that we can’t understand each other, let alone agree on key issues. I have come to the conclusion that I would never want Brad to work in my Boston office (thanks goodness he’s on the other side of the country). Although Elias and I seem to agree on most points, the overall team can’t form a common vision or strategy. I don’t know how Elias, Susan, or Brad feel, but I would be quite happy to work somewhere that did not require any of these long-distance team headaches.


1. What type of team was formed here? Was it necessary, in your opinion?

2. Use the team effectiveness model in Chapter 9 and related information in this chapter to identify the strengths and weaknesses of this team’s environment, design, and processes.

3. Assuming that these four people must continue to work as a team, recommend ways to improve the team’s effectiveness.


CASE: IV    Conflict In Close Quarters

A team of psychologists at Moscow’s Institute for Biomedical Problems (IBMP) wanted to learn more about the dynamics of long-term isolation in space. This knowledge would be applied to the International Space Station, a joint project of several countries that would send people into space for more than six months. It would eventually include a trip to Mars taking up to three years.

IBMP set up a replica of the Mir space station in Moscow. They then arranged for three international researchers from Japan, Canada, and Austria 110 days isolated in a chamber the size of a train car. This chamber joined a smaller chamber where four Russian cosmonauts had already completed half of their 240 days of isolation. This was the first time an international crew was involved in the studies. None of the participants spoke English as their first language, yet they communicated throughout their stay in English at varying levels of proficiency.

Judith Lapierre, a French-Canadian, was the only female in the experiment. Along with obtaining a PhD in public health and social medicine, Lapierre had studied space sociology at the International Space University in France and conducted isolation research in the Antarctic. This was her fourth trip to Russia, where she had learned the language. The mission was supposed to have a second female participant from the Japanese space program, but she was not selected by IBMP.

The Japanese and Austrian participants viewed the participation of a woman as a favorable factor, says Lapierre. For example, to make the surroundings more comfortable, they rearranged the furniture, hung posters on the walls, and put a tablecloth on the kitchen table. “We adapted our environment, whereas Russians just viewed it as something to be endured,” she explains. “We decorated for Christmas because I’m the kind of person who likes to host people.”

New Year’s Eve Turmoil

Ironically, it was at one of those social events, the New Year’s Eve party, that events took a turn for the worse. After drinking vodka (allowed by the Russian space agency), two of the Russian cosmonauts got into a fistfight that left blood splattered on the chamber walls. At one point a colleague hid the knives in the station’s kitchen because of fears that the two Russians were about to stab each other. The two cosmonauts, who generally did not get along, had to be restrained by other men. Soon after that brawl, the Russian commander grabbed Lapierre, dragged her out of view of the television monitoring cameras, and kissed her aggressively—twice. Lapierre fought him off, but the message didn’t register. He tried to kiss her again the next morning.

The next day the international crew complained to IBMP about the behavior of the Russian cosmonauts. The Russian institute apparently took no against the aggressors. Instead the institute’s psychologists replied that the incidents were part of the experiment. They wanted crew members to solve their personal problems with mature discussion without asking for outside help. “You have to understand that Mir is an autonomous object, far away from anything,” Vadim Gushin, the IBMP psychologist in charge of project, explained after the experiment had ended in March. “If the crew can’t solve problems among themselves, they can’t work together.”

Following IBMP’s response, the international crew wrote a scathing letter to the Russian institute and the space agencies involved in the experiment. “We had never expected such events to take place in a highly controlled scientific experiment where individuals go through a multistep selection process,” they wrote. “If we had known… we would not have joined it as subjects.” The letter also complained about IBMP’s response to their concerns.

Informed about the New Year’s Eve incident, the Japanese space program convened an emergency meeting on January 2 to address the incidents. Soon after the Japanese team member quit, apparently shocked by IBMP’s inaction. He was replaced with a Russian researcher on the international team. Ten days after the fight—a little over the month the international team began the mission—the doors between the Russian and international crews’ chambers were barred at the request of the international research team. Lapierre later emphasized that this action was taken because of concerns about violence, not the incident involving her.

A Stolen Kiss or Sexual Harassment

By the end of experiment in March, news of the fistfight between the cosmonauts and the commander’s attempts to kiss Lapierre had reached the public. Russian scientists attempted to play down the kissing incident by saying that it was one fleeting kiss, a clash of cultures, and a female participant who was too emotional.

“In the West, some kinds of kissing are regarded as sexual harassment. In our culture it’s nothing,” said Russian scientist Vadim Gushin in one interview. In another interview he explained, “The problem of sexual harassment is given a lot of attention in North America but less in Europe. In Russia it is even less of an issue, not because we are more or less moral than the rest of the world; we just have different priorities.”

Judith Lapierre says the kissing incident was tolerable compared to this reaction from the Russian scientists who conducted the experiment. “They don’t get it at all,” she complains. “They don’t think anything is wrong. I’m more frustrated than ever. The worst thing is that they don’t realize it was wrong.”

Norbert Kraft, the Austrian scientist on the international team, also disagreed with the Russian interpretation of events. “They’re trying to protect themselves,” he says. “They’re trying to put the fault on others. But this is not a cultural issue. If a woman doesn’t want to be kissed, it is not acceptable.”


1. Identify the different conflict episodes that exist in this case. Who was in conflict with whom?

2. What are the sources of conflict for these conflict incidents?

3. What conflict management style(s) did Lapierre, the international team, and Gushin use to resolve these conflicts? What style(s) would have worked best in the situation?


CASE: V   Hillton’s Transformation

Twenty years ago Hillton was a small city (about 70,000 residents) that served as an outer to a large Midwest metropolitan area. The city treated employees like family and gave them a great deal of autonomy in their work. Everyone in the organization (including the two labor unions representing employees) implicitly agreed that the leaders and supervisors of the organization should rise through the ranks based on their experience. Few people were ever hired from the outside into middle or senior positions. The rule of employment at Hillton was to learn the job skills, maintain a reasonably good work record, and wait your turn for promotion.

Hillton had grown rapidly since the mid-1970s. As the population grew, so did the municipality’s workforce to keep pace with the increasing demand for municipal services. This meant that employees were promoted fairly quickly and were almost guaranteed employment. In fact, until recently Hillton had never laid off any employee. The organization’s culture could be described as one of entitlement and comfort. Neither the elected city council members nor the city manager bothered the department managers about their work. There were few costs controls because rapid growth forced emphasis on keeping up with the population expansion. The public became somewhat more critical of the city’s poor services, including road construction at inconvenient times and the apparent lack of respect some employees showed towards taxpayers.

During these expansion years Hillton put most of its money into “outside” (also called “hard”) municipal services such as road building, utility construction and maintenance, fire and police protection, recreational facilities, and land use control. This emphasis occurred because an expanding population demanded more of these services, and most of Hillton’s senior people came from the outside services group. For example, Hillton’s city manager for many years was a road development engineer. The “inside” workers (taxation, community services, and the like) tended to have less seniority, and their departments were given less priority.

As commuter and road systems developed, Hillton attracted more upwardly mobile professionals to the community. Some infrastructure demands continued, but now these suburban dwellers wanted more “soft” services, such as libraries, social activities, and community services. They also began complaining about how the municipality was being run. The population had more than doubled between the 1970s and 1990s, and it was increasingly apparent that the city organization needed more corporate planning, information systems, organization development, and cost control systems. Resident voiced their concerns in various ways that the municipality was not providing the quality of management that they would expect from a city of its size.

In 1996 a new mayor and council replaced most of the previous incumbents, mainly on the platform of improving the municipality’s management structure. The new council gave the city manager, along with two other senior managers, an early retirement buyout package. Rather than promoting form the lower ranks, council decided to fill all three positions with qualified candidates from large municipal corporations in the region. The following year several long-term managers left Hillton, and at least half of those positions were filled by people from outside the organization.

In less than two years Hillton had eight senior or departmental managers hired from other municipalities who played a key role in changing the organization’s value system. These eight managers became known (often with negative connotations) as the “professionals.” They worked closely with each other to change the way middle and lower-level managers had operated for many years. They brought in a new computer system and emphasized cost controls where managers previously had complete autonomy. Promotions were increasingly based more on merit than seniority.

These managers frequently announced in meetings and newsletters that municipal employees must provide superlative customer service, and that Hillton would become one of the most customer-friendly places for citizens and those doing business with the municipality. To this end these managers were quick to support the public’s increasing demand for more soft services, including expanded library services and recreational activities. And when population growth flattened for a few years, the city manager and the other professionals gained council support to lay off a few outside workers due to lack of demand for hard services.

One of the most significant changes was that the outside departments no longer held dominant positions in city management. Most of the professional managers had worked exclusively in administrative and related inside jobs. Two had Master of Business Administration degrees. This led to some tension between the professional managers and the older outside managers.

Even before the layoffs, managers of outside departments resisted the changes more than others. These managers complained that their employees with the highest seniority were turned down for promotions. They argued for more budget and warned that infrastructure problems would cause liability problems. Informally these outside managers were supported by the labor union representing outside workers. The union leaders tried to bargain for more job guarantees, whereas the union representing inside workers focused more on improving wages and benefits. Leaders of the outside union made several statements in the local media that the city had “lost its heart” and that the public would suffer from the actions of the new professionals.


1. Contrast Hillton’s earlier corporate culture with the emerging set of cultural values.

2. Considering the difficulty in changing organizational culture, why did Hillton’s management seem to be successful at this transformation?

3. Identify two other strategies that the city might consider to reinforce the new set of corporate values.


Organizational Behavior

02 Sep

CASE: I    Diana’s Disappointment: The Promotion Stumbling Block

Diana Gillen had an uneasy feeling of apprehension as she arrived at the Cobb Street Grille corporate offices. Today she was meeting with her supervisor, Julie Spencer, and regional director, Tom Miner, to learn the outcome of her promotion interview for the district manager position. Diana had been employed by this casual dining restaurant chain for 12 years and had worked her way up from waitress to general manager. Based on her track record, she was the obvious choice for the promotion; and her friends assured her that her interview process was merely a formality. Diana was still anxious, though, and feared that the news might not be positive. She knew she was more than qualified for the job, but that didn’t guarantee anything these days.

Nine months ago, when Diana interviewed for the last district manager opening, she thought her selection for the job was inevitable. She was shocked when that didn’t happen. Diana was so upset about not getting promoted then that she initially decided not to apply for the current opening. She eventually changed her mind—afterall, the company had just named her “restaurant manager of the year” and trusted her with managing their flagship location. Diana thought her chances had to be really good this time.

A multi-unit management position was desirable move up for any general manager and was a goal to which Diana had aspired since she began working in the industry. When she had not been promoted the last time, Julie, her supervisor, explained that her people skills needed to improve. But Diana knew that explanation had little to do with why she hadn’t gotten the job—the real reason was corporate politics. She heard that the person they hired was some superstar from the outside—a district manager from another restaurant company who supposedly had strong multi-unit management experience and a proven track record of developing restaurant managers. Despite what she was told, she was convinced that Tom, her regional manager, had been unduly pressured to hire this person, who had been referred by the CEO.

The decision to hire the outsider may have impressed the CEO, but it enraged Diana. With her successful track record as a store manager for the Cobb Street Grille, she was much more capable, in her opinion, of overseeing multiple units than someone who was new to the operation. Besides, district managers had always been promoted internally from among the store managers, and she was unofficially designated as the next one to move up to a district position. Tom had hired the outside candidate as a political maneuver to put himself in a good light with management, even though it meant overlooking a loyal employee lime her in the process. Diana had no patience with people who made business decisions for the wrong reasons. She worked very hard to avoid politics and it especially irritated her when the political actions of others negatively impacted her.

Diana was ready to be a district manager nine months ago, and she thought she was even more qualified today—provided the decision was based on performance. She ran a tight ship, managing her restaurant completely by the book. She meticulously controlled expenses. Her sales were growing, in spite of new competition in the market, and she received relatively few customer complaints. The only number that was a little out of line was the higher turnover among her staff.

Diana was not too concerned about the increasing number of terminations, however; there was a perfectly logical explanation for this. It was because she had high standards for both herself and her employees. Any

Who delivered less than 110 percent at all times would be better off finding a job somewhere else. Diana didn’t think she should bend the rules for anyone, for whatever reason. A few months ago, for example, she had to fire three otherwise good employees who decided to try a new customer service tactic-a so-called innovation they dreamed up-rather than complying with the established process. As the general manager, it was her responsibility to make sure that the restaurant was managed strictly in accordance with the operations manual, and she could not allow deviations. This by-the-book approach to managing had served her well for many years. It got her promoted in the past, and she was not about to jinx that now. Losing a few employees now and then—particularly those who had difficulty following the rules—was simply the cost of doing business.

During a recent store visit Julie suggested that Diana might try creating a friendlier work environment because she seemed aloof and interacted with employees somewhat mechanically. Julie even told her that she overheard employees refer to Diana as the “ice maiden” behind her back. Diana was surprised that Julie brought this up because her boss rarely criticized her. They had an unspoken agreement: Because Diana was so technically competent and always met her financial targets, Julie didn’t need to give her much input. Diana was happy to be left alone to run her restaurant without needless advice.

At any rate, Diana rarely paid attention to what employees said about her. She wasn’t about to let something as childish as a silly name cause her to modify a successful management strategy. What’s more, even though she had recently lost more than the average number of employees due to “personality differences” or “miscommunications” over her directives, her superiors did not seem to mind when she consistently delivered strong bottom-line results every month.

As she waited in the conference room for the others, Diana worried that she was not going to get this promotion. Julie had sounded different in the voicemail message she left to inform her about this meeting, but Diana couldn’t put her finger on exactly what it was. She would be very angry if she was passed over again and wondered what excuse they would have this time. Then her mind wandered to how her employees would respond to her if she did not get the promotion. They all knew how much she wanted the job, and she cringed at how embarrassed she would be if she didn’t get it. Her eyes began to mist over at the sheer thought of having to face them if she was not promoted today.

Julie and Tom entered the room then, and the meeting started. They told Diana, as kindly as they could, that she would not be promoted at this time; one of her colleagues would become the new district manager. She was incredulous. The individual who got promoted had been with the company only three years—and Diana had trained her! She tried to comprehend how this happened, but it did not make sense. Before any further explanation could be offered, she burst into tears and left the room. As she tried in vain to regain her composure, Diana was overcome with crushing disappointment.


1. Within the framework of the emotional intelligence domains of self-awareness, self-management, social awareness, and relationship management, discuss the various factors that might have to led to Diana’s failure to be promoted.

2. What competencies does Diana need to develop to be promotable in the future? What can the company do to support her developmental efforts?


CASE: II    Buddy’s Snack Company

Buddy’s Snack Company is a family-owned company located in the Rocky Mountains. Buddy Forest started the business in 1951 by selling home-made potato chips out of the back of his pickup truck. Nowadays Buddy’s in a $36 million snack food company that is struggling to regain market lost to Frito-Lay and other fierce competitors. In the early eighties Buddy passed the business to his son, Buddy Jr., who is currently grooming his son, Mark, to succeed himself as head of the company.

Six months ago Mark joined Buddy’s Snacks as a salesperson, and after four months he quickly promoted to sales manager. Mark recently graduated from a local university with an MBA in marketing, and Buddy Jr. was hoping that Mark would be able to implement strategies that could help turn the company around. One of Mark’s initial strategies was to introduce a new sales performance management system. As part of this approach, any salesperson who receives a below average performance rating would be required to attend a mandatory coaching session with his or her supervisor. Mark Forest is hoping that these coaching sessions will motivate employees to increase their sales. This case describes the reaction of three salespeople who have been required to attend a coaching session because of their low performance over the previous quarter.

Lynda Lewis

Lynda is a hard worker, who takes pride in her work ethic. She has spent a lot of time reading the training material and learning selling techniques, viewing training videos or her own time, and accompanying top salespeople on their calls. Lynda has no problem asking for advice and doing whatever needs to be done to learn the business. Everyone agrees that Lynda has a cheery attitude and is a real “team player,” giving the company 150 percent at all times. It has been a tough quarter for Lynda due to the downturn in the economy, but she is doing her best to make quota during this past quarter is not to lack of effort, but just bad luck in the economy. She is hopeful that things will turn around in the next quarter.

Lynda is upset with Mark about having to attend the coaching session because this is the first time in three years that her sales quota has not been met. Although Lynda is willing to do whatever it takes to be successful, she is concerned that the coaching sessions will be held on a Saturday. Doesn’t Mark realize that Lynda has to raise three boys by herself and that weekends are an important time for her family? Because Lynda is a dedicated employee, she will somehow manage to rearrange the family’s schedule.

Lynda is now very concerned about how her efforts are being perceived by Mark. After all, she exceeded the sales quota for the previous quarter, yet she did not receive thanks or congratulation for those efforts. The entire experience has left Lynda unmotivated and questioning her future with the company.

Michael Benjamin

Michael is happy to have his job at Buddy’s Snack Company, although he really doesn’t like sales work that much. Michael accepted this position because he felt that he wouldn’t have to work hard and would have a lot of free time during the day. Michael was sent to coaching mainly because his customer satisfaction reports were low; in fact, they were the lowest in the company. Michael tends to give canned presentations and does not listen closely to the customer’s needs. Consequently, Michael makes numerous errors in new sales orders, which delay shipments and lose business and goodwill for Buddy’s Snack Company. Michael doesn’t really care because most of his customers do not spend much money, and he doesn’t think it is worth his while.

There has been a recent change in the company commission structure. Instead of selling to the warehouse stores and possibly earning a high commission, Michael is now forced to sell to lower-volume convenience stores. In other words, he will have to sell twice as much product to earn the same amount of money. Michael does not think this change in commission is fair, and he feels that the coaching session will be waste of time. He believes that the other members of the sales team are getting all the good leads, and that is why they are so successful. Michael doesn’t socialize with others in the office and attributes others’ success and promotions to “whom they know” in the company rather than the fact that they are hard workers. He thinks that no matter how much effort is put into the job, he will never be adequately rewarded.

Kyle Sherbo

For three of the last five years Kyle was the number one salesperson in the division and had hopes of being promoted to sales manager. When Mark joined the company, Kyle worked closely with Buddy Jr. to help Mark learn all facets of the business. Kyle thought this close relationship with Buddy Jr. would assure his upcoming promotion to the coveted position of sales manager, and he was devastated to learn that Mark received the promotion that he thought was his.

During the past quarter there was a noticeable change in Kyle’s work habits. It has become commonplace for Kyle to be late for appointments or miss them entirely, not return phone calls, and not follow up on leads. His sales performance declined dramatically, which resulted in a drastic loss of income. Although Kyle had been dedicated and fiercely loyal to Buddy Jr. and the company for many years, he is now looking for other employment. Buddy’s Snack is located in a rural community, which leaves Kyle with limited job opportunities. He was, however, offered a position as a sales manager with a competing company in a larger town, but Kyle’s wife refuses to leave the area because of her strong family ties. Kyle is bitter and resentful of his current situation and now faces a mandatory coaching session that will be conducted by Mark.


1. You have met three employees of Buddy’s Snacks. Explain how each employee’s situation relates to equity theory.

2. Explain the motivation of these three employees in terms of the expectancy theory of motivation.


CASE: III    Sabeer Bhatia: An Icon Of Creativity

Sabeer Bhatia, the co-founder of Hotmail is the recipient of the ‘TR 100” award presented by MIT to 100 young innovators who are expected to have the greatest impact on technology in the next few years. He has won several laurels—‘Elite 100’ list of top trendsetters in the New Economy by Upside Magazine, ‘People to watch’ in International Business by TIME (2002), ‘Entrepreneur of the Year’ by a venture capital firm Draper Fisher Jurvetson (1997), and one of the ten most successful entrepreneurs by San Jose Mercury News and POV magazine (1998).

One needs to know what has gone into making him a highly creative person. Born in Chandigarh, India, he completed his early schooling at Bangalore, in schools with ethical values. His parents were both professionals; father, Baldev, a senior officer in Ministry of Defense, and mother, Daman, a senior official in the Central Bank of India, who attracted great value to education. He has been a brilliant student who would solve problems on the blackboard. He was a perfectionist and would feel miserable if he was unable to write everything he knew in his answer book during an exam, due to limited time. He has also been entrepreneurial during his school days and once opened a sandwich shop.

He joined the Birla Institute of Technology, which he left to study at California Institute of after winning full scholarship. He completed his masters from Stanford University and joined Apple, where he worked for nine months. He had an urge to do something unique using the net, and he came up with javasoft—a method of using the web to create a personal database, where people could preserve their personal things. He shared his plan with his colleague Jack Smith, who suggested to e-mail to javasoft. Bhatia worked the whole night to develop the business plan. The two tried various options and came up with ‘Hotmail’ as their final choice, and a brand was launched in 1995. After a year, Microsoft approached them, and Hotmail was sold to Microsoft for $400 million. Bhatia worked with Microsoft for a year, and has launched two more products: Arzoo and BlogEverywhere. From the above account it is obvious that Sabeer Bhatia is brilliant, persistent, and innovative, and has scientific and technical knowledge. His friends find him “persistent, focused and disciplined”. To top it all, he is a perfectionist and entrepreneurial at heart. He has an unquenching desire to create new ventures, and bubbles with new ideas. He feels Indian IT companies can be more creative. Creativity seems to be his motivation in life; he is still single.


1. What competencies are needed to be creative?

2. Identify methods through which creativity can be nurtured.


CASE: IV    Women Leaders In The Corporate World

There are not many women in the position of leadership in corporate India.

The growth of women in the corporate world has been slow, probably due to the glass ceiling and role stereotypes. Barring a few females who have made it to the top, others have only reached till the middle/senior level of management. Family and social support and education level are important factors for leadership in the business world. Besides, family has priority over career for women in India. Thus, few women cut through all the barriers and reach the top. One such example is Naina Lal Kidwai, Chairperson and Managing Director, The Hongkong and Shanghai Corporation’s (HSBC) investment banking and securities business in India. According to her, in India, “There is an extended family of mothers, sisters, and mothers-in-law ready to step in along with the easily available domestic help. However, despite these advantages in the urban class in India, women are only now entering the corporate world.” (Emmons, 2004)

A graduate from HBS, Naina joined ANZ Grindlays Bank in India in 1982. Having done her stints in a variety of jobs in merchant, retail and investment banking, she moved to Morgan and Stanley in 1994 to manage its operations in India. She has been a high achiever throughout. Naina was ranked 3rd by Fortune Magazine in their maiden list of the world’s top women in business in Asia (2000), and later it placed her among the top 50 Women in Business in three successive years 2001, 2002, and 2003. Time Magazine selected her as one of 2002’s fifteen emerging ‘Global Influentials’. She is Chairperson of various committees of Industry Associations, and is on the Governing Body of National Council of Applied Manpower Research as a member. She is also Director, International Board of Digital Partners Foundation, USA. Naina is not only successful in professional life, but in her personal life too; she is married with two children.


1. What are the barriers for women to become corporate leaders?

2. What competencies are needed by women to succeed in corporate life?


CASE: V    The Excellent Employee

Emily, who had the reputation of being an excellent worker, was a machine operator in a furniture manufacturing plant that had been growing at a rate of between 15 percent and 20 percent each year for the past decade. New additions were built onto the plant, new plants opened in the region, workers hired, new product lines developed – lots of expansion – but with no significant change in overall approaches to operations, plant layout, ways of managing workers, or design processes. Plant operations as well as organizational culture were rooted in traditional Western management practices and logic, based largely on the notion of mass production and economies of scale. Over the past four years the company had grown in number and variety of products and in market penetration; however, profitability was flattening and showing signs of decline. As a result, managers were beginning to focus on production operations (internal focus) rather than mainly focusing on new market strategies, new products, and new market segments (external focus) in developing their strategic plans. They hoped to reduce manufacturing costs, improving consistency of quality and ability to meet delivery times better while decreasing inventory and increasing flexibility.

One of several new programs initiated by managers in this effort to improve flexibility and lower costs was to get workers cross-trained. However, when a representative from Human Resources explained this program to Emily’s supervisor, Jim, he reluctantly agreed to cross-train most of his workers, but not Emily.

Jim explained to the Human Resources person that Emily worked on a machine that was very complex and not easy to effectively operate. She had to “babysit” it much of the time. He had tried to train many workers on it, but Emily was the only person who could consistently get products through the machine that were within specifications and still meet production schedules. When anyone else tried to operate the machine, which performed a key function in the manufacturing process, it ended up either being a big bottleneck or producing excessive waste, which create a lot of trouble for Jim.

Jim went on to explain that Emily knew this sophisticated and complicated machine inside and out; she had been running it for five years. She liked the challenge, and she said it made the day go by faster, too. She was meticulous in her work-a skilled employee who really cared about the quality of her work. Jim told the HR person that he wished all of his workers were like Emily. In spite of difficulty of running this machine, Emily could run it so well that product piled up at the next workstation in the production process, which couldn’t keep up with her!

Jim was adamant about keeping Emily on this machine and not cross-training her. The HR was frustrated. He could see Jim’s point, but he had to follow executive orders: “Get these people cross-trained.”

Around the same time a University student was doing a field study in the section of the plant where Emily worked, and Emily was one of the workers he interviewed. Emily told the student that in spite of the fact that the plant had some problems with employee morale and excessive employee turn-over, she really liked working there. She liked the piece-rate pay system and hoped she did not have to participate in the recent “program of the month,” which was having operators learn each other’s jobs. She told the student that it would just create more waste if they tried to have other employees run her machine. She told him that other employees had tried to learn how to operate her machine but couldn’t do it as well as she could.

Emily seemed to like the student and began to open up to him. She told him that her machine really didn’t need to be so difficult and touchy to operate: With a couple of minor design changes in the machine and better maintenance, virtually anyone could run it. She had tried to explain this to her supervisor a couple of years ago, but he just told her to “do her work and leave operations to the manufacturing engineers.” She also said that if workers upstream in the process would spend a little more time and care to keep the raw material in slightly tighter specifications, it would go through her machine much more easily; but they were too focused on speed and making more piece-rate pay. She expressed a lack of respect for the managers who couldn’t see this and even joked about how “managers didn’t know anything.”


1. Identify the sources of resistance to change in this case.

2. Discuss whether this resistance is justified or could be overcome.

3. Recommend ways to minimize resistance to change in this incident or in future incidents.

Organizational Behavior

02 Sep

General Motors: Its Changing Organizations Design

The trials and tribulations of General Motors (GM) during the 1980s and 1990s mirror those of organizations in the United States and around the world. GM’s position of market leader in automobile production and sales began to falter in the early 1980s along with market leaders in other industries. Competitive forces throughout the world were forcing US firms to rethink their strategies and their organization de­signs. As more and more competitors from Asia and Europe challenged GM’s market supremacy and as technological developments in manufacturing and information processing challenged GM’s production advantages, GM’s management responded by implementing changes in its organization de­sign that continue into the second half of the 90s.

The first signs of problems began to appear in 1981 when the company reported its first loss since 1921. This report coincided with the appointment of Roger Smith as CEO, the sixth GM CEO since Alfred P Sloan, Jr., who served from 1937 to 1956. Sloan created the modern version of GM through the development of the divisional organizational structure, which consisted of five independent divisions— Chevrolet, Pontiac, Oldsmobile, Buick, and Cadillac—and the competing product strategy. The competing product strat­egy encouraged each division to compete for customers by delegating complete authority to each division to design, produce, market, and sell its own particular line of cars. The only limitation placed on the division was the overall corporate strategy of encouraging car buyers to think of “trading up” as each year’s new models hit the show floors. Thus, the ‘Chevrolet Division produced the starter cars, relatively inexpensive and within the price range of the first-time car buyer. But with increases   in   income the  car buyer  would   be encouraged through promotion and selling efforts to consider the more expensive Pontiac and Oldsmobile vehicles, and ultimately the Buick and Cadillac.

This traditional divisional design was in place throughout the post-World War II period when General Motors grew into the largest manufacturing organization in the world. But something happened along the way. The divisional structure as it evolved over time began to be identified as an impediment to progress and market response. One of the outgrowths of the structure was the development of a massive corporate support staff, which when created was supposed to provide expert advice and consultation to the divisions. But over time these staff members began to take over me decision making of the line units, and the decision making began to grind to a halt in endless discussions in endless committee meetings at corporate headquarters. As these corporate staff units increased their influence through the provision of valued information, they sought and received formal authority over many of the day-to-day decisions.

Thus, when Roger Smith took the reins in 1981, he began the process that continues even to this day: redesigning GM’s organizational structure with the specific purpose of pushing decision making down into the operating divisions and reducing the number of staff at corporate headquarters. In 1984, he announced his first move: the creation of two autonomous groups, BOC and CPC. BOC consisted of what had been the Buick, Oldsmobile, and ‘Cadillac divisions, and CPC consisted of what had been Chevrolet, Pontiac, and GM of Canada. Smith delegated complete authority to each of the groups to organize in whatever way the managers thought was necessary to get GM back on track—to regain its competitive, growing, and profitable status.

BOC decided to organize around four completely autono­mous product groups—strategic business units (SBUs). Each product group would operate as Sloan had envisioned his divisional structure would operate, exercising complete au­thority to design, produce, and sell cars. By contrast, CPC organized around functional lines with centralized authority, but with a matrix overlay to facilitate communication across functional lines.

When 1993 rolled around, GM had replaced Robert Stempel, who had replaced Roger Smith, with Jack Smith. Stempel had been in office barely two years, yet the board of directors was unhappy with his deliberate management style. He simply was moving too slowly in carrying out the turnaround that Roger Smith had begun. The new CEO responded to the news that GM’s market share had dropped to its lowest point in 23 years, 29 percent, by creating a single operating division, North American Operations (NAO); paring corporate staff from 13,500 to 2,500; reducing the number of car models from 62 to 54; combining 27 different purchasing departments into one; and eliminating nearly 16,500 hourly jobs by offering early retirement. These seemingly harsh measures were necessary according to Jack Smith to assure GM’s very survival as an automaker.

The organizational design that GM now counts on to enable it to survive and compete identifies the five traditional divisions—Chevrolet, Pontiac, Oldsmobile, Buick, and Cadillac—as marketing units. But all production, product design, and purchasing will be done in one separate unit. The story of GM’s reorganization efforts remains unfinished. In fact, what progress the company makes will depend upon’; Jack Smith’s success at eliminating the remaining vestiges of bureaucracy that persist even in the midst of massive efforts to make the company more responsive to market conditions” and technological developments. Centralization or Decentrali­zation? Which is the appropriate response: centralize some functions, such as purchasing and production, and decentralize other functions such as marketing?

Despite all the efforts of its CEOs from Roger Smith to Jack Smith, GM continues its long slide down the profitability curve. The efforts to reverse this slide through organization redesign and other measures seem to have yielded little gain. If General Motors cannot cope with the rigors of global competition, can the country?

1. Identify the environmental forces that have driven General Motors to change its organizational design.

2. Have the changes in structure been in the appropriate direction? Have they been misguided? Explain your answer and your reasoning.

3. General Motors has a collaboration with Hindustan Motors-makers of iconicAmbassador.However,they are also trying to independently establish own set up.what changes may happen to their parent organization structure?.

4. Discuss the possibility that redesigning the organizational structure is actually an irrelevant response: to what ails General Motors.


MicroAge Undergoes Massive Structural Change

In April 2000, MicroAge Technology Services trans­formed itself to an e-Business infrastructure services company that operates as a virtual organization, with an agile and mobile sales force able to reach broader geo­graphic markets. “The rapidly-changing climate of the technology industry, primarily due to the growth of the Internet and emphasis on reducing operating and tech­nology costs through e-Business, has made it clear that we must make significant changes to our business to meet the demands of the new digital marketplace,” said MicroAge Technology Services President, Jeff Swanson.

“As a virtual organization, our sales teams will no longer be tied to physical brick-and-mortar facilities. They will be able to cover broad geographic areas to meet the needs of clients wherever they do business. At the same time, we will continue migrating clients to MicroAgeDirect for product procurement so MicroAge Technology Services sales associates can focus their full attention on relationship management of their clients in fulfilling their infrastructure services needs.”

Swanson continued, “As a client-centric organiza­tion the need for physical locations is minimized so that we can work more directly with clients to help them profit from technology in the internet economy.”

The company’s strategic initiatives, aimed at trans­forming MicroAge Technology Services into a flexible and agile organization fully .capable-of providing the e-Business infrastructure services its clients require, included:

  • Expansion of market coverage through the establishment of a field structure composed of thirteen broad geographic market areas, eliminating in three phases the costly network of thirty-five branch
  • Centralization of operations and, processes to lower costs and increase efficiency as MicroAge Technol­ogy Services moved to a virtual, field organization.”Branch inside sales functions will transition to centralized sales support and client site based sales teams as appropriate.
  • Completion of centralized service dispatch for all MicroAge launched plans to centralize serv­ice dispatch in order to implement consistent quality standards and enhance overall client satisfaction.
  • Migration of all clients toMicroAgeDirect for prod­uct procurement. Sales support for major clients will continue to be provided by existing client-site teams or by a centralized team operating from the com­pany’s Tempe offices.

MicroAge Inc., President Christopher Koziol noted that the restructuring of ,the procurement function allows the MicroAge Technology Services sales force to focus their full attention on serving the needs of clients and meet the demands of the new connected econ­omy. “This strategy allows our associates to focus their full attention on managing client relationships and releases them from the burden of managing product transactions, which are more efficiently handled by automated procurement systems such as MicroAge Direct. We will also be able to reduce the costs of deliv­ering services and products, significantly streamline operations and ensure consistent, high-quality service delivery to all clients. The most significant benefits of this new structure will be improved sales productivity and growth increased profitability, and client satisfac­tion,” he said.

Questions for Discussion

1. The changes in organizational structure discussed in this case were initiated in April 2000. Go on-line and look up MicroAge today. Do you think the com­pany has prospered as a result of these changes? Explain. What is the status of the company today?

2. MicroAge made several organizational changes at the same time. What problems might be encoun­tered by making so many changes at once? How can managers deal with this type of massive struc­tural change?

3. The MicroAge sales force will work independently for much of their time with the elimination of the thirty-five field offices. How can managers at corpo­rate headquarters keep track of sales Activity? What technologies might be used to ensure that sales goals are being met?

4. Compare organization structure of any Indian company involved in e Commerce with Microage


Organizing For Innovation At Raytheon Company.

Raytheon Company depends upon innovation for survival. The company competes in the highly technical and volatile electronic based product industry. Its business with the government includes missile systems, radar, and underwater surveillance products which account for more than half of its $7 billion annual sales. The other half comes from business groups including such well-known consumer products as Amana appliances, speed Queen laundry products, and Caloric cooking appliances. In this environment the importance of development of new products and new technology becomes crucial to the firm’s very survival and it is imperative to design an organization that facilitates new product development. Typically, firms create research and development (R&D) units to do product and process development research and, Raytheon uses this organizational form but supplements it with a centralized, corporate level, New Products Center.

The New products Centre (NPC) is a 35 person group located at a corporate headquarters in Burlington. Massachusetts. Since its formation in 1969, it has participated in the early development of 39 products which have become mainstays in the firm’s product line. The NPC stands alone and works with all the divisions and subsidiaries of the company including those R&D units that are parts of the divisions and subsi­diaries. The company also uses other ways to initiate and sustain innovation including external consultants as well as internal and external ventures groups. The NPC plays the special role in this configuration of approaches to innovation because it views the entire organization as both a source of clients and a source of resources. All the expertise in all the divisional R&D groups can be made available to the NPC during the course of developing new products.

The NPC serves as a way to cross functional and divisional boundaries so as to tap all the skills and abilities in Raytheon. The primary goal of the NPC is to develop profitable products. New products are worthless if they do not generate profits, no matter how brilliant or interesting the underlying idea. Thus the bottom-line criterion for evaluating the performance of the NPC is its contribution to profit. Its basic operating procedure is to develop the first functioning model of a new product that can then be turned over to the appropriate product or business center. If the product is successful, it will extend the product line and will be manufactured with existing facilities and distributed through existing channels.

The center is staffed by both generalists and specialists. The generalists are capable of working on a variety of products and fields simultaneously. Three major categories of specialists in Raytheon’s NPC focus on: (1) computer applications for electronic controls, (2) materials design and development, and (3) product engineering which transfers the product manufacturing responsibility to a product or business group. However, even the ablest of research and technical talent will go untapped if a sat­isfactory relationship with the client group is not established. In Raytheon every organizational unit is a potential client group of NPC, and the development of satis­factory working relationships requires mutual trust. A satisfactory working relationship includes agreement on which market to target with what product, the scale of company investment, the role of each person involved, and who will get credit for success and blame for failure. These are important issues that must be negotiated before the real work of developing the product can begin.

The internal operations, organization, staffing, and interpersonal skills are critical to the success of the NPC. But its place in the overall organizational structure is also critical. In recognition of the possibility that the center could be the first victim of hard times when revenues and cash flows require retrenchment, Raytheon funds the center’s $3 million annual cost entirely out of the executive office resources. This practice means that no operating division or group will be assessed any cost for using the center’s resources for product development. In addition, the director of the center reports to the CEO thus emphasizing the support of top management for the center’s importance. Raytheon’s experience with its NPC indicates that it is one approach to organizing for innovation that other firms could adopt.


1. Evaluate Raytheon’s approach to organizing for innovation. What alternatives come to mind? Would any of these alternatives be appropriate for Raytheon to consider?

2. Select an Indian company known for Innovation. Justify choice.

3. Compare their approach with Raytheon


Krispy Kreme: Where Growth Is Really Sweet

At Krispy Kreme’s 324th store opening in late October 2003, a crowd began gathering early outside the store. Close to 100 people huddled under a tent and umbrellas on that cold, rainy morning” waiting for the store’s open­ing. With the local media present, the store opened at 5:30 a.m. to the crowd’s chanting “Doughnuts! Doughnuts!” One customer who had been in line since 3:00 a.m. admitted to getting up early to see Presidents and Governors—and now to purchase Krispy Kreme doughnuts. As admirable—or crazy—as this may seem, it’s tame compared to the doughnut dedication shown by others. Some people will even camp out at the stores in the final days of construction and set up be­fore the opening. Rob Perugini camped outside of the 324th Krispy Kreme for 1 7 days before the opening, breaking the old record of 13 days. What does Krispy Kreme do to pro­duce such devotion to its doughnuts?

The Founding and Early Growth of Krispy Kreme

Krispy Kreme Doughnuts, founded in 1937, has grown from a small doughnut shop in a rented building into “a leading branded specialty re­tailer, producing more than 5 million doughnuts a day and over 1.8 billion a year.” After purchasing a yeast-raised doughnut recipe from a French chef in New Orleans, Vernon Rudolph, Krispy Kreme’s founder, began mak­ing doughnuts in a rented building in Winston-Salem, North Carolina, and selling them to local grocery stores. Soon Rudolph began selling hot doughnuts directly to customers.In the ensuing years, Krispy Kreme grew into a small chain of stores, all using the same recipe. Product quality varied, how­ever, and the company established a dry-mix plant and distribution system to en­sure a consistent product. Krispy Kreme continued to expand and enjoyed steady growth until the mid-1970s when the company was sold to Beatrice Foods subsequent to Rudolph’s death.

The sale to Beatrice Foods ushered in an era in which Krispy Kreme stores sold ice cream, sausage bis­cuits, and other food prod­ucts in addition to dough­nuts. Even the doughnut recipe was changed. Horri­fied by what was happening, a group of Krispy Kreme franchisees repurchased the company from Beatrice foods a few years later.

With the 1982 repur­chase, Krispy Kreme refocused on making the hot doughnut experience a com­pany priority. The company continued expanding throughout the Southeastern United States, and then in 1996 it opened its first unit outside the Southeast. This store was in New York City. In 1999, Krispy Kreme opened its first store in California. National expan­sion has accelerated rapidly since then. In December 2001, the company opened a store in Canada, its first outside the United States.

Growth Through Excellence

Krispy Kreme has a strategic philosophy that is oriented toward growth through ex­cellence. The company’s strategic philosophy revolves around the following beliefs:

  • “All products we make in our stores will have a taste and quality that are second to none.”
  • “The starting point in con­trolling product quality is controlling the quality and freshness of the ingredi­ents.”
  • “We will be thoroughly pre­pared to execute growth ini”
  • “We view quality, service, and innovation as keys to creating and maintaining a competitive advantage.”
  • We view our company as a set of capabilities, not just a product or brand.”
  • “We view our growth and success as a company as a natural result of the growth and success of our people.”7

Krispy Kreme’s growth has been partly fueled by the company’s obsession with product consistency. Krispy Kreme strives for such con­sistency that a doughnut purchased anywhere in the world at any time will taste exactly the same. This is ac­complished by testing all raw ingredients before delivery is accepted. If a test sample of a shipment does not meet the company’s standards, the entire shipment is re­jected. Krispy Kreme also makes sample doughnuts from every single 2,500-pound batch of mix to en­sure that each batch is blended correctly.

Krispy Kreme is more like a factory than a bakery. Krispy Kreme stores typically operate around the clock, producing doughnuts for walk-in customers as well as for wholesale purchase by supermarkets and grocery stores.

National expansion through franchising has dri­ven a good portion of Krispy Kreme’s growth, particularly since the mid-1990s. Signifi­cant growth has occurred even though a Krispy Kreme franchise is the most costly food franchise available—be­ing about five times the stan­dard cost for most opera­tions, as estimated by the International Franchise As­sociation. A Krispy Kreme franchise costing $2 million per location on average, is both extraordinarily difficult to obtain and in great de­mand. Krispy Kreme requires its franchisees to have “$5 million in net worth to apply and . . . ownership and op­erating experience with multi-unit food service oper­ations.” Krispy Kreme also seeks “area developers”— franchisees who will open at least 10 stores in a region.

Krispy Kreme stores are high-volume operations with higher profit margins than other fast-food business. A typical McDonald’s franchise has revenues of about $1.5 million annually and a typi­cal Dunkin Donuts averages about $744,000. In fiscal 2001, Krispy Kreme fran­chisees had average revenue of $2.2 million per location. This jumped to $2.8 million in fiscal 2002 and $3 million in fiscal 2003. Company stores had even higher an­nual sales volume, reaching about $4 million in fiscal 2003.

“Krispy Kreme now takes an ownership stake in all new franchisees, claiming anywhere from 33% to 75%,” a strategy that increasingly is being adopted by other franchising companies. ‘The parent companies engage in such partnerships because they lead to higher earnings and faster expansion.” Krispy Kreme takes an own­ership stake even though franchisees “have the money and desire to open as many stores as the company will allow.”

While fueling growth, this joint-partnership strat­egy has not been a smooth road. A lawsuit over the terms of an alleged contract was filed by two franchisees in northern California. An equity fund that was formed by 35 Krispy Kreme executives to invest in franchise stores was disbanded in the aftermath of the Enron scan­dal so “that no individual’s personal gain would conflict with the overall good of the company.”

Krispy Kreme’s rapid growth has also been facili­tated by its use of informa­tion technology. The com­pany uses the Internet as well as a corporate intranet to aid national and interna­tional expansion. Using its information technology, Krispy Kreme has made more and more of its services and information accessible to corporate staff, stores, franchisees, and suppliers. The vast majority of orders from individual units are placed over the company’s intranet. Using the Internet and intranet, individual stores from anywhere in the world can train employees around the clock.

Krispy Kreme continues to expand into new markets, both in the United States and overseas. In fiscal 2003, the company entered 17 new U.S. markets as well as one in Canada. It also opened its first store outside of North America, which is in Sydney, Australia. At the end of fiscal 2003, the company is also preparing for a store opening in London. In addition, the company acquired Montana Mills Bread Company and successfully introduced Krispy Kreme Signature Cof­fees—an outgrowth of its earlier acquisition of Digital Java, Inc. Krispy Kreme has developed a roasting process for coffee beans that ensures the same high level of quality and consistency with its cof­fees as it has with its dough­nuts.

In line with its emphasis on product consistency, Krispy Kreme’s opening of a new store engenders highly consistent customer behav­ior. A Krispy Kreme store opening attracts a lot of at­tention. The experience of James Consentino, a West Palm Beach, Florida, fran­chisee is typical on the morn­ing of a store opening and in the ensuing days. “At 5:30 a.m. that morning, he’ll let in a mob of people who’ve been waiting outside for hours for the warm doughnuts stream­ing from his ovens at a rate of 2,640 per hour. The event will probably be covered by a TV news crew—most Krispy Kreme openings are—and in his first week Consentino will take in almost as much in revenue as the typical Dunkin’ Donuts store makes in a year.”

Review Questions

1. What are the key ele­ments of Krispy Kreme’s philosophy’? How do these elements relate to the organizing trend of balancing decentralization with centralization?

2. What type of organiza­tional structure does Krispy Kreme appear to be using?

3. What is the potential for developing a network structure at Krispy?

4. Based on its recent growth history, (Including expected entry in India),what type of organizational structure should be used to accommodate the growth in the next 5 years?


Tata Electric Locomotive Company-TATA MOTORS

Tata Electric Locomotive Company started functioning at J’Pur in 1955 and was engaged in manufacture and supply of electric engines to the Indian Railways. Known as TELCO; it soon began to make diesel trucks in collaboration with World renowned Mercedes- Benz at the same location. TELCO duplicated the facility near Pune in 1965 and 1985 initiated a third facility at Lucknow. Today it is known as Tata Motors.

The main activities at Telco consisted of manufacturing the spare parts and assembling these parts into Engine, transmission and the Truck: selling Trucks and accessories: procurement of raw materials required for manufacture of these parts as well as other indirect items: making drawings and designs of product, spare parts, equipment etc; maintaining a check on quality; ensuring proper upkeep of various equipments etc. In addition to these activities, TELCO management started as Engineering Research Centre (ERC) at Pune in early 70’s.

Automobile policy changes initiated by Government in 1978, enabled TELCO to design and develop four wheel products other than trucks to which TELCO was initially restricted. TELCO soon developed smaller Trucks, which could successfully compete with Japanese products. Encouraged by this success, TELCO came into market with products like Tata Mobile and others which were serving as passenger cars also. This range of vehicles known as Tata Family’ was manufactured at Pune. However, these products did not enjoy a great success. The other two Jeep like offerings Tata-Sumo and Safari were however, a great success initially. TELCO started working on design and development of a car in 1995. ERC was briefed to make a car which could compete with Zen, but should have diesel engine. With help from French & Italian designers, TELCO successfully launched Indica car by 1998. Later on, a large version Indigo was introduced.

Unfortunately for TELCO, however the environment had changed and many other cards like Matiz, Santroetc were available to the customer, in addition to new models introduced by Maruti. So initially the car model failed. After a series of quality improvement, car model Indica succeeded.

In 2004, TELCO became Tata Motors. In 2008/09 of company launched a small car at Rs.1 lac price – Nano, which would be produced at a new location. It also introduced several variants of models already existing. Also Tata Motors also brought car models with engines procured from FIAT. Nano plant in Gujarat has been activated recently.

Q.1: How do you think TELCO activities were organized initially?

Q.2: In light of the current situation, do you think Tata Motors needs to charge its organization structure?

Q.3: How would you like to effect this change? Why?

Q 4 In the past two years, Tata Motors is losing market share rapidly, with the off take of Nano car reduced drastically. A new MD has been appointed and one of his mandates is to reduce costs. How could this be achieved via restructuring?


ABCL Petrochemical Company

ABCL is a Petrochemical company, which was founded as collaboration between a UK Company and an Indian Management Group in the late 60’s (The collaboration agreement expired in the 70’s).

Almost from the inception, the company manufactured and sold three products – P, A and T- at the only facility near Pen in Raigad district. These products found applications in Resins, Industrial salt, Paints, Dyes respectively. During the next two decades, when the Industrial activity in the country and particularly around Thane- Belapur belt, was expanding rapidly, the company found theses products (known collectively as Commodity products) to be in short supply with the supply far outstripping the demand. The financial performance was exceptionally well (It may be mentioned that till 1991, any company had to get Government license to increase volume, add any new product and to get collaboration).

Basic activities within the company consisted of manufacturing these products in the facility (the equipment had been installed with the help of the foreign collaborators, and was capital intensive and complicated) maintaining and repairing / replacing the facility, modifying the manufacturing process to suit Indian conditions, purchasing raw materials (which were standard outputs of other petrochemical companies in the vicinity and spare parts required for the equipment importing critical auxiliary material, distribution the finished products though 10 wholesalers/ Distributors located across India. Due to the restrictions mentioned earlier the company started an in-house R&D activity in the mid 80’s and successfully developed 10 new products for applications in pharmaceutical perfumery, pesticides, Agrochemicals etc. these products were required in low volumes but fetched higher prices. This portfolio was known as specialty chemicals. Due to very little competition and low volumes, these products were also sold through some distribution channels. Company kept on doing something exceptionally well tell 90’s.

However, with liberalization and globalization the import duty protection provided on all the company products vanished and import of all company products from abroad became a reality, thereby squeezing the margins. The company also began to feel the need for development of higher value added products, reduce costs etc.

Q1. How do you think the activities of the company were arranged initially?

Q2. With which changing environment is there a need to change the organization structure?Why?

Q3. How would you re-organize? Why?

Q 4 study and compare organization structure of Reliance.


Lucent: Clean Break, Clean Slate?

The company that could seemingly do no wrong in the first three years after it was spun off from AT&T in 1996 seriously lost its way in 2000. Worst of all, it has been completely bested by archrival Nortel Networks Corp. in the key market for optical-fiber telephone switches.

The contrast with Nortel is what stings Lucent execs the most. It was only a few years ago that Nortel was the industry dog. But to­day, Nortel has 45 percent of the exploding optical-transmission-switch market. That compares with just 15 percent for Lucent, which decided in 1996 to develop a slower switch precisely be­cause its customers weren’t asking for anything faster. Lucent now rues the decision to settle for less transmission speed. And CEO Henry Schacht is quick to acknowledge that he is as much at fault as former CEO Richard McGinn. Schacht says he is planning one-on-one meetings with Lucent’s customers and is reviewing all the processes now in place with an eye to streamlining Lucent’s cum­bersome structure.

Under McGinn, Lucent embarked on an organizational over­haul in September 2000. To head up key divisions, it has appointed some aggressive new outsiders who are not mired in the company’s bureaucratic mindset. One of those, CFO Deborah C. Hopkins, is putting in place a companywide standard for evaluating a product’s profitability, replacing the piecemeal, business-by-business stan­dard used before. The company is also chopping away at manage­ment layers, more closely tying compensation to performance, and trying to better integrate its vaunted Bell Labs with product-development teams. But the world’s largest telecom-equipment maker actually has a more cosmic task: It must remake itself into a company that can be quick to respond to needs, quick to deliver new technology, and far less bureaucratic. And it has to do all of this while suffering from a 20 percent turnover rate that is siphon­ing off top talent.

Granted, such an overhaul has been prescribed for just about every lumbering old economy behemoth. Lucent is determined to pull itself apace with that market. And it may have a secret weapon: In September, Lucent named Jeong Kim to head its optical-networks business. Clearly different from the Lucent lifers around him. Kim has reorganized the group into 17 small divisions based on product lines, with managers closely matched to customers and compensation tied to performance. His goal: to improve time to delivery by 30 percent. “I have a 100-day plan,” he says.

Kim’s entrepreneurial spirit is sorely needed at Lucent, and he is convinced healready has had a positive effect on morale. He re­cently visited a Lucent plant in North Andover, Massachusetts, and found general managers there very involved in suggesting ways the operation could he improved. “They were really taking ownership of their operation. And morale was running really high. I was very encouraged.”

Lucent must also start regaining the trust of its employees if it wants to stem the flood of talent that started rushing out the door as soon as executives’ pre-IPO options were excersid on October 1, 1999. And it hasn’t done any better at hanging on to the employees who came on board with its many acquisitions. Adopted employees who have headed for the doors regularly complain that they found them selves stifled by Lucent’s many-layered management. “There are a lot of top-level people trying to get out of Lucent right now,” our Silicon Valley headhunter says.

Lucent’s executives are sounding all of the right turnaround noises. William T. O’Shea, vice president for corporate strategy and business development, is in charge of a massive effort that kicked off this past summer to streamline Lucent’s businesses. The goal: in encourage entrepreneurship. “We are putting new people in charge and organizing groups to focus their energy in small teams.” he says, rather than structuring the company in large, often uncommon inactive divisions. And the company is including Bell Lab researchers in these teams, to make sure that their invention areproperly promoted. “We are bringing a much broader collection of people to the table internally to make strategic decisions,”  he says.


1. What are the reasons behind these changes in strategy?

2. How would you characterize the changes in Lucent’s vertical and horizontal structures?

3. What other management issues do you see in this case? How do they combine with issues of org structure?



Curtice-Burns, Inc., consists of seven food manufacturing divisions with sales in excess of $270 million. The company grew primarily through acquisitions of food companies which then became divisions of the company. The management philosophy at Curtice-Burns, Inc., emphasizes decentralization and autonomy. Each division is completely responsible for its own business—with the exception of major capital investments. To underscore the importance of decentralization, the company has a headquarters staff of only 12 people.

President and CEO Hugh Cumming is committed to decentralization and can readily identify the advantages and disadvantages of the approach. The primary advantage is the clearly defined responsibility of each division’s CEO for that division’s perfor­mance. A CEO whose division’s-performance is below planned performance cannot blame headquarters for meddling in division matters. Instead, he alone makes all the strategic and operational decisions.

A second advantage derives from the company’s incentive plan. Because of the cyclical nature of the food business, Curtice-Burns does not tie its incentive plan to the performance of a single division. Rather, the plan is based upon overall corporate results and allocated to the divisions on the basis of payroll. The incentive plan creates positive peer pressure because a poorly performing division will reduce the bonus for all divisions.

Decentralization stimulates and sustains the entrepreneurial spirit so often found in small business, but often missing in large corporations. All the top-management per­sonnel began their careers in small business, and they tend to continue to manage entrepreneurially. For example, when one division decided it was time to get into the natural potato chip business, it did so in less than a month. By contrast, Pepsico’sFrito-Lay Division took 15 months to bring out the product.

The decentralized concept is not without difficulties. For example, the emphasis on divisional marketing of regional brands does little to promote the visibility of Curtice-Burns stock. Consequently, the stock sells at prices lower than what the company’s board of directors thinks is appropriate. Investors simply are not familiar with Curtice-Burns.

A second disadvantage of decentralization is the inherent duplication of functions such as accounting, sales, and marketing. A corollary problem is that some divisions (acquired companies) are too small to operate independently. Small divisions often cannot provide the full range of functional support required to operate as an independent unit.

A third problem is difficult to define. But it relates to the managerial question of knowing when headquarters should assist or even overrule division decision. Constant interference in division affairs obviously ruins the concept, but total disregard is likewise ruinous. Striking a balance between the two extremes is a problem only because it is a matter of managerial judgment.

Cumming believes the advantages of decentralization outweigh its disadvantages. In fact, he sees the practice as the primary cause for the company’s steady growth.


1. Evaluate Curtice-Burns, Inc.’s policy of decentralization.

2. What specific company strategies facilitate the use of decentralized authority?

3. At what point should Cumming consider centralizing certain functions?Which are the function most likely to be centralized when and if that point is reached?



In 1986 Ford passed its bigger competitor, Gen­eral Motors, with earnings of $3.3 billion. Ford’s market share is about 20 percent. But success, in many instances, may be only temporary, and Ford’s chairman, Donald E. Petersen, is con­cerned about complacency. Indeed, the com­pany has to work hard to maintain its reputation for stylish, aerodynamic cars and high quality.

Under the former leadership of Henry Ford II, the company was very centralized. But Peter­sen’s plan is to make Ford an integrated global enterprise. Thus, a great deal of authority for the development of specific models or compo­nents is now centralized in the company’s vari­ous technical centers around the world rather than in Detroit. Under this plan, the car or its components are developed in the technical center with the best expertise in a particular field, anywhere in the world. This could save the company a lot of money by avoiding duplication in development and reducing tooling costs. For example, Ford of Europe, located in England, is the center for developing the platform for the new model that will replace the European Sierra and the American Tempo and Topaz. Ford will sell the new cars in Europe and in the United States. Similarly, in Japan Mazda (Ford owns 25 percent of the company), which has much experience in building small cars, will be the center for developing the platform for the replacement car for the Escort. The North American center of excellence will focus on midsize cars. Similar centers are planned for major component, such as transmissions and engines. While these centers of excellence develop platform and key components, exterior and interior styling will be the responsibility of companies in various regions.

The concept of the centers of excellent may seem promising, yet a previous attempt in the early 1980s to build a “world car in Europe failed. It is said that the American car Escort, shared only one part with European counterpart, namely, a seal in water pump.


1. What do you think of Ford’s overall decentralization with centralized authority for development of specific cars and components at the technical centers?

2. Why does Ford think that the concept of having centers of excellence located in various part the world will be the correct organization structure for the twenty-first century?

3. Research to find out if these centres of excellence are still operating.

4. As is known Ford came to india a few years ago. Research and report their organization.


Stopping the Sprawl at HP

When Randy Mott joined Wal-Mart fresh out of col­lege in 1978, its in-house tech staff had only 30 members and company founder Sam Walton had not yet become a believer in the power of computing to revolu­tionize retailing. But Mott and his cohorts developed a network of computerized distribution centers that made it simple to open and run new stores with cookie-cutter efficiency.

Then in the early 1990s, Mott, by this time chief information officer, persuaded higher-ups to invest in a so-called data warehouse. That let the company collect and sift cus­tomer data to analyze buying trends as no company ever had, right down to which flavor of Pop-Tarts sells best at a given store.

By the time Mott took his latest job last summer, as CIO of HP, he had become a rock star of sorts among the corporate techie set as an executive who not only under­stood technology and how it could be used to improve a business but how to deliver those benefits. Besides his 22-year stint at Wal-Mart, Mott helped Dell hone its already huge IT advantage. By Welding nearly 100 separate sys­tems into a single data warehouse, Mott’s team enabled Dell to quickly spot rising inventory for a particular chip, for instance, so the company could offer online promotions for devices containing that part before the price fell too steeply.

Now Mott, 49, is embarking on his boldest and most challenging            project yet: a three-year, $1 billionplus makeover of HP’s  internal tech systems that will replace 85 loosely connected data centers           around the world with six cutting edge facilities—two each in Austin,  Atlanta, and Houston. Mott ispushing sweeping changes in the way HP operates, slashing thousands of smaller projects at the decentralized company to focus on a few corporate wide initiatives
including scrapping 784 isolated databases for one companywide data warehouse. Says Mott: “We want to make HP the envy of the technology world.” If it works, Mott’s makeover could have more impact than any new HP advertising campaign, printer, or PC and could turbocharge the company’s already impressive turnaround. HP posted profits of $1.5 billion in its second quarter, up 51% from the year before, on a 5% increase in sales. If Mott is successful, HP’s annual spending on tech should be cut in half in the years ahead, from $3.5 billion in 2005, say insiders.

More important, a Wal-Mart style data warehouse could help HP make headway on its most vexing problem in recent years: how to capitalize on its vast product breadth. While HP sells everything from $10 ink cartridges to multimillion dollar supercomputers, the company has operated more like a conglomerate of separate companies than a one-stop tech superstore. “We shipped 55 million printers, 30 million PCs, and 2 million servers last year,” says CEO Hurd. “If we can integrate all that information, it would enable us to know exactly how we’re doing in Chicago on a given day, or whether the CIO of a big customer also happens to own any of our products at home.”

Mott’s initiatives may well stir up a hornet’s nest within HP. They will likely require thousands of layoffs, while requiring the support of remaining staffers in a company that has long resisted centralized control. Mott is testing the limits of the HP culture, taking away the right of thousands of IT workers to purchase their own tech equipment.

But Mott has the absolute backing of Hurd, who began recruiting him shortly after arriving at HP in February 2005. The pair have known each other for years. At both Wal-Mart and Dell, Mott bought data warehousing gear from Hurd, who was a leading evangelist for the technology during his years at NCR Corp. Hurd eventually wooed Mott in July on the strength of a $15 million pay package and a promise to support him if he’d sign on for the aggressive three year transformation.

Still, Mott’s greatest strength may be that while a technologist, he has the management skills to actually make IT take root in a company’s culture. Linda M. Dillman, a onetime Wal-Mart CIO and now its executive vice president for risk management and benefits administration, recalls how Mott championed the deployment of IT by showing how it achieved Wal-Mart’s business goals. Underlings say Mott’s low-key Southern charm belies an intensity that typically brings him into the office by 6:15 a.m. He has no patience for quick summaries during grueling two day long business reviews he convenes once a month. That certainly jibes with Hurd’s view of the world which is why he’s centralizing HP’s balkanized information systems, even while working to decentralize operational control. The idea is to make sure all of HP’s businesses are working off the same set of data, and to give them the tools to quickly make the best decisions for the entire company say, a single customer management system, so executives can know the full breadth of what any account buys from HP.


1. In what ways is Randy Mott trying to change HP’s structure and the way it works?

2. In what ways has he been trying to change HP’s Culture?

3. How will the changes he has made affect HP’s competitive advantage and performance?

4. Research about HP’s org structure in India Is it appropriate to conditions in India?


Organisation Structure of Saxe Realty Company

Saxe Realty Company, Inc,. located in the San Francisco bay area, was founded in 1938 by Jules and Marion Saxe. For most of its history, the company was a single office agency run by its history, the company was a single-office agency run by its founders. Over time, the company grew in size and sales revenue, which increased from 41 million in 1973 to over 10 million in 1979. Rather than a single office, the company had six branches in the San Francisco and Marin County areas.

The firm grew for many reasons. An important reason was the founders’ ability to do certain things very well. They knew how to select location, time moves, and design offices. They recruited and hired people with above-average ability and trained them to be effective salespeople. The rewards of growth were enjoyed by the Saxe family and employees of their firm.

But with growth came problems stemming from the mismatch between the firm’s organization structure, management practices, and the requirements of a large firm compared to a small one. In the early days, Saxe Realty could handle its business matters in simple and informal ways. After all, its business matters in simple and informal ways. After all, it was a family corporation, and family members ran it as a family, not as a business.

Some of the problems that surfaced with growth included the absence of clearly defined roles and areas of responsibility. People were in jobs because of family relationship rather than skills. Important decisions were made by relatively few people, who often did not have knowledge of all available information. The firm, moreover, had  no strategic plan. It responded. The firm, moreover, had no strategic plan. It responded and reacted to opportunities rather than being responded. In a sense, the firm’s success had simply outgrown its organization.

Saxe consequently had to make many changes in its operations and organization structure, the overriding goal being to move Saxe away from an entrepreneurial style firm toward a professionally managed one. The change itself involved a process of preparation and implementation.

The organization structure that Saxe adopted relies on geography as the basis for departmentalization. There is a central office and the branch offices report to it. Geographic departmentalization encourages decentralization. One of the outcomes sought by Saxe’s top management. Branch management are responsible for the day to day activities of their offices. The central office maintains overall direction through planning and controlling processes. For example, all branch offices participate in the annual planning process, during which objective for each branch are developed. These objectives are then the targets and the responsibility of branch managers.

Saxe’s top management developed formal descriptions for all key positions, defining the responsibilities of each job with special attention to avoiding overlap and duplication of effort. The company’s experience during its entreneurial stage was that things were often left undone because everyone assumed that someone else was doing them. In other instances, several people would assume responsibility for a task when it required the attension of only one person. A key consideration in the new organization structure was to define explicitly and formally the work expected from each individual job.

The new structure provides for reporting channels from each branch associate to the chief executive officer. The chain of command is the channel for progress reports on planned objectives, financial and sales reports, and other informational needs. In comparison with the previous organization, the chain of command is much more explicit and formal. Individuals are encouraged to go through channels.

The entire change at Saxe has been both extensive and time consuming. Nearly every aspect of the firm’s operations has been affected, and the changes took two years or more to fully implement.

Questions for Analysis:

1. Draw an organization chart that depicts the structure being implemented at Saxe.

2. Which alternative structures could Saxe have implemented and what would be the advantages of each in comparison to the Saxe did implement?

3. What are the relationships between the planning function and the organization function as depicted in the Saxe case?

4. How is Hiranandani real estate organized in India?



It was about 2 p.m. on March 9 when three Nucor Corp. electri­cians got the call from their col­leagues at the Hickman (Ark.) plant. It was bad news: Hickman’s electri­cal grid had failed. For a minimillsteelmaker like Nucor, which melts scrap steel from autos, dishwashers, mobile homes, and the like in an electric arc furnace to make new steel, there’s little that could be worse. The trio immediately dropped what they were doing and headed out to the plant. Malcolm McDonald, an electrician from the Decatur (Ala.) mill, was in Indiana visiting facility. He down arriving at 9 o’clock that night. LssHart and Bryson Trumble, from Nucor’s facil­ity in Hertfore County N.C., boarded a plane that anded in Memphis at 11 p.m. Then they drove two hours to the troubled plant.

No supervisor has asked them to make frit trip, are no one had to. They went on their own. Camp­ing out in the electrical substation with the Hickman staff, the team worked 20-hour shifts to get the plant up and running again in three days instead of the anticipated full week. There wasn’t any direct financial incentive for them to blow their weekends, no extra money in their next paycheck, but-for the company- their contribution was huge. Hickman went on to post a first-quarter record for tons of steel shipped.

What’s most amazing about this story is that at Nucor it’s not consid­ered particularly remarkable. Says Executive Vice President John J. Ferriola, who oversees the Hickman plant and seven others, “It happens daily.” In an industry as Rust Belt as they come, Nucor has nurtured one of the most dynamic and engaged workforces around. The 11,300 nonunion employees at the Char­lotte (N.C.) company don’t see themselves as worker bees waiting for instructions from above. Nucor’s flattened hierarchy and emphasis on pushing power to the front line lead its employees to adopt the mindset of owner-operators. It’s a profitable formula as Nucor’s 387% return to shareholders suggests. Nucor gained renown in the late 1980s for its radical pay practices, which base the vast majority of most workers’ income on their perfor­mance. An upstart nipping at the heels of the integrated steel giants, Nucor had a close-knit culture that was the natural outgrowth of its underdog identity. Legendary leader F. Kenneth Iverson’s radical insight: that employees, even hourly clock-punchers, will make an extraordinary effort if you reward them richly, treat them with respect, and give them real power.

Nucor is an upstart no more, and the untold story of how it has clung to that core philosophy even as it has grown into the largest steel company in the U.S. is in many ways as compelling as the celebrated tale of its brash youth. Iverson retired in 1999. Under CEO Daniel R. DiMicco, a 23-year vet­eran, Nucor has snapped up 13 plants over the past five years while managing to instill its unique culture in all of the facilities it has bought, an achievement that makes him a more than worthy successor to Iverson,

At Nucor the art of motivation is about an unblinking focus on the people on the front line of the busi­ness. It’s about talking to them, lis­tening to them, taking a risk on their ideas, and accepting the occasional failure. It’s a culture built in part with symbolic gestures. Every year, for example, every sin­gle employee’s name goes on the cover of the annual report. And like Iverson before him, DiMicco flies commercial, manages without an executive parking space, and really does make the coffee in the office when he takes the last cup.

Although he has an Ivy League pedigree, including degrees from Brown University and the University of Pennsylvania, DiMicco retains the plain-talking style of a guy raised in a middle-class family in Mt. Kisco, N.Y. Only 65 people—yes, 65—work alongside him at headquarters.

Money is where the rubber meets the road. Nucor’s unusual pay system is the single most dar­ing element of the company’s model and the hardest for out­siders and acquired companies to embrace. An experienced steel-worker at another company can easily earn $16 to $21 an hour. At Nucor the guarantee is closer to $10. A bonus tied to the production of defect-free steel by an employee’s entire shift can triple the average steelworker’s take-home pay.

With demand for steel scorching these days, payday has become a regular cause for celebration. Nucor gave out more than $220 million in profit sharing and bonuses to the rank and file in 2005. The average Nucor steelworker took home nearly $79,000 last year. Add to that a $2,000 one-time bonus to mark the company’s record earnings and almost $18,000, on- average, in profit sharing. Not only is good work rewarded, but bad work is penal­ized. Bonuses are calculated on every order and paid out every week. At the Berkeley mill in Huger, S.C., if workers make a bad batch of steel and catch it before it has moved on, they lose the bonus they otherwise would have made on that shipment. But if it gets to the cus­tomer, they lose three times that.

Managers don’t just ask workers to put a big chunk of their pay at risk. Their own take-home depends heavily on results as well. Depart­ment managers typically get a base pay that’s 75% to 90% of the mar­ket average. But in a great year that same manager might get a bonus of 75% or even 90%, based on the return on assets of the whole plant. “In average-to-bad years, we earn less than our peers in other compa­nies. That’s supposed to teach us that we don’t want to be average or bad. We want to be good,” says James M. Coblin, Nucor’s vice president for human resources.

Compared with other U.S. com­panies, pay disparities are modest at Nucor. Today, the typical CEO makes more than 400 times what a factory worker takes home. Last year, Nucor’s chief executive col­lected a salary and bonus precisely 23 times that of his average steel-worker. DiMicco did well by any reasonable standard, making some $2.3 million in salary and bonus (plus long-term pay equaling $4.9 million), but that’s because Nucor is doing well. When things are bad, DiMicco suffers, too.

Executive pay is geared toward team building. The bonus of a plant manager, a department manager’s boss, depends on the entire corpo­ration’s return on equity.

So there’s no glory in winning at your own plant if the others are failing. But to focus only on pay would be to miss something spe­cial about the culture Nucor has created. There’s a healthy compe­tition among facilities and even among shifts, balanced with a long history of cooperation and idea-sharing. Since there’s always room for improvement, plant man­agers regularly set up contests for shifts to try to outdo one another on a set goal, generally related to safety, efficiency, or output. Ryan says Nucor’s Utah plant is the benchmark these days. It is the most profitable, with the lowest costs per ton. “They’ve got every­thing down to a science,” says Ryan   admiringly.   “It gives you something to shoot for.”


1. What is Nucor’s managers’ approach to organizing?

2. In what ways has this approach affected its organizational structure?

3. Study Tata Steels India operation and Compare its organization structure with Nucor. What are the differences and what is the reason for those differences?