Barbara Russell, a manufacturing manager, walked into the monthly the way retail stores received the merchandise they needed when company-wide mesting with a light step and a feeting of hopeful- they needed it. The team thrived, and trust blossomed among the ‘ess she hadn't felt in a long time. The company’s new, dynamic, _members. They even spent nights and weekends working to complete (CEO was going to announce a new era of empowerment at Elecre- their report. They were proud of ther ideas, which they believed Quik, an 80-year-old publicly held company that had once been 2 _were innovative but easly achievable: permit a manager to follow a leading manufacturer and retailer of electrical products and supplies. product from design through sales to customers; allow salespeople Tn recent years, the company has experienced a host of problems: to refund up to $500 worth of merchandise on the spot; make market share was dectining in the face of increased foreign and ‘information available to salespeople about future products; and swap ‘domestic competition; new product ideas were few and far between; sales and manufacturing personnel for short periods to let them get departments such as manufacturing and sales barely spoke to one ta know one another's jobs, another: morale was at an alltime low: and many employees were ‘When the team presented their report to department heads, actively seeking other jobs. Everyone needed a dose of hope. Martin Griffin was enthusiastic. But shortly into the meeting he Martin Grifin, who had been hired to revive the failing company, had to excuse himself because of a late-breaking deal with a major briskly opened the meeting with 2 challenge: ‘As we face increasing hardware store chain. With Martin absent, the department heads competition, we need new ideas, new energy, new spirit to make this rapidly formed a wall of resistance. The director of human resources ‘company great. And the source fortis change is you - each one of complained thatthe ideas for personnel changes would destroy You: He then went on to expain that under the new empoweiment the carefully crafted job categories that had just been completed, campaign, employees would be getting mare information about The finance department argued that allowing salespeople to make how the company mas run and would beable to work with other $500 refund would create a god mine for unethical customers and ‘employees in new and creative ways. Martin prodlaimed a new salespeople. The legal department wamed that providing information 1a of tust and cooperation at Elecra-Ouik. Barbara found this ‘to salespeople about future products would invite industrial spying. exciting; but as she looked around the rom, she saw many of the The team members were stunned. As Barbara mulled over the ‘other employees including her friend Hany roling their eyes. latest turn of events, she considered her options: keep her mouth ‘Gust another pile of corporate crap; Harry said later. ‘One minute shut; take a chance and confront Martin about her sincerity in they try downsizing, the next re-engineering. Then they dabble in making empowerment work; push slowly for reform and work for ‘restructuring. Now Martin wants to push empowerment. Garbage like gradual support from the other teams: or look for anather job and ‘empowerment fn't a substitute for hard work and a little faith in Leave a company she really cared about, Barbara realised there would the people who have been with this company for years. We made it be no easy choices and mo easy answers. ‘great once, and we can do it again, Just get out of our way! Harry hhad been @ manufacturing engineer with Electra-Qulk for more than 20 years. Barbara knew he was extremely loyal ta the company, but hhe ~ and a lot of others like him - were going to be an obstacle to the empowerment efforts. Top management assigned selected managers to several problem-solving teams to come up with ideas for implementing the ‘empowerment campaign. Barbara loved her assignment as team leader of the manufacturing team, working on ideas to improve. Sour Seangon «2 Daft SOURCE: Based Rite 1965, Ca0ca\ e-45case INCIDENT 2 Did Toyota’s Culture ‘You may be familiar with the problems that have recently plagued Toyota. However, you may not know the whole story. First the facts. In 2010 Toyota issued a series of recalls for various models. The most serious was for a defect called “unintended acceleration,” which occurs when a car accelerates with no apparent input from the driver. Investigations revealed that unintended accelera- tion in Toyota cars has been the cause of 37 deaths since 2000. When the problems first surfaced, however, Toyota denied it was the cause. Eventually, Toyota apologized and recalled more than 9 million cars To many, the root cause of Toyota’s problems was its insular, arrogant culture. Fortuneargued: “Like GM before it, Toyota has gotten smug. It believes the Toyota Way is the only way.” Time reported "a Toyota management team 538 — CHAPTER16 Organizational Culture with elderly drivers, and elderly drivers are known to be more prone to confusing pedals. Many other independent investigations, including ones conducted by automobile experts at Popular Mechanics and Car and Driver, reached the same conclusion: the main cause of unintended accel- eration was drivers mistaking the gas pedal for the brake pedal. ‘There’s a long history of misreporting on this issue. Audi was nearly driven into bankruptcy when 60 Minutes aired a report, “Out of Control,” purportedly proving that defects in the car were behind six fatal sudden-accelera- tion accidents. Asit turns out, 60 Minutes paid sometime to tamper with the car—filling a canister of compressed air linked to the transmission—to cause the sudden accelera- tion shown in the segment. Further investigations never uncovered evidence that defects in Audi's cars were be- hind the incidenws Reblias « Source ' Cause Its Problems? that had fallen in love with itself and become too insu- lar to properly handle something like the current crisis.” ‘Transportation Secretary Ray LaHood described Toyota's culture as *safety-deaf.” But is this the reality? Increasingly, evidence suggests that Toyota's culture—or even the cars it produces—is not the source of the problem. A201] report released by the U.S. National Highway ‘Traffic Safety Administration (NHTSA) concluded that unintended acceleration was not caused by problems in the electronic circuitry. The Wall Street Journal wrote that “safety regulators, human-error experts and auto makers say driver error is the primary cause of sudden acceler tion." Forbes and The Atlantic commented that most of the incidents of sudden acceleration in Toyota cars occurred Does Toyota have an insular and inbred corporate cure? Probably. Bucivs been that way for long tie its far rom clear thatthe culture, oF even the comes cars is esponsibe for the sudden acceleration protic Judge C2213) pe F37-3eCase Study 12.1 PROFITEL INC. sa formerly government-owned telephone mono- Poly, Profitel enjoyed many decades of minimal com. Petition, Even today, as a publicly traded enterprise, ‘he company’s almost exclusive control over tele Phone copper wiring across the county keeps its profit ‘margins above 40 percent. Competitors in telephone threaten Profte’s dominance. Because of these threals, Profitel’s board of directors decided to hire an outsider as the new chief executive. Although several qualified candidates expressed an interest in Profitel’s top job, the board selected Lars Peeters, who had been CEO for six years of a publicly traded European telephone company, fol: lowed by a brief stint as CEO ofa cellular telephone ‘company in the United States until it was acquired by a larger firm. Profitel’s board couldn't believe its good fortune; Peeters brought extensive industry knowl edge and global experience, a high-octane energy level, self-confidence, decisiveness, and a congenial yet strongly persuasive interpersonal style. He also hhad a unique “presence,” which caused people to pay attention and respect his leadership. The board was also impressed with Pecters’s strategy to bolster Prof- tel’s profit margins. This included investing heavily in the latest wireless broadband technology (for both cellular telephone and computer Internet) before competitors could gain a foothold, cutting costs through layolts and reduction of peripheral services, and put- {ing pressure on the government to deregulate Profi tel's traditional and emerging businesses. When Peeters described his strategy to the board, one board member commented that this was the same strategy Peeters used in his previous two CEO postings Peeters dismissed the comment, saying that each sit ation is unique. Pecters lived up to his reputation as a decisive ex: ecutive. Almost immediately after taking the CEO job at Profitel, he hired two executives from the European company where he had previously worked, ‘Together, over the next two years, they cut the work. force by 5 percent and rolled out the new wireless broadband technology for cell phones and Internet, Costs increased somewhat due to downsizing ex. penses and the wireless technology rollout. Profitel’s wireless broadband subseriber list grew quickly be- cause, in spite ofits very high prices, the technology faced limited competition and Profitel was pushing. customers off the older technology to the new net. work, Profitel’s customer satisfaction ratings fell, how- ever. A national consumer research group reported that Profite’s broadband offered the country’s worst MeShane 4 Von Clince Cacio pp 319- 3&o and DSL broadband continue to rely on Profitel’s wholesale business, which generates substantially more profit than similar wholesale services in many other countries. However, Profitel has stiff competi tion in the cellular (mobile) telephone business, and other emerging technologies (voice-over-Internet) value. Employee morale also declined due to layoity and the company's public image problems. Some in dustry experts also noted that Profitel selected ity wireless technology without evaluating the alternative emerging wireless technology, which had been gain. ing ground in other countries. Peeters's aggressive campaign against government regulation also hd tunintended consequences. Rather than achieving less regulation, criticizing the government and its telecon ‘munications regulator made Profitel look even more ‘arrogant in the eyes of both customers and govern. ‘ment leaders Profitel’s board was troubled by the company's lackluster share price, which had declined 20 per. cent since Peeters was hired. Some board members also worried that the company had bet on the wrong wireless technology and that subscription levels would stall far below the number necessary to achieve the profits stated in Peeters’s strategic plan, This concern came closer to reality when a foreign. owned competitor won a $1 billion government con- tract to improve broadband services in regional areas of the country. Profitel’s proposal for that re- sional broadband upgrade had specified high prices and limited corporate investment, but Pecters had been confident Profitel would be awarded the con- {tact because of its market dominance and existing infrastructure with the new wireless network. When the government decided otherwise, Profitel’s board fired Peeters along with the two executives he had hired from the European company. Now, the board had to figure out what went wrong and how to avoid is problem in the future © 2008 Steven L, McShaneCASE FOR DISCUSSION Med lene aN Pal oor i New Zealand senior management will be presented with a business proposal ina lst cltch plan by unions to stop the aitine outsourcing most ofits heavy maintenance and hundreds of jobs to Asia or Europe. The New Zealand Engineering, Printing and Manufacturing Union has dratted a business Plan that it claims will achieve almost al the cost savings Air NZ hopes to make by shifting its maintenance work offshore, ‘The proposal we wil (submit) wl involve job losses but not as many as Air New Zealan} 's proposing, said union national secretary Andrew Little, At NZ says outsourcing the maintenance of its long-haul planes could save $NZI00 milion (SA95.5rillion) over five years. The move will esultin the loss of 617 jobs ZThe union claims its plan to keep maintenance work in NZ will save the ‘aifine $NZ00 milion over five years. ‘We think we can pretty much close the gap,’ Mr Ltle said. With the Lunion putting the final touches on its proposal yesterday, Mr Little would not go into detail 's believed the proposal will include reducing overtime pay and time off in lieu “This could strike an alarm bell fr Qantas’ 6900 maintenance and engineering workers in Australia, some of whom are involved in talks. Qantas has already wamed it could fellow Af 'NZ5 lead if Cantas cannot cut costs across its Australian maintenance operations. In enterprise bargaining talks with the Australian Manufacturing Workers Union (AMWU), Qantas has requested a cutin overtime and shift penalties paid to maintenance workers Chiet Gxecutive Geoff Dixon recently denied Qantas was using threats to shift work overseas in a bid to dive @ hard bargain with the union, Mr Dixon said Qantas had.no choice but to redex costs, He recently warned the national carer would have to cut costs and jobs iit was to keep maintaining its long-haul jets in Australia. The airline made redundant about 160 maintenance workers in Sydney and Melbourne, Source: Sct Rochiot The Age, 7 December 200, Source» Coaddell ey al Cacer) p.3ac.