Organizational Behavior Case for Discussion #1

Rewarding the Hourly Worker

Hourly workers—people who are paid a set dollar amount for each hour they work—have long been the
backbone of the U.S. economy. But times are changing, and with them so also is the lot of the hourly worker. As
they can with most employment conditions, organizations are able to take a wider variety of approaches to managing
compensation for hourly workers. And nowhere are these differences more apparent than in the contrasting
conditions for hourly workers at General Motors and Wal-Mart.
General Motors is an old, traditional industrial company that until recently was the nation’s largest employer.
And for decades, its hourly workers have been protected by strong labor union like the United Auto Workers
(UAW). These unions, in turn, have forged contracts and established working conditions that almost seem archaic in
today’s economy. Consider, for example, the employment conditions of Tim Philbrick, a forty-two-year-old plant
worker and union member at the firm’s Fairfax plant near Kansas City who has worked for GM for twenty-three
years.
Mr. Philbrick makes almost $20 an hour in base pay. With a little overtime, his annual earnings top $60,000.
But even then, he is far from the highest-paid factory worker at GM. Skilled-trade workers like electricians and
toolmakers make $2 to $2.50 an hour more, and with greater overtime opportunities often make $100,000 or more
per year. Mr. Philbrick also gets a no-deductible health insurance policy that allows him to see any doctor he wants.
He gets four weeks of vacation per year, plus two week off at Christmas and at least another week off in July. Mr.
Philbrick gets two paid twenty-three-minute breaks and a paid thirty-minute lunch break per day. He also has the
option of retiring after thirty years with full benefits.
GM estimates that, with benefits, its average worker makes more than $43 an hour. Perhaps not surprisingly, then,
the firm is always looking for opportunities to reduce its workforce through attrition and cutbacks, with the goal of
replacing production capacity with lower-cost labor abroad. The UAW, on the other hand, of course, is staunchly
opposed to further workforce reductions and cutbacks. And long-standing work rules strictly dictate who gets
overtime, who can be laid off and who can’t, and myriad other employment condition for Mr. Philbrick and his
peers.
But the situation at GM is quite different—in a lot of ways—from conditions at Wal-Mart. Along many different
dimensions Wal-Mart is slowly but surely supplanting General Motors as the quintessential U.S. corporation. For
example, it is growing rapidly, is becoming more and more ingrained in the American lifestyle, and now employs
more people than GM did in its heyday. But the hourly worker at Wal-Mart has a much different experience than the
hourly worker at GM.
For example, consider Ms. Nancy Handley, a twenty-seven-year-old Wal-Mart employee who oversees the men
department at a big store in St. Louis. Jobs like Ms. Handley’s pay between $9 and $11 an hour, or about $20,000 a
year. About $100 a month is deducted from Ms. Handley’s paycheck to help cover the cost of benefits. Her health
insurance has a $250 deductible; she then pays 20 percent of her health-care cots as long as she uses a set of
approved physicians. During her typical workday, Ms. Handley gets tow fifteen-minute breaks and an hour for
lunch, which are unpaid. Some feel that conditions are inadequate. Barbara Ehrenreich, author of Nickel and Dimed:
On (Not) Getting By in America, worked at a Wal-Mart while researching her book and now says, “Why would
anybody put up with the wages we were paid?”
But Ms. Handley doesn’t feel mistreated by Wal-Mart. Far from it, she says she is appropriately compensated
for what she does. She has received three merit raises in the last seven years and has ample job security. Moreover,
if she decides to try for advancement, Wal-Mart seems to offer considerable potential, promoting thousands of
hourly workers a year to the ranks of management. And Ms. Handley is clearly not unique in her views—Wal-Mart
employees routinely reject any and all overtures from labor unions.
In the twenty-first century, the gap between “Old Economy” and “New Economy” workers, between
unionized manufacturing workers and nonunion or service workers, may be shrinking. Unions are losing their power
in the auto industry, for example, as foreign-owned plants within the United States give makers such as Toyota and
BMW, which are nonunion, a cost advantage over the Big Three U.S. automakers. U.S. firms are telling the UAW
and other unions, “We’re becoming noncompetitive, and unless you organize the [foreign-owned firms], we’re
going to have to modify the proposals we make you.” At the same time, Wal-Mart is facing lawsuits from
employees who clam the retailer forced them to work unpaid overtime, among other charges. At Las Vegas store,
the firm faces its first union election. In a world where Wal-Mart employs three times as many workers as GM, it
may be inevitable that the retailer’s labor will organize. On the other hand, will labor unions continue to lose their
power to determine working conditions for America’s workforce?

References: Joann Muller, “can The UAW Stay in the Game?” Business Week, June 10, 2002.
www.businessweek.com on June 3, 2002; Mark Gimein, “Sam Walton Made Us a Promise,” Fortune, March 18,
2002. www.fortune.com on June 3, 2002.
 Case Questions
1. Compare and contrast hourly working conditions at General Motors and Wal-Mart.
2. Describe the most likely role that the hourly compensation at these two companies plays in motivating employees.
3. Discuss how goal setting might be used for each of the two jobs profiled in this case.

Organizational Behavior Case for Discussion #2

Using Groups to Get Things Done

After years of difficulties and many attempts to change, a Myerstown, Pennsylvania, pharmaceutical plant, part
of the commission Care Division of German-owned Bayer Corporation, instituted a teams-based changed program.
The facility had been sold several times in recent years and had operated under various organizations. The fifty-
year-old factory was staffed at less than 50 percent when it was purchased by Bayer. There has been no plant
manager for almost a year, and morale was at an all-time low. Worse yet, the factory was losing money, and the
remaining employees feared a shutdown. The outlook was bleak, but in the absence of leadership from the top level,
the Human Resource Department, under the guidance of director John Danchisko, decided that the employees
themselves could turn the low-performing facility around.
First, ninety-three employees were selected at random to participate in seven focus groups. At the meetings,
workers brainstormed the answers to open-ended questions such as “Why do people work here?” and “Why do
people leave here?” Their answers were compiled and sent to every employee for comments and input. Employees
were impressed; they liked the new proactive and collaborative management style. Rick Higley, a pharmaceutical
operator, says, ‘ The thing I rally appreciated about the process was that the managers listened to what everyone had
to say , treated is as equals, and really valued our opinions.”
Next, an eighteen-member cross-functional team was formed to recommend and help implement improvements.
The team approach was clearly popular because fifty people volunteered for those eighteen slots. The team focused
on five key priorities:
1. Define site goals and strategy and communicate them interactive employee
conferences. Job security concerns and a need to see how shorter-term goals to fit
into the long-term strategy were important to employees.
2. Develop a site communication process. Employees felt that their best option for
information was no better than a “rumor mill” while supervisors often weren’t
given critical information. Having consistency of information from the top to the
bottom of the organization benefited everyone.
3. Develop hourly employee and supervisory role definitions and competency
profiles. Changing ownership had led to too many abandoned programs, and
training has been inconsistent. Decision-making authority, span of control, and
management roles were just a few of the areas of confusion.

4. Identify areas of perceived inconsistencies in site practices and policies and

determine appropriate actions. Employees wanted to ensure that any system used
at the facility would be used consistently and that all workers would be treated the
same.

5. Developed a performance measurement process (a performance scorecard system).

Without some type of measurement system, workers and supervisors were unsure
whether goals were being reached.
One of the biggest obstacles to change was the factories past history of failed changes. An employee noted, “It
would be nice if [managers] were really sincere in this, but we’ve all been through this before. I think this is going to
be another flavor of the month.” Employee skepticism began to change as the teams focused on what really mattered
to the hourly workers. Employees began by asking, “What’s in it for me?”—but the teams proposed a pay-for-
performance system, with employees earning up to an additional 8 percent on top of their base pay when
profitability was above target.
In its first year, the facility reached four of its five financial goals and became profitable earlier than expected.
Employee satisfaction is now up, and accidents are down. On-time completion of weekly production quotas has
risen from 53 percent (about average for this industry) to 85 percent. In 2000, the plant received Workforce
magazine’s Optimas award for excellence in human resources. Management was so pleased with the results of the
program that the teams have become permanent, with rotating membership. Danchisko says, “When we first started
this, we didn’t realize how big it would actually become for our site. Hire We are, a few years down the road, and
we’re still heavily into this.” The site’s teams process has become a model for other Bayer facilities.
Werner Wenning, the new chairman of Bayer, has taken control of the firm at a difficult time. The stock price is
declining, new products are slow to reach market, and the company is restructuring its divisional organization.
Wenning admits that Bayer was too slow in its response to changing market condition, noting, “In the future, we
have to act more quickly.” Perhaps the CEO ought to consider the team-based methods that were developed by his
own employees at the Myerstown facility.

References: “About the Awards,” Workforce web site. www.workforce.com, “2001 Bayer Annual Reprot,”
www.bayer.com, “Bayer’s Big Headache,” Business Week, May 6, 2002. www.businessweek.com,on May 21, 2002.

Case Questions
1. What type of group are the focus groups that were initially formed at Bayer’s Myerstown facility? What type is
the current eighteen-member, permanent group? What factors led you to make the choices you did?
2. Based on group performance factors, what do you predict will be the likely performance of the eighteen-
member cross-functional team?
3. Initially, workers at the Myerstown plant were skeptical about the use of teams and resisted the change. What
conflict resolution approach was used to address this problem? Is that the approach you would recommend for this
situation? Why or why not?

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Organizational Behavior Case for Discussion #3

None of Us Is as Smart as All of Us

Are you unhappy about your recent encounters with the medical profession? So you think that doctors are too
rush and impersonal, insurance companies have too much control, fee are too high, and procedures and tests are not
thoroughly explained? You’re not alone. National consumer surveys show a low level of satisfaction with health
care, but at the Mayo Clinic in Rochester, Minnesota, patient satisfaction soars above the average. At the same time,
costs are lower and the staff is happier than those at most other hospitals. Teamwork is the key to the clinic’s
remarkable success.
The Mayo Clinic was founded by Dr. William W. Mayo, a Minnesota Physician, and his two son, William J.
and Charles, also physicians. After a catastrophic tornado in 1883, the doctors joined forces with nurses from the
Sisters of St. Francis, and the arrangement was made permanent with the opening of Sr. Mary’s Hospital in 1889.
The Mayo brothers recruited more Physicians, hiring technicians and business managers and creating one of the first
group medical practices. The closeness of the two siblings, as will as advances in medicine, helped guide the
development of Mayo’s team-based culture. Harry Harwick, their first business manager, claims, “The first and
perhaps greatest lesson I learned from the Mayos was that was that of teamwork. For ‘my brother and I’ was no
mere convenient term of reference, but rather the expression of a basic, indivisible philosophy of life.” Dr. William
J. May said, ‘It has become necessary to develop medicine as a cooperative science; the clinician’ the specialist, and
the laboratory workers uniting for the good of the patient. Individualism in medicine can no longer exist.
The team approach permeates the culture of the entire organization. It begins with staff and physician recruiting.
Mayo runs its own medical school and residency programs and hires many of its own graduates. The clinic selects
only those with the “right” attitude, the ones who are willing to put patients’ needs first. All clinic medical staff,
including doctors, nurses, and technicians, call each other “consultants,” a term which emphasizes collaboration and
also reduces status barriers, enabling all workers to participate as equals in patient-care decisions. The CEO is a
physician; every committee is headed by medical personnel, with business staffers working as advisors only. The
Mayo brothers turned their life savings into the Mayo Foundation, which funds the clinic’s operation as well as
medical education and research. Doctors at Mayo are employees, not owners, so they receive a salary, ensuring that
they will make decisions in the best interests of their patients, not for personal gain. Without worries about turf
battles, collaboration is the norm. Oncologist Lynn Hartman explains, “I take great comfort in the proximity of
expertise. I feel much more confident in the accuracy of my diagnosis because I’ve got some very, very smart people
next to me who have expertise that I don’t have.”
A typical patient’s experience at Mayo is something like this: A cancer patient would have multiple
professionals involved in his or her care, from oncologists to nurses to radiologists to surgeons to social workers,
and the group would meet as a team with the patient to work out a joint strategy for treatment. Cancer patients
typically feel that they have little control, but Mayo doctors know that getting patients actively involved in their own
care dramatically increases the odds of successful treatment. Hartman claims, “Most patients today want a more
interactive style… so [that] they can be part of the decision. They’re on the Internet; they’re doing their own
research. What they’re looking for is someone who can help them sort through that information.’ With help from the
professionals, patients can work out a treatment that makes sense for their particular circumstances. When a
patient’s needs or questions change, the team adapts.
We work in teams, and each team is driven ny the medical problems involved in a case an by the patient’s
preferences. Sometimes that means that a team must be expanded—or taken apart and re assembled,” says Hartman.
Part of Mayo’s success comes because of past successes—for example, when its medical school graduates refer
patients to the clinic. The foresight of Will and Charlie Mayo in providing financially for the clinic is another factor.
Mayo’s reputation also creates opportunities, such as Mayo physician Donald D. Hensrud’s recurring column for
Fortune readers and the award-winning web site mayoclinic.com. But most of it is due to the passion for teamwork
expressed in the founders’ philosophy: “No one is big enough to be independent of others. None of us is smart as all
of us.”
References: 2000 Mayo Foundation Annual Report, www.mayoclinic.org; “History,” “Mayo’s Mission,” “The
Tradition,” “The Agenda-Total Teamwork,” www.fastcompany.com

Case Questions
1. Would you consider the patient-care groups at the Mayo Clinic to be teams? Explain your answer in terms
of job categories, authority, and reward system. (Hint: See Table 12.1 for guidance)
2. What team-related benefits can you find described in this case? What are the possible team-related costs?
3. What type of team are the patient-care teams? What factors led you to arrive at your answer?

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Organizational Behavior Case for Discussion #4

The Most Stressful Conditions

How can effective choices be made when there is no time, when your employees, your company, and your
community are in imminent danger? Decision making under these conditions takes on a different character, as
shown in the response of Sidley Austin Brown & Wood to the tragic events of September 11, 2001.
The giant law firm was formed in May 2001 when Brown & Wood merged its Wall Street financial law
offices with those of Chicago-based Sidley & Austin, corporate law specialists, creating the nation’s fourth-largest
practice, with 1,400 lawyers worldwide. Many of the firm’s lawyers are headquartered in New York City, with 600
formerly housed at 1 World Trade Center on floors 52 to 57 and another 100 seven miles away in midtown
Manhattan. On September 11, the first plane struck overhead. Workers noticed the explosion’s tremors and the smell
of jet fuel. Director of Administration John Connelly asked workers to evacuate, helping the frightened and
confused employees to the stairs. Being unaware of the extent of the danger, Connelly and others went from floor to
floor to ensure that everyone was safely out, then left the building just as it collapsed. Only one company employee
perished in the attack.
In the aftermath, with damaged facilities and workers in shock, Sidley Austin employees faced the most trying
circumstances of their careers. When their attempts to contact the midtown building failed because cell phone towers
had been destroyed, many employees walked to the site. At the midtown location, partner Alan S. Weil anticipated
the need for additional office space and called his landlord, who granted immediate leases on two floors and also got
another law firm to gibe up two newly leased floors. By the end of the day, hundreds of desks, computers, and cell
phones were arriving, and contractors were installing computer cables. “It’s just amazing what you can get in New
York overnight,” says partner Thomas R. Smith Jr. According to New York writer John Schwartz, “The normal rules
of business engagement—deliberate negotiation, adversarial wrangling and jockeying for advantage—were swept
away. The infamously in-your-face New York attitude was nowhere to be found.”
The partnership’s directors were supposed to meet in Los Angeles on September 12 but were stranded
elsewhere as airlines ceased operations. The executives used conference call to begin “issue-spotting,” according ti
Thomas Cole, partner. He explained, “The lawyers who assembled that day and in the days thereafter were people
who had spent their entire working lives engaged in solving complex problems for clients.
…But that was under normal conditions. Would we succeed under the most stressful conditions…?” Issues
involving people, insurance, and communications were complex; for example, the people issue covered such items
as payroll continuity, trauma counseling, and safety and security. The organization pulled together—staffers from
the Chicago headquarters drove all night to assist. When the firm’s backup data tapes needed transport from a New
Jersey warehouse to Chicago, the storage companies offered to have their employees drive overnight because no
planes were flying. Dennis J. O’Donovan, head of the firm’s technology section, says, “[Disaster recovery seminars]
always prepare you for the worst—people not being available, people not being cooperative; the opposite has
happened.”
 On September 17, firm employees met, and partner Charles W. Douglas told the crowd, “The assets of the law
firm are not the desks in the offices, the woodwork that’s on the walls or the paintings that are hung in the corridors.
The assets of the law firm are its people.” Smith agreed, saying, “Being able to keep the business going is great, but
it’s the people that count.” Employees and partners at Sidley Austin have taken on the added work with few
complaints; many say that work is therapeutic. The lawyers have completed many financial deals on time, believing
that it’s their patriotic duty to continue working as before. Employees claim that the tragedy drew them closer
together, creating intimate friendships. Others are still suffering from stress, and some may choose paid disability
leave, Nancy L, Karen, chief information officer, says the firm has learned a lot about crisis conditions. “We ought
to be able to recover in less than a say next time,” she says, adding with a nervous laugh, “God forbid!” Perhaps
Thomas Cole best asked…if the disaster has been a setback to the full realization of the anticipated benefits of our
merger. I answer that “[b]because of the way few have risen to this challenge together, the most important yet most
elusive goal in any merger integration, namely the creation of a true partnership, occurred overnight.”

References: “About Sidley,” “Our Offices,” “Our Practices,” Sidley Austin Brown & Wood website.
www.sidley.com

Case Questions
1. Using the rational approach to decision making, describe the ways in which these crisis conditions affected each
step of the decision-making process.

2. Based on your answer to question 1, what are some potential problems that firm should be aware of when they
must make decisions during a crisis? What are some steps that firms can take to avoid those problems or to
minimize their negative impact?

3. Due to the extraordinary circumstances in New York City during and just after September 11, many individuals
and firms changed their behavior, acting more altruistically and ethically. In your opinion, why did this occur? Do
you think the change is likely to endure for a long time, or is it only temporary?