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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