Note: Solve any 4 Cases Study’s
CASE:
I Enterprise Builds On People
When most people think of car-rental firms, the names of Hertz and Avis
usually come to mind. But in the last few years, Enterprise Rent-A-Car has
overtaken both of these industry giants, and today it stands as both the
largest and the most profitable business in the car-rental industry. In 2001,
for instance, the firm had sales in excess of $6.3 billion and employed over
50,000 people.
Jack Taylor started Enterprise in St. Louis
in 1957. Taylor had a unique strategy in mind for Enterprise, and that strategy
played a key role in the firm’s initial success. Most car-rental firms like
Hertz and Avis base most of their locations in or near airports, train
stations, and other transportation hubs. These firms see their customers as
business travellers and people who fly for vacation and then need
transportation at the end of their flight. But Enterprise went after a
different customer. It sought to rent cars to individuals whose own cars are
being repaired or who are taking a driving vacation.
The firm got its start by working with
insurance companies. A standard feature in many automobile insurance policies
is the provision of a rental car when one’s personal car has been in an
accident or has been stolen. Firms like Hertz and Avis charge relatively high
daily rates because their customers need the convenience of being near an
airport and/or they are having their expenses paid by their employer. These
rates are often higher than insurance companies are willing to pay, so
customers who these firms end up paying part of the rental bills themselves. In
addition, their locations are also often inconvenient for people seeking a
replacement car while theirs is in the shop.
But Enterprise located stores in downtown and
suburban areas, where local residents actually live. The firm also provides
local pickup and delivery service in most areas. It also negotiates exclusive
contract arrangements with local insurance agents. They get the agent’s referral
business while guaranteeing lower rates that are more in line with what
insurance covers.
In recent years, Enterprise has started to
expand its market base by pursuing a two-pronged growth strategy. First, the
firm has started opening airport
locations to compete with Hertz and Avis more directly. But their target is
still the occasional renter than the frequent business traveller. Second, the
firm also began to expand into international markets and today has rental
offices in the United Kingdom, Ireland and Germany.
Another key to Enterprise’s success has been
its human resource strategy. The firm targets a certain kind of individual to
hire; its preferred new employee is a college graduate from bottom half of
graduating class, and preferably one who was an athlete or who was otherwise
actively involved in campus social activities. The rationale for this unusual
academic standard is actually quite simple. Enterprise managers do not believe
that especially high levels of achievements are necessary to perform well in
the car-rental industry, but having a college degree nevertheless demonstrates
intelligence and motivation. In addition, since interpersonal relations are
important to its business, Enterprise wants people who were social directors or
high-ranking officers of social organisations such as fraternities or
sororities. Athletes are also desirable because of their competitiveness.
Once hired, new employees at Enterprise are
often shocked at the performance expectations placed on them by the firm. They
generally work long, grueling hours for relatively low pay.
And all Enterprise managers are expected to
jump in and help wash or vacuum cars when a rental agency gets backed up. All
Enterprise managers must wear coordinated dress shirts and ties and can have
facial hair only when “medically necessary”. And women must wear skirts no
shorter than two inches above their knees or creased pants.
So what are the incentives for working at
Enterprise? For one thing, it’s an unfortunate fact of life that college
graduates with low grades often struggle to find work. Thus, a job at
Enterprise is still better than no job at all. The firm does not hire
outsiders—every position is filled by promoting someone already inside the
company. Thus, Enterprise employees know that if they work hard and do their
best, they may very well succeed in moving higher up the corporate ladder at a
growing and successful firm.
Question:
1.
Would
Enterprise’s approach human resource management work in other industries?
2.
Does
Enterprise face any risks from its human resource strategy?
3.
Would
you want to work for Enterprise? Why or why not?
CASE:
II Doing The Dirty Work
Business magazines and newspapers regularly publish articles about the
changing nature of work in the United States and about how many jobs are being
changed. Indeed, because so much has been made of the shift toward
service-sector and professional jobs, many people assumed that the number of
unpleasant an undesirable jobs has declined.
In fact, nothing could be further from the
truth. Millions of Americans work in gleaming air-conditioned facilities, but
many others work in dirty, grimy, and unsafe settings. For example, many jobs
in the recycling industry require workers to sort through moving conveyors of
trash, pulling out those items that can be recycled. Other relatively
unattractive jobs include cleaning hospital restrooms, washing dishes in a
restaurant, and handling toxic waste.
Consider the jobs in a chicken-processing
facility. Much like a manufacturing assembly line, a chicken-processing
facility is organised around a moving conveyor system. Workers call it the
chain. In reality, it’s a steel cable with large clips that carries dead
chickens down what might be called a “disassembly line.” Standing along this line
are dozens of workers who do, in fact, take the birds apart as they pass.
Even the titles of the jobs are unsavory.
Among the first set of jobs along the chain is the skinner. Skinners use sharp
instruments to cut and pull the skin off the dead chicken. Towards the middle
of the line are the gut pullers. These workers reach inside the chicken
carcasses and remove the intestines and other organs. At the end of the line
are the gizzard cutters, who tackle the more difficult organs attached to the
inside of the chicken’s carcass. These organs have to be individually cut and
removed for disposal.
The work is obviously distasteful, and the
pace of the work is unrelenting. On a good day the chain moves an average of
ninety chickens a minute for nine hours. And the workers are essentially held
captive by the moving chain. For example, no one can vacate a post to use the
bathroom or for other reasons without the permission of the supervisor. In some
plants, taking an unauthorised bathroom break can result in suspension without
pay. But the noise in a typical chicken-processing plant is so loud that the
supervisor can’t hear someone calling for relief unless the person happens to
be standing close by.
Jobs such as these on the chicken-processing
line are actually becoming increasingly common. Fuelled by Americans’ growing
appetites for lean, easy-to-cook meat, the number of poultry workers has almost
doubled since 1980, and today they constitute a work force of around a quarter
of a million people. Indeed, the chicken-processing industry has become a major
component of the state economies of Georgia, North Carolina, Mississippi,
Arkansas, and Alabama.
Besides being unpleasant and dirty, many jobs
in a chicken-processing plant are dangerous and unhealthy. Some workers, for
example, have to fight the live birds when they are first hung on the chains.
These workers are routinely scratched and pecked by the chickens. And the air
inside a typical chicken-processing plant is difficult to breathe. Workers are
usually supplied with paper masks, but most don’t use them because they are hot
and confining.
And the work space itself is so tight that
the workers often cut themselves—and sometimes their coworkers—with the knives,
scissors, and other instruments they use to perform their jobs. Indeed, poultry
processing ranks third among industries in the United States for cumulative
trauma injuries such as carpet tunnel syndrome. The inevitable chicken
feathers, faeces, and blood also contribute to the hazardous and unpleasant work
environment.
Question:
1.
How
relevant are the concepts of competencies to the jobs in a chicken-processing
plant?
2.
How
might you try to improve the jobs in a chicken-processing plant?
3.
Are
dirty, dangerous, and unpleasant jobs an inevitable part of any economy?
CASE:
III On Pegging Pay to Performance
“As you are aware, the Government of India has removed the capping on
salaries of directors and has left the matter of their compensation to be
decided by shareholders. This is indeed a welcome step,” said Samuel Menezes,
president Abhayankar, Ltd., opening the meeting of the managing committee
convened to discuss the elements of the company’s new plan for middle managers.
Abhayankar was am engineering firm with a
turnover of Rs 600 crore last year and an employee strength of 18,00. Two years
ago, as a sequel to liberalisation at the macroeconomic level, the company had
restructured its operations from functional teams to product teams. The change
had helped speed up transactional times and reduce systemic inefficiencies,
leading to a healthy drive towards performance.
“I think it is only logical that performance
should hereafter be linked to pay,” continued Menezes. “A scheme in which over
40 per cent of salary will be related to annual profits has been evolved for
executives above the vice-president’s level and it will be implemented after
getting shareholders approval. As far as the shopfloor staff is concerned, a
system of incentive-linked monthly productivity bonus has been in place for
years and it serves the purpose of rewarding good work at the assembly line. In
any case, a bulk of its salary will have to continue to be governed by good old
values like hierarchy, rank, seniority and attendance. But it is the middle
management which poses a real dilemma. How does one evaluate its performance?
More importantly, how can one ensure that managers are not shortchanged but get
what they truly deserve?”
“Our vice-president (HRD), Ravi Narayanan,
has now a plan ready in this regard. He has had personal discussions with all
the 125 middle managers individually over the last few weeks and the plan is
based on their feedback. If there are no major disagreements on the plan, we
can put it into effect from next month. Ravi, may I now ask you to take the
floor and make your presentation?”
The lights in the conference room dimmed and
the screen on the podium lit up. “The plan I am going to unfold,” said
Narayanan, pointing to the data that surfaced on the screen, “is designed to
enhance team-work and provide incentives for constant improvement and
excellence among middle-level managers. Briefly, the pay will be split into two
components. The first consists of 75 per cent of the original salary and will
be determined, as before, by factors of internal equity comprising what Sam
referred to as good old values. It will be a fixed component.”
“The second component of 25 per cent,” he
went on, “will be flexible. It will depend on the ability of each product team
as a whole to show a minimum of 5 per cent improvement in five areas every
month—product quality, cost control, speed of delivery, financial performance
of the division to which the product belongs and, finally, compliance with
safety and environmental norms. The five areas will have rating of 30, 25, 20,
15, and 10 per cent respectively.
“This, gentlemen, is the broad premise. The
rest is a matter of detail which will be worked out after some finetuning. Any
questions?”
As the lights reappeared, Gautam Ghosh,
vice-president (R&D), said, “I don’t like it. And I will tell you why.
Teamwork as a criterion is okay but it also has its pitfalls. The people I take
on and develop are good at what they do. Their research skills are
individualistic. Why should their pay depend on the performance of other
members of the product team? The new pay plan makes them team players first and
scientists next. It does not seem right.”
“That is a good one, Gautam,” said Narayanan.
“Any other questions? I think I will take them all together.”
“I have no problems with the scheme and I
think it is fine. But just for the sake of argument, let me take Gautam’s point
further without meaning to pick holes in the plan,” said Avinash Sarin,
vice-president (sales). “Look at my dispatch division. My people there have
reduced the shipping time from four hours to one over the last six months. But
what have they got? Nothing. Why? Because the other members of the team are not
measuring up.”
“I think that is a situation which is bound
to prevail until everyone falls in line,” intervened Vipul Desai, vice president
(finance). “There would always be temporary problems in implementing anything
new. The question is whether our long term objectives is right. To the extend
that we are trying to promote teamwork, I think we are on the right track.
However, I wish to raise a point. There are many external factors which impinge
on both individual and collective performance. For instance, the cost of a raw
material may suddenly go up in the market affecting product profitability. Why
should the concerned product team be penalised for something beyond its
control?”
“I have an observation to make too, Ravi,”
said Menezes, “You would recall the survey conducted by a business fortnightly
on ‘The ten companies Indian managers fancy most as a working place’.
Abhayankar got top billings there. We have been the trendsetters in executive
compensation in Indian industry. We have been paying the best. Will your plan
ensure that it remains that way?”
As he took the floor again, the dominant
thought in Narayanan’s mind was that if his plan were to be put into place,
Abhayankar would set another new trend in executive compensation.
Question:
But how should he see it through?
CASE: IV Crisis Blown Over
November 30, 1997 goes down in the history of a Bangalore-based
electric company as the day nobody wanting it to recur but everyone
recollecting it with sense of pride.
It was a festive day for all the 700-plus
employees. Festoons were strung all
over, banners were put up; banana trunks and leaves adorned the factory gate,
instead of the usual red flags; and loud speakers were blaring Kannada songs.
It was day the employees chose to celebrate Kannada Rajyothsava, annual feature
of all Karnataka-based organisations. The function was to start at 4 p.m. and
everybody was eagerly waiting for the big event to take place.
But the event, budgeted at Rs 1,00,000 did
not take place. At around 2 p.m., there was a ghastly accident in the machine
shop. Murthy was caught in the vertical turret lathe and was wounded fatally.
His end came in the ambulance on the way to hospital.
The management sought union help, and the
union leaders did respond with a positive attitude. They did not want to fish
in troubled waters.
Series of meetings were held between the
union leaders and the management. The discussions centred around two major
issues—(i) restoring normalcy, and (ii) determining the amount of compensation
to be paid to the dependants of Murthy.
Luckily for the management, the accident took
place on a Saturday. The next day was a weekly holiday and this helped the
tension to diffuse to a large extent. The funeral of the deceased took place on
Sunday without any hitch. The management hoped that things would be normal on
Monday morning.
But the hope was belied. The workers refused
to resume work. Again the management approached the union for help. Union
leaders advised the workers to resume work in al departments except in the
machine shop, and the suggestions was accepted by all.
Two weeks went by, nobody entered the machine
shop, though work in other places resumed. Union leaders came with a new idea
to the management—to perform a pooja to ward off any evil that had befallen on
the lathe. The management accepted the idea and homa was performed in the
machine shop for about five hours commencing early in the morning. This helped
to some extent. The workers started operations on all other machines in the
machine shop except on the fateful lathe. It took two full months and a lot of
persuasion from the union leaders for the workers to switch on the lathe.
The crisis was blown over, thanks to the
responsible role played by the union leaders and their fellow workers. Neither
the management nor the workers wish that such an incident should recur.
As the wages of the deceased grossed Rs 6,500
per month, Murthy was not covered under the ESI Act. Management had to pay
compensation. Age and experience of the victim were taken into account to
arrive at Rs 1,87,000 which was the
amount to be payable to the wife of the deceased. To this was added Rs 2,50,000
at the intervention of the union leaders. In addition, the widow was paid a
gratuity and a monthly pension of Rs 4,300. And nobody’s wages were cut for the
days not worked.
Murthy’s death witnessed an unusual behavior
on the part of the workers and their leaders, and magnanimous gesture from the
management. It is a pride moment in the life of the factory.
Question:
1.
Do you
think that the Bangalore-based company had practised participative management?
2.
If your
answer is yes, with what method of participation (you have read in this
chapter) do you relate the above case?
3.
If you
were the union leader, would your behaviour have been different? If yes, what
would it be?
CASE:
V A Case of Burnout
When Mahesh joined XYZ Bank (private sector) in 1985, he had one clear
goal—to prove his mettle. He did prove himself and has been promoted five times
since his entry into the bank. Compared to others, his progress has been
fastest. Currently, his job demands that Mahesh should work 10 hours a day with
practically no holidays. At least two day in a week, Mahesh is required to
travel.
Peers and subordinates at the bank have
appreciation for Mahesh. They don’t grudge the ascension achieved by Mahesh,
though there are some who wish they too had been promoted as well.
The post of General Manager fell vacant. One
should work as GM for a couple of years if he were to climb up to the top of
the ladder, Mahesh applied for the post along with others in the bank. The
Chairman assured Mahesh that the post would be his.
A sudden development took place which almost
wrecked Mahesh’s chances. The bank has the practice of subjecting all its
executives to medical check-up once in a year. The medical reports go straight
to the Chairman who would initiate remedials where necessary. Though Mahesh was
only 35, he too, was required to undergo the test.
The Chairman of the bank received a copy of
Mahesh’s physical examination results, along with a note from the doctor. The
note explained that Mahesh was seriously overworked, and recommended that he be
given an immediate four-week vacation. The doctor also recommended that
Mahesh’s workload must be reduced and he must take physical exercise every day.
The note warned that if Mahesh did not care for advice, he would be in for
heart trouble in another six months.
After reading the doctor’s note, the Chairman sat back in his chair,
and started brooding over. Three issues were uppermost in his mind—(i) How
would Mahesh take this news? (ii) How many others do have similar fitness
problems? (iii) Since the environment in the bank helps create the problem,
what could he do to alleviate it? The idea of holding a stress-management
programme flashed in his mind and suddenly he instructed his secretary to set
up a meeting with the doctor and some key staff members, at the earliest.
Question:
1.
If the
news is broken to Mahesh, how would he react?
2.
If you
were giving advice to the Chairman on this matter, what would you recommend?
CASE:
VI “Whose Side are you on, Anyway?”
It was past 4 pm and Purushottam Mahesh was still at his shopfloor
office. The small but elegant office was a perk he was entitled to after he had
been nominated to the board of Horizon Industries (P) Ltd., as workman-director
six months ago. His shift generally ended at 3 pm and he would be home by late
evening. But that day, he still had long hours ahead of him.
Kshirsagar had been with Horizon for over
twenty years. Starting off as a substitute mill-hand in the paint shop at one
of the company’s manufacturing facilities, he had been made permanent on the
job five years later. He had no formal education. He felt this was a handicap,
but he made up for it with a willingness to learn and a certain enthusiasm on
the job. He was soon marked by the works manager as someone to watch out for.
Simultaneously, Kshirsagar also came to the attention of the president of the
Horizon Employees’ Union who drafted him into union activities.
Even while he got promoted twice during the
period to become the head colour mixer last year, Kshirsagar had gradually
moved up the union hierarchy and had been thrice elected secretary of the
union. Labour-management relations at Horizon were not always cordial. This was
largely because the company had not been recording a consistently good
performance. There were frequent cuts in production every year because of
go-slows and strikes by workmen—most of them related to wage hikes and bonus
payments. With a view to ensuring a better understanding on the part of labour,
the problems of company management, the Horizon board, led by chairman and
managing director Aninash Chaturvedi, began to toy with idea of taking on a
workman on the board. What started off as a hesitant move snowballed, after a
series of brainstorming sessions with executives and meetings with the union
leaders, into a situation in which Kshirsagar found himself catapulted to the
Horizon board as work-man-director.
It was an untested ground for the company.
But the novelty of it all excited both the management and the labour force. The
board members—all functional heads went out of their way to make Kshirsagar
comfortable and the latter also responded quite well. He got used to the
ambience of the boardroom and the sense of power it conveyed. Significantly, he
was soon at home with the perspectives of top management and began to see each
issue from both sides.
It was smooth going until the union presented
a week before the monthly board meeting, its charter of demands, one of which
was a 30 per cent across-the board hike in wages. The matter was taken up at
the board meeting as part of a special agenda.
“Look at what your people are asking for,”
said Chaturvedi, addressing Kshirsagar with a sarcasm that no one in the board
missed. “You know the precarious finances of the company. How could you be a
party to a demand that can’t be met? You better explain to them how ridiculous
the demands are,” he said.
“I don’t think they can all be dismissed as
ridiculous,” said Kshirsagar. “And the board can surely consider the
alternatives. We owe at least that much to the union.” But Chaturvedi adjourned
the meeting in a huff, mentioning, once to Kshirsagar that he should “advise
the union properly”.
When Kshirsagar told the executive committee
members of the union that the board was simply not prepared to even consider
the demands, he immediately sensed the hostility in the room. “You are a sell
out,” one of them said. “Who do you really represent—us or them?” asked
another.
“Here comes the crunch,” thought Kshirsagar.
And however hard he tried to explain, he felt he was talking to a wall.
A victim of divided loyalities, he himself
was unable to understand whose side he was on. Perhaps the best course would be
to resign from the board. Perhaps he should resign both from the board and
the union. Or may be resign from Horizon itself and seek a job
elsewhere. But, he felt, sitting in his office a little later, “none of it
could solve the problem.”
Question:
1.
What
should he do?
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