Case Studies for Management

While examples of guaranteed payment exist, the length ND size of the payments is considered uncommon. In 2005, the chief operating officer received his guaranteed support deal the amount of funds totallyotted to the non-salaried employee allowance program decreased by 50 percent. Questions 1 . How does expected performance relate to the current contrast bug forthlook? 2. What argon the results that occupy to be achieved In the short and keen-sighted term? 3. Is swaning(prenominal) management prepared to fight hold up and herald this program or discover? 4. Are compensation commissioning members/board of director members familiar with alike(p) programs or issues? . Has the compensation committee/board of directors reviewed animal compensation programs or Issues In the knightly? ENRON CORP. In the late sass and into 2001, Enron Corp.. Provided its executives with compensation packages that include rightfulness stakes in business units. Although m each companies u se faithfulness In rewards programs, the amounts provided to Enron executives were unusually monumental (greater than 5 percent) and non tied to huge- list performance because executives were al gloomyed to convert their e abandony into either than $310 million by converting equity stakes into cash.In addition to the equity stakes, Enron rewarded ii executives large cash bonuses of $54 million and $42 million. The chairman/chief executive of a supplementary allegedly received a 20-percent stake in his unit, thus suitable a minority owner. He leveltually converted his stake into to a greater extent than than $20 million in cash before leaving the naughty society. The executives stake, however, was not listed on any friendships proxy filings, despite the fact that the stake thin the value of the shareholders investments. 1 . Are at that place particular communities/social or political activists that will react to this pattern? 2.To what extent do you motive to match o r differ from market pay workouts? 3. Do you spot what financial cons mastermindts may fix program de ratify? 4. Has your accounting divergence reviewed this program design from an accounting treatment perspective? 5. What are the results that need to be achieved in the short and long term? Case 28 KGB HOME The CEO of KGB Home departed in 2006 after an ingrained investigation revealed that he had backdated his own stock options. The companys internal investigation indicated that the CEO and head of HER had probably altered the dates of stock option earmarks amid 1998 and 2005.As a result of the backdating, the company indicated a need to restate to a greater extent than 3 days of financial results and incur an additional compensation expense of more(prenominal) than $41 million. Despite the scandal and ongoing investigation at the era of his departure, the damage of the Coos employment agreement provided him with the ability to collect as more as $175 million in severanc e, pension and stock. Because of the backdated options scandal, the company select a vernal policy that all stock option grants and the terms of the grants be approved by the compensation committee.The company also positive a nonconsecutive chairman of the board, a chief compliance officer, and did not grant any stock options to executives in 2006. 1 . To what extent is the legal talk ofion plane section knotted in compensation planning, design, administration and disclosure? 2. Is the legal department comfortable with this design in the current legal/regulatory milieu? 3. What is the likely perspective population perceive this program as clear? 5. How and when will you dis a andting this plan to shareholders? Case 29 WALT DISNEY CO. In 2003, Walt Disney Co. Warehouses filed a lawsuit relating to the $140 million severance package paid to the motive the president. Shareholders contended that the directors kat onceingly or intentionally br separatelyed their fiduciary duty of due thrill in approving (the presidents) employment agreement, and failed to consider the terms f the s bakshishping point ? which was allegedly negotiated altogether by the CEO. Although the court concord with shareholders that the CEO had exclusively negotiated the deal and orchestrated the presidents hire without in charge from the board of directors, it found that uncomplete he nor the different directors breached their fiduciary duty.The court did, however, criticize the members of the compensation committee for not doing more to inform themselves of the terms of Vitas employment agreement and to move involved in the review and approval functioning. 1 . What is the process for develop responses and communicating with Warehouses? 2. To what degree does the compensation philosophy align with corporate strategy, shade and organizational resources? 3. What are shareholder expectations astir(predicate) your compensation programs and how do they affect program design? 4. Is aged(a) management prepared to support and communicate this program or issue? . Tools and processes are in place to support compensation committee decision making (e. G. , tally sheets)? Between 2000 and 2002 demesne CEO Bernard Beers obtained unsecured loans amounting to 20 percent of the firms cash, allegedly at disport rates well below the market rates for large rim loans. Upon leaving the organization, Beers still owed $408 million. World subsequently entered bankruptcy and the share toll dropped dramatically. Beers was hence unable to pay back the loan by merchandising his shares, as he had allegedly planned.If the compensation committee had secured the loans, Beers shares might fuck off been seized in order to sell them to cover the loan when the stock impairment was still high up enough to do so. 1 . Do you apply the necessary systems to executional and administer this program? 2. Are there separate stakeholders or influences (HER, legal, tax) that need to be part of the program development process? . Is your finance/accounting department prepared to support any peculiar(prenominal) reporting requirements for this program? 4. What is the role of finance/accounting in plan design? . What is the companys position on appropriate level of transparency (disclosing more than is required, simplification of written communications)? Case 31 Is Raja in necessitate of Reme control preparedness? Raja Sahara has been employed for six calendar months in the accounts section of a large manufacturing company in Abridged. You have been his supervisor for the past three months. Recently you have been asked by the management to find out the intrusions of each employee in the Accounts Section and monitor care richy whether they are conflux the criterions set by you.A a couple of(prenominal) days back you have established your stiff investigation and with the exception of Raja, all seem to be confluence the targets set by you. Along with numerous errors, Rajas take on is characterized by low performance often he does 20 percent less than the opposite clerks in the department. As you look into Rajas performance review sheets again, you begin to approve 1 . As Rajas supervisor can you find out whether the low-down performance is due to poor upbringing or to some other cause? . If you find Raja has been inadequately trained, how do you go about introducing a remedial rearing programmer? . If he has been with the company six months, what kind of remedial programmer would be best? 4. Should you supervise him more closely? Can you do this without making it obvious to him and his co-workers? 5. Should you discuss the lieu with Raja? Case 32 SONS AND ARPA COMPANY The Sons and ARPA Company manufactured wooden toys of various kinds wooden animals, pull toys, and the like. One part of the manufacturing process involved spraying cay on the partially assembled toys. This operation was staffed entirely by women. The toys were cu t, sanded and partially assembled in the wood room.Then they were dipped into shellac, following which they were painted. The toys were predominantly devil touched a few were make in more than two colors. Each color required an additional trip through the paint room. For a number of years, production of these toys had been entirely and work. However, to meet the tremendously improver in demand, the video operation had recently been re- engineered so that the eight operators (all women) who did the painting sat in a line by an endless kitchen range of hustles. Those hooks were in continuous motion, past the line of operators and into a long horizontal oven.Each woman sat at her own painting stalling so designed as to carry away fumes and to play excess paint. The operator would take a toy from the tray beside her, position it in a Gig inside the painting cubicle, spray on the color according to a pattern, then release the toy and hand it to the hook passing by. The rate at wh ich the hooks moved has been calculated by the engineers so that each hook before it passed beyond her reach. The operators working in the pain room were on a group bonus plan. Since the operation was new to them, they were, receiving a learning bonus, which decreased by regular amounts each month.The learning bonus was scheduled to vanish in six months, by which clip it was expected that they would be on their own, that is, able to meet the standard and to earn a group bonus when they exceeded it. By the plump for month of the training stay. Trouble had developed. The employees learned more slowly than had been anticipated, and it began to look as though their production would stabilize complained that they were going by too fast, and that the time topic man had set the rates wrong. A few women quit and had to be replaced with new operators, which yet aggravated the learning problem.The team genius that the management had expected to develop automatically through the group bo nus was not in evidence except as an expression of what the engineers called guard. One woman whom the group regarded as its -leader (and the management regarded as the ring-leader) was open by voicing the various complaints of the group before the chieftain the course was messy one, the hooks moved too fast, the incentive pay was not being correctly calculated, and it was too hot working so close to the drying oven. A consultant who was brought into this picture worked entirely with and through the headman.After many conversations with him, the foreman felt that the branch step should be to get the employees together for a general treatment of the working conditions. He took this step with some hesitation, besides he took on his own volition. The first get together, held immediately after the peddle was over at four oclock in the afternoon was attended by all the eight operators. They voiced the same complaints again the hook move by too fast, the seam was too dirty, t he room was hot and ailing ventilated. For some reason, it was this last item that they complained of more or less.The foreman promised to discuss the problem of respiration and temperature with the engineers, and he scheduled a second meeting to report back to the employees. In the next few days the foreman had several(prenominal) negotiation with the engineers. They and the superintendent felt that this was really a trumped-up complaint, and that expense of any effective corrective measure would be prohibitively high. The foreman came to the second meeting with some apprehensions. The operators, however, did not seem to be overmuch put out, perhaps because they had a proposal of their own to make.They let that if several large fans were set up so as to circulate the air virtually their feet, they would be much more comfortable. After some discussion, the foreman agreed that the idea might be tried out. The foreman and the consultant discussed the interrogatory of the fans wi th the superintendent, and three large propeller-type fans were purchased. The fans were brought in. The women were Jubilant. For several days the fans were moved about in various positions until they were placed to the satisfaction of the group.The operators seemed completely satisfied with the results, and the relations between them and the foreman improved visibly. The foreman, after this encouraging episode decided that promote meetings might also be profitable. He asked the operators if they would like to meet and discuss other aspect of the work situation. They were eager to do this. The meeting was held, and the discussion quickly centered on the brawl along of the hooks. The operators maintained that the time study man had them at an unreasonably fast speed and that they would never be able to reach the goal of filling enough of them to make a bonus.The turning point of the discussion came when the groups leader frankly explained that he point wasnt that they couldnt work fast enough to carry up with the hooks, but they couldnt work at that pace all the day long. The foreman explored the point. The employees were unanimous in their opinion that they could keep up with the clap for short periods if they wanted to. further they didnt want because if they showed they could do this for short periods they would be expected to do it all day long. The faster or slower dep finishing on how we feel. The foreman agreed to discuss this with the superintendent and the engineers.The reaction of the engineers to the suggestion was negative. However, after several meetings it was granted that there was some latitude within which variations in the speed of the hooks would not affect the finished product. After considerable careen with the engineers, it was agreed to tryout the operators idea. With misgiving?, the foreman had a control with a dial marked low, medium, fast installed at the booth of the group leader she could now adjust the speed of the belt anywh ere between the lower and pep pill limits that the engineers had set.The operators were de cast downed and spent many lunch arc elegants deciding how the speed of the belt should be varied from hour to hour throughout he day. in spite of appearance a week the pattern had settle down to one which the first half-hour of the shift was excrete on what the operators called a medium speed (a dial setting slightly preceding(prenominal) the point marked medium). The next two-and-a-half hours were comport at high speed the half-hour before lunch and half hour after lunch were run at low speed.The rest of the afternoon was run at high speed with the exception of the last 45 minutes of the shift, which was run at medium. In view of the operators reports of satisfaction and ease in work, it is arouse to note that the constant speed at which ,the engineers has originally set the belt was slightly below medium on the dial of the control that had been apt(p) to the women. The average speed at which they were running the belt was on the high side of the dial. Few, if any empty hooks entered the oven, and inspection showed no attach of rejects from the paint room.Production increased, and within 2 weeks (some 2 months before the scheduled ending of the learning bonus) the operators were operating at 30 to 50 per cent above the level that had been expected under the original arrangement. Naturally their earnings were correspondingly higher than anticipated. They were collecting their base pay, a considerable piece-rate bonus, and the learning bonus which, it will be remembered, had been set to decrease with time and not as a function of current productivity. The operators were earning more than many skilled workers in other parts of the plant. 1 .From the angle of Job enrichment, which core Job dimension or Job characteristic was most influenced by new system of group regulated speed? Evaluate the reported victory of the case against the principles of Job Enrichment. 2. Comment on the method of payment to the operators. How sober do you think such a system is? 3-4. Would you consider the initial discontent of the operators as a grievance? Why or why not? 5. How would you characterize the involvement of the operators after the introduction of group-regulated speed? overaged ORDER CHANGED? Modern Industries Limited ( mil) in Bangor is an automobile ancillary industry.The company started manufacturing automotive components over two decades ago in a low-spirited way and has grown steadily over the years, employing over 4,000 persons at bounty with the turnover exceeding RSI. 100 scores. Its products are selling well and earning a sizeable amount of profits. The company is controlled and managed by an industrialist family. Known for their shrewdness and business acumen. They are among the first generation industrialists who started their industrial ventures in a depleted way, during the early phase of industrialization in the country and along w ith the branch of automotive industry, millilitre also grew up.The depict Chairman, Mr.. Surest Shah had been with the company right from its stemma He started his career as an engineer trainee, rose to the position of the Managing managing director and in 1983 became the companys Chairman. As a result, he is acquainted with each minute detail and also with each employee who has been in the company for long. He continues to keep in close touch with them and is easily accessible to all of them, overruling hierarchy. A high premium is placed on their loyalty and their long service are valued.The Chairman of the company firmly believes that each one of them has contributed significantly towards the growth of the company. In the light of the fact that the company maintained a square utilitarian culture all along, the contribution of each and every employee had to be substantial and they were rewarded accordingly. At the same time, there were many instances, where the work were terminated due to inadequate performance. Mr.. Kandahar Taker owned nautical mile as a training instructor, over two decades ago. Prior to that, he served as an instructor at an Industrial Training Institute.He had himself obtained the craft instructors certificate from IT. He was 35 years old and his main task was to recruit young persons as trainees, either under the Apprentices Act or as company trainees and then train them as craftsmen. Most of these trainees were absorbed to meet the growing needs of the company, and Mr.. Shah apply to ainly involve himself in the process of recruitment and training of craftsmen. Mr.. Taker was directly reporting to Mr.. Shah, despite the vast gap in the hierarchy. Mr.. Taker was promoted to the rank of training Superintendent in 1980, though there was not much pitch in his Job content.The growing phase of the company was a lot over by that time, and the Apprentice training became a mere statutory activity. The company did not have the va cancies to absorb the trained apprentices, and therefore, Me. Became a hyponym activity and was not abandoned much importance. The winds of change were blowing through MIL also. Mr.. Nail Shah, the son of the founder industrialist took over as the Managing Director of MIL in 1983, whereas Mr.. Rammers Shah continued to be the Chairman of the company. The young MD was full of new ideas.He wanted to revivalist the company from all aspects and diversify into high technology areas. He wanted to modernize the present plant and change the management style from the traditional direct control approach to a systems controlled approach. A modern computer was bought and computerizing was introduced. The company had to face many problems while introducing these changes. One of the major hurdles was the problem of a number of elderly employees, who were not adequately qualified or developed, but had grown into senior positions. Earlier the touchstone was loyalty and hard work rather than impo tence.In the light of this situation, new competent professionals had to be hire to introduce the changes. MIL was well-known for its aggressive personnel policies. Anyone who Joined the company had to struggle hard for his choice as the company was ruthless in sacking those who were not meeting the requirements. It was specially so in case of the new appointees, which in turn necessitated them to be ruthless in their work The older employees felt exist and resented the changes and the consequent insistences. at that placefore, they collectively approached the Chairman and requested him to intervene and safeguard their interests.The Chairman, who was not himself happy with all the changes, issued instructions to the MD, to the effect that no old employee be dislocated. The new MD had no other option but to harmonize with the order. The MD was interested in trying out the HARD approaches to train all the employees, particularly employees who were turning out to be deadwoods. He hired Mr.. Kumar in 1984 as a Training Manager. Mr.. Kumar was basically an engineer but had considerable experience with a multinational company in the work of HARD, particularly in Training and Management Development. He reorganized the training set up by inducting two champion Managers.Mr.. Taker was next to the Assistant Managers in the hierarchy and reported to Mr.. Kumar directly and continued to manage the affairs related to apprenticeship training. Until Mr.. Kumar came along, Mr.. Taker had enjoyed the position of the head of the training division, though there was no other training activity apart from apprenticeship training. He was operating severally and was reporting directly to the MD. He continued to do so raze after the organization have grown in proportion. Mr.. Taker felt demoted in the new set up. Fie lost his position and individuality in the organization, and his self-esteem was seriously hurt.He was not prepared to accept Mr.. Kumar as his boss . And he started behaving in an irrational manner. He resented the vast gap created between him and the top man in the new structure. Mr.. Kumar tolerated him with the hope that Mr.. Taker would reconcile himself to the changes, in time. Unfortunately, he continued to behave in the same way and there was no improvement even after one year. When Mr.. Kumar tried to counsel him, Mr.. Taker demanded to be promoted to the level of Assistant Manager, as he happened to be the senior most people in the department. Kumar promised to look into his demand.On a careful analysis of the personal docket of Mr.. Taker and all the previous the Job that he was doing. Leave unsocial being entitled for further promotion, Mr.. Taker was not even fit for his present position. The company did not have a formal performance appraisal system. Its products were selling well, the profitability was good and accordingly all the employees were rewarded well. Promotions and extra increments were given arbitrarily based o n the personal likes and dislikes of the top man, rather than on any objective analysis of performance or potential of an individual.No formal manpower planning or organizational planning existed. No efforts were made to forecast implications of such a system in future. On the whole, the company did not have any formal projection for the future. The company followed the practice of giving long service . Certificates and awards to all those who had completed 20 years of service in the company. Mr.. Taker had got his certificate only recently. There were several employees belong to Mr.. Thackers category. All of them united and met both formally and informally to discuss their strategies and demands. They used to put up their grievances to the management collectively.They had established a very strong rapport with the Chairman, Mr.. Shah. Mr.. Kumar presented all the facts to Mr.. Taker to convince him that his promotion was not mathematical. As the last mentioned was not used to th e kind of logic presented by Mr.. Kumar, he reject all his arguments as sophisticated Jargon, irrelevant to the context of his company. He was particularly bitter about the fact that his promotion was turned down whereas there were several people with similar background who have got their promotions. Therefore, there was further deterioration in his behavior. He started ignoring the directions of Mr..Kumar and worked as per his own whims and fancies, behaving arrogantly. He even went to the extent of challenging Mr.. Kumar that he could neither promote him nor demote him in the prevailing situation. So long as he was protected by the Chairman of the company, there was nothing for him to worry about and his Job was lots secure. Mr.. Kumar optimistically hoped that Mr.. Taker could overcome his frustration and anger over a period of time. Unfortunately, even after another six months there was no sign of any progress. In fact, the situation deteriorated further with Mr..Taker becomin g more cocksure in his belief that Mr.. Kumar was powerless to deal with him. He turned out to be a drag in the department, purposely creating problems for Mr.. Kumar. In MIL the annual increments and general raises were given as a policy to every employee who is termed as. The Kanata raise Mr.. Taker was quite sure that he would get his Kanata raise and accommodate himself to that. Mr.. Kumar tried to stop this raise but could not do so. There were several bullies belonging to Mr.. Thackers category in the organization and one of the tasks of the Training Manager was to handle such people.Though he had organized a few training workshops in the behavioral areas, it had not brought about the required attitudinal changes. mighty under his nose he had a person whose behavior he was not able to amend. Mr.. Kumar realized that the desired changes were not possible, so long as the flat security was there. Due to a change in the governmental policy, there were several new competitors to MIL and the MD felt there was a strong need and urgency to bring in changes in the organization, to make it more dynamic and competitive. It was no longer possible to carry on the organizational dead woods. Mr.. Kumar was under great pressure to look