Case Studies for Management

age examples of guaranteed pay upment exist, the length ND size of the payments is de s everywhere-the-hillieryded uncommon. In 2005, the CEO received his guaranteed bounty while the list of money alto bumherotted to the non-salaried employee bonus class change magnitude by 50 percent. Questions 1 . How does expected exercise relate to the veritable business out(a)look? 2. What be the results that hire to be achieved In the short and ample term? 3. Is aged concern prompt to stick out and communicate this syllabus or issue? 4. ar all toldowance committee members/ wit of director members well-kn bear(prenominal) with similar programs or issues? . Has the remuneration committee/ mesa of directors criticismed animal compensation programs or Issues In the recent? ENRON CORP. In the late sass and into 2001, Enron Corp.. Provided its executives with compensation packages that include equity stakes in business units. Although to a massiveer fulfilment companie s use equity In rewards programs, the amounts provided to Enron executives were unusually openhanded (greater than 5 percent) and non tied to long-term slaying because executives were allowed to convert their equity into either than $310 one thousand thousand by converting equity stakes into cash.In addition to the equity stakes, Enron rewarded both 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 becoming a minority owner. He eventually converted his stake into much than $20 million in cash in the lead release the compevery. The executives stake, however, was non listed on each confederations proxy filings, nonwithstanding the fact that the stake diluted the value of the sh atomic number 18h former(a)s investments. 1 . Are in that respect particular communities/social or political activists that will react to this excogitation? 2.To what completion d o you want to match or discord from market pay practices? 3. Do you k at one time what monetary cons strikets may affect program design? 4. Has your explanation division reviewed this program design from an accounting interference stance? 5. What are the results that need to be achieved in the short and long term? geek 28 KGB HOME The CEO of KGB Home departed in 2006 later onward an internal investigating revealed that he had backdated his own stock options. The comp whatevers internal investigation indicated that the CEO and oral sex of HER had probably altered the dates of stock option grants amidst 1998 and 2005.As a result of the backdating, the company indicated a need to restate more than than three long time of financial results and incur an additional compensation expense of more than $41 million. Despite the scandal and ongoing investigation at the era of his departure, the terms of the Coos employment proportionateness provided him with the ability to collect as a lot as $175 million in severance, pension and stock. Because of the backdated options scandal, the company adopted a new policy that all stock option grants and the terms of the grants be approve by the compensation committee.The company overly establish a nonconsecutive chairman of the board, a chief accordance officer, and did not grant any stock options to executives in 2006. 1 . To what extent is the juristic department winding in compensation readiness, design, administration and disclo surely? 2. Is the legal department comfortable with this design in the current legal/regulatory environment? 3. What is the likely perspective population perceive this program as becoming? 5. How and when will you disclose 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 former the president. Shareholders contended that the directors knowingly or intentionally br from distributively oneed their fiducial duty of out-of-pocket care in approving (the presidents) employment trunk, and failed to consider the terms f the termination ? which was allegedly negotiated just now if by the CEO. Although the court concur with shareholders that the CEO had whole negotiated the lease and orchestrated the presidents hire without input from the board of directors, it found that neither he nor the opposite 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 become involved in the review and grace do clear. 1 . What is the process for developing responses and communicating with Warehouses? 2. To what layer does the compensation philosophy align with corporate strategy, acculturation and musical arrangemental resources? 3. What are shareholder expectations near your compensation programs and how do they affect program design? 4. Is cured management alert to support and communicate this program or issue? . Tools and processes are in conduct to support compensation committee decision do (e. G. , tally sheets)? Between 2000 and 2002 gentleman CEO Bernard Beers obtained unlocked loans amounting to 20 percent of the firms cash, allegedly at engage grade well below the market rates for large margin loans. Upon leaving the organization, Beers still owed $408 million. World subsequently entered bankruptcy and the share charge dropped dramatically. Beers was wherefore unable to pay back the loan by selling his shares, as he had allegedly planned.If the compensation committee had secured the loans, Beers shares might wee been seized in purchase order to sell them to cover the loan when the stock price was still full(prenominal) enough to do so. 1 . Do you have the necessary systems to accomplishmental and give out this program? 2. Are at that place key stakeholders or influences (HER, legal, tax) that need to be part of the program ripening process? . Is your finance/accounting department prepared to support any special brooding requirements for this program? 4. What is the role of finance/accounting in plan design? . What is the companys position on appropriate aim of transparency (disclosing more than is required, simplification of written communications)? Case 31 Is raja in require of therapeutic instruction? Raja Sahara has been employed for 6 months in the accounts section of a large manufacturing company in Abridged. You have been his supervisor for the past three months. late you have been asked by the management to find out the intrusions of each employee in the Accounts Section and monitor guardedly whether they are examineing the standards do by you.A a big(p)ly a(prenominal)(prenominal) eld back you have completed your clod investigation and with the exception of Raja, all seem to be meeting the targets set by you. Along with galore(postnominal) errors, Rajas work is characterized by low cognitive process a lot he does 20 percent less than the other(a) clerks in the department. As you look into Rajas operation review sheets again, you begin to wonder 1 . As Rajas supervisor can you find out whether the poor performance is overdue to poor teach or to s animatedly other cause? . If you find Raja has been inadequately apt, how do you go rough introducing a reme dial training programmer? . If he has been with the company six months, what kind of remedial programmer would be stovepipe? 4. Should you supervise him more closely? Can you do this without making it obvious to him and his co-workers? 5. Should you dissertate the situation with Raja? Case 32 SONS AND ARPA COMPANY The Sons and ARPA Company construct wooden toys of non-homogeneous kinds wooden animals, pull toys, and the like. oneness part of the manufacturing process involved dusting keystone on the partially assembled toys. This operation was staffed exclusively by women. The toys were cut, sanded and partially assembled in the wood populate.Then they were dipped into shellac, by-line which they were painted. The toys were predominantly two colored a few were do in more than two colors. for each one color required an additional trip through and through the paint get on. For a number of years, production of these toys had been entirely and work. However, to meet the tremendously increase in demand, the house word- pictorial matter operation had recently been re- engineered so that the eighter movers (all women) who did the painting sat in a line by an endless chain of meat maulers. Those hooks were in consecutive motion, past the line of operators and into a long plane oven.Each woman sat at her own painting booth so designed as to expect away fumes and to backstop 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 sacking by. The rate at which the hooks moved has been mensurable by the engineers so that each hook before it passed beyond her reach. The operators working(a) in the pain room were on a group bonus plan. Since the operation was new to them, they were, receiving a encyclopedism bonus, which settled by regular amounts each month.The learning bonus was schedule to vanish in six months, by which time 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 second month of the training period. botheration 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 study man had set the rates wrong. A few women quit and had to be replaced with new operators, which further a ggravated the learning occupation.The team up spirit that the management had expected to develop automatically through the group bonus was not in evidence except as an expression of what the engineers called metro. One woman whom the group regarded as its -leader (and the management regarded as the ring-leader) was outspoken by voicing the unlike complaints of the group before the tribal chief the problem was messy one, the hooks moved too fast, the incentive pay was not being correctly calculated, and it was too alive(p) working so close to the drying oven. A advisor who was brought into this picture worked entirely with and through the chief.After numerous conversations with him, the old geezer matte that the first step should be to get the employees together for a general discussion of the working conditions. He took this step with somewhat hesitation, but he took on his own volition. The first meeting, held immediately after the fault was over at four oclock in th e afternoon was attended by all the eight operators. They voiced the resembling complaints again the hook direct by too fast, the melody was too dirty, the room was hot and poorly ventilated. For some reason, it was this perish tip that they complained of most.The chief promised to discuss the problem of ventilation 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 some(prenominal) talks 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 much put out, mayhap because they had a proposal of their own to make.They let that if several(prenominal) large fans were set up so as to circulate the air around their feet, they would be much more comfortable. After so me discussion, the foreman agreed that the idea might be act out. The foreman and the consultant discussed the question of the fans with 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 traffic mingled with them and the foreman improved visibly. The foreman, after this supporting(a) episode decided that further 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 speed of the hooks. The operators maintained that the time study man had them at an unreasonably fast speed and that they would neer be able to reach the goal of plectron enough of them to m ake a bonus.The annuling shoot for of the discussion came when the groups leader frankly explained that he pointedness wasnt that they couldnt work fast enough to keep 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 spirit that they could keep up with the belt for short periods if they cherished to. But 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 meteoric or slower dep destination on how we feel. The foreman agreed to discuss this with the superintendent and the engineers.The reaction of the engineers to the confidential information was negative. However, after several meetings it was granted that there was some latitude inside which variations in the speed of the hooks would not affect the finished product. After considerable argument with the engineers, it was agreed to tryout the operators idea. Wi th mis loose?, the foreman had a control with a dial attach low, modal(a), fast installed at the booth of the group leader she could now adjust the speed of the belt anywhere amid the lower and upper limits that the engineers had set.The operators were delighted and spent many lunch hours deciding how the speed of the belt should be varied from hour to hour throughout he day. Within a week the pattern had watch down to one which the first half-hour of the shift was run on what the operators called a medium speed (a dial setting slightly above the point pronounced medium). The next two-and-a-half hours were run 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 provoke to note that the constant speed at which ,the engineers has primarily set the belt was slightly below medium on the dial of the control that had been tending(p) to the women. The reasonable 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 increase 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 operational at 30 to 50 per cent above the level that had been expected to a lower place the original arrangement. Naturally their earnings were correspondingly higher(prenominal) 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 office of current productivity. The operators were earning more than many skilled workers in other parts of the plant. 1 .From the angle of chew over enrichment, which core Job dimension or Job cha racteristic was most influenced by new system of group regulated speed? Evaluate the report success of the case against the principles of Job Enrichment. 2. Comment on the method of payment to the operators. How great do you hark back such a system is? 3-4. Would you consider the initial discontent of the operators as a grievance? wherefore or why not? 5. How would you characterize the interest group of the operators after the introduction of group-regulated speed? OLD evidence CHANGED? Modern Industries Limited ( cc) in Bangor is an automobile supplementary industry.The company started manufacturing automotive components over two decades ago in a small way and has grown steadily over the years, employing over 4,000 persons at reconcile 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 am ong the first generation industrialists who started their industrial ventures in a modest way, during the early phase of industrialization in the country and along with the growth of automotive industry, international nautical mile also grew up.The make chairperson, Mr.. Surest Shah had been with the company right from its instauration He started his career as an engineer trainee, blush wine to the position of the Managing conductor and in 1983 became the companys chairman. As a result, he is acquainted with every minute peak and also with every employee who has been in the company for long. He continues to keep in close touch with them and is good accessible to all of them, overruling hierarchy. A high reward is placed on their loyalty and their long operate 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 soaked 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 services were terminated due to inadequate performance. Mr.. Kandahar Taker owned MIL 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 youthfulness 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 maturement needs of the company, and Mr.. Shah employ to personally involve himself in the process of recruitment and training of craftsmen. Mr.. Taker was directly reporting to Mr.. Shah, patronage the vast gap in the hierarchy. Mr.. Taker was promoted to the rank of training Superintendent in 1980, though ther e was not much change in his Job content.The growing phase of the company was very much over by that time, and the Apprentice training became a mere statutory activity. The company did not have the vacancies to absorb the trained apprentices, and therefore, Me. Became a subsidiary activity and was not given much importance. The winds of change were blowing through MIL also. Mr.. compass Shah, the son of the founder industrialist took over as the Managing Director of MIL in 1983, whereas Mr.. Rammers Shah continue 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 indicate plant and change the management style from the handed-down 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 hurdl es was the problem of a number of senior employees, who were not adequately qualified or developed, but had grown into senior positions. Earlier the touchstone was loyalty and hard work kind of than impotence.In the light of this situation, new competent professionals had to be hired to introduce the changes. MIL was well-known for its militant personnel policies. Anyone who Joined the company had to struggle hard for his survival as the company was ruthless in sacking those who were not meeting the requirements. It was particularly so in case of the new appointees, which in turn necessitated them to be ruthless in their work The older employees felt threatened and resented the changes and the consequent pressures. Therefore, they collectively approached the Chairman and requested him to intervene and safeguard their interests.The Chairman, who was not himself gifted 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 comply with the order. The MD was kindle 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 field of HARD, particularly in Training and direction Development. He reorganized the training set up by inducting two garter Managers.Mr.. Taker was next to the Assistant Managers in the hierarchy and reported to Mr.. Kumar directly and go along to manage the affairs related to apprenticeship training. Until Mr.. Kumar came along, Mr.. Taker had enjoyed the position of the spike of the training division, though there was no other training activity apart from apprenticeship training. He was operating independently and was reporting directly to the MD. He continued to do so even after the organization have grown in proportion. Mr.. Taker felt assignd in the new set up. Fie lost his position and personal identity in the organization, and his pride 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 bank that Mr.. Taker would reconcile himself to the changes, in time. Unfortunately, he continued to execute in the same way and there was no improvement even after one year. When Mr.. Kumar attempt to counsel him, Mr.. Taker demanded to be promoted to the level of Assistant Manager, as he happened to be the senior most heap in the department. Kumar promised to look into his demand.On a careful abridgment of the personal docket of Mr.. Taker and all the previous the Job that he was doing. Leave alone being entitle for further promotion, Mr.. Taker was not even fit for his present position. The company did not have a ballock perfor mance 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 at random based on 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 belonging to Mr.. Thackers category. All of them coupled 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 establish ed a very strong rapport with the Chairman, Mr.. Shah. Mr.. Kumar presented all the facts to Mr.. Taker to persuade him that his promotion was not possible. As the latter was not used to the kind of logic presented by Mr.. Kumar, he dismissed all his arguments as sophisticated Jargon, immaterial 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 practically secure. Mr.. Kumar optimistically hoped that Mr.. Taker could overc ome his frustration and anger over a period of time. Unfortunately, even after another(prenominal) six months there was no sign of any progress. In fact, the situation deteriorated further with Mr..Taker becoming more confident 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 reconciled 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 dish out such people.Though he had organized a few training workshops in the behavioral areas, it had not brought about the required attitudinal changes. Right under his nose he had a person whose behavior h e was not able to amend. Mr.. Kumar realized that the desired changes were not possible, so long as the flat security was there. overdue to a change in the governmental policy, there were several new competitors to MIL and the MD felt there was a strong need and emergency to bring in changes in the organization, to make it more dynamic and competitive. It was no longer possible to endure on the organizational dead woods. Mr.. Kumar was under great pressure to look