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Decision Making-Raju's Dilemma

Case Study

Dr.K.Prabhakar,
Velammal Engineering College
prabhakar.krishnamurthy@gmail.com

Electronic copy available at: http://ssrn.com/abstract=1791334

Abstract
This case study describes a real time situation faced by an employee in an
organization. The names and organizations are changed as per request of the
employee. The major focus of this case study is make the reader of the case to identify
a stand and then "own the role" and examines the "implications of the stand or
decision from various dimensions. In this, case an employee who was working in an
Indian firm for long time and had a transition to a multinational organization. He is
very happy with the systems followed by the organization compared to his old
organization. However, when he faced with a situation that is most difficult for him to
work, he wants to change to his old organization. His old organization, which had no
downsizing policy, has picked it up as a strategic alternative to stray competitive. The
reader is expected to solve the dilemma faced by Raju.
Application
This case study will be suitable for students undergoing I year MBA when they are
exposed to all functional areas. Similarly, it is suitable to Human Resources
Practitioners with two to three years of experience.

Objectives of the case


Concepts Involved in the case is "dilemma" faced by a person in a difficult
Human Resources situation. The major objective of this case is to identify decision
problem faced by Raju. For this, the reader has to use analytical skills of exploring the
alternatives and arrive at a decision that has to be justified by him. It the issues such
as approach avoidance conflicts if he is with Wellbonne he has to face downsizing. If
he shifts to Charkraj, he has to face his old colleagues who may not accept him. He
may have to do downsizing or convince his vice president not to downsize. All these
issues have to be brought out by the reader to examine the issues, identify a stand and
adhere to the stand.

Electronic copy available at: http://ssrn.com/abstract=1791334

When Raju was leaving an organization after 20 years, there is anxiety within
him. He was leaving Charkraj to take up a senior job at Wellbonne with a salary jump
of almost double that of what he was getting at Charkraj- going from one successful
company to another successful global firm. He never worked in any other
organization other that Charkraj. Change as if this is making him feel uncomfortable.
When he was given a farewell the Managing Director Dr.Rajesh gave a party to his
family at his residence and gave an open offer to return to Charkraj at any time for all
the good service he has done for the organization. His management knowledge gave
him the idea while changing jobs, "Be very flexible, unlearn what you have learnt, be
alert and prepared, and accept what you are about to learn".
On day one, Raju was told, Wellbonne is a value-driven company. So was Charkraj
thought Raju? What is this value driven? As the days passed by, Raju noticed that at
every stage, each employee was committed to and driven by the vision, mission and
objectives of the organization - and the values. It was total commitment towards the
values that made Raju to feel different. Every communication, every note, every email
and every decision was driven by what Wellbonne stood for - its values. There is a
feel of values in its communications with its employees and customers.

Deliverables was measured against the objectives and then linked to the
values. Every person generally does a value-check, if it is not in tune with the values
of the organization, even if it is a success the process did not justify the achievement:
so people stop and rethink and examine the process. This is the thought process that
worked in the background, encapsulating all thoughts and deeds.
The information is shared and always available across all levels. The
organization has no boundaries and hierarchies. At all level there is no confidentiality
or secret. The Vice President's presentation to South Asia Head is available on the
Intranet, he asked everybody to comment and wanted his or her opinion, and he
personally signed it. At Charkraj, Sr. Manager like Raju does not know even annual
report. Raju never knew what is confidential and what is not confidential. Raju used
to get information from newspapers. When Raju was sales head of a business unit, his

business head never told him what the profit were, how new targets were being
planned. It was all by direction and instruction, no interface and interaction.
What is missing in Charkraj is the attitude of sharing. At Charkraj everyone act like a
unified family, they celebrate events like Diwali, but they were not united in goals
towards organization, one. So if some employee comes up with some idea he kept it
for himself and used for his growth and development. Information was never shared
and his ideas may be passed on as his bosses' ideas and the employee is likely to loose
his position. The organization had 10 business units there are many common factors
with each of the business units. Raju never met other unit chiefs or shared any
information between each of the units. There were secrets, lobbies, groups, and
intrigues.
During training programme at Charkraj, Raju was put through six months in
costing and systems. Raju knew raw materials that go into various products, the cost
of raw material, and how to prepare cost sheets. Later, when Raju became sales head
of the same product, TOPS, the finance manager told him: "X is the cost of
manufacture, Y is the cost of sales, and we are making a 15% margin. This is the
selling price; you have to sell at this price. Raju fresh with his memories at the costing
department has challenged it. In order to compete in the market we need correct data.
Then only pricing can be done appropriately and then craft a position in the market
according to the cost economics is the argument of Raju.

Raju discovered there was a huge difference between what was listed on the
product cost sheet and what was stated on the bill of material. Raju requested the unit
accountant, informed about the total deviation, and wanted further information. The
accountant was visibly annoyed. "Why are you looking at the bill of material and who
gave you access to it and who are you to question all these?" he said. "You are a sales
person and you have no right to examine purchase orders and question them, it is the
work of an auditor." he admonished the factory manager for sharing such information
especially with sales people. The commercial head called Raju and asked about the
problem. Raju explained the need for transparency in costing and how it will help to
build brands. The commercial Head gave a patient hearing and said: "Raju, Just go
and sell... and forget all your training in the costing department. Focus your abilities

and training to examining the deficiencies in the distribution and try to meet those
men in Nainappa Naicken Street to sell; there are many retail outlets where our
products are not available. So pay attention to all that and leave costing to the experts
and never question that, the information is confidential! Above all the accountants are
the people to bother about the profits, you are not! Your job is to sell and motivate
salespersons to meet targets.

Raju realized that this practice was common in the organization. Due to this
reason despite some strong brands, Charkraj was pushed down in the marketplace by
local brands. Because it was taking the price up without proper planning of costs.
Now, if values were the drivers, information sharing and transparency are the drivers
for Charkraj then if value audit has been conducted, the organization would have built
better brands. But such needless confidentiality and smudging of figures was also
affecting the perception of the sales force, who believed that our products were not as
good as those of the competition or somebody in the Management is making money.
However in the sales meetings the chiefs push the sales force and even condemn them
for lethargy, inefficiency, and slow movement, misplaced emphasis. Bonuses and
increments of these people were reduced, as a penalty for poor performance - the
effect is poor moral, poor performance and even poor personal lives! Raju has to
accept the self appointed custodians of profitability of organization, the accountants.
At Wellbonne, anyone can just log on to the Intranet and access all data about the
products. The difference between Charkraj and Wellbonne is apparent.

The readiness to be open is also visible in its daily communication at Wellbonne,


which means there never is a situation where you have to do something without
knowing why. At Charkraj, people spoke to Raju, discussed his work, congratulated
him, and hiked him off, if things went wrong, but no one communicated or had a
dialogue with Raju. You can always go to your superior and say, "I think the price of
this product is overstated." The most probable the boss reply, "Maybe, but you do
your work...leave costing to the experts..." He probably may not explain all, but may
say, "Yes, we have a high price structure for the following reasons...let me explain
what our strategy is..." there is "talk" but no communication.

Charkraj went through a number of brand buyouts, yet not once did anyone talk to
Raju or any senior managers and his team about it. Newspapers and gossip is the only
source of information. Sometimes the official price is X amount, and actual price is Y
and the rest has gone to the pocket of Managing Director or to his relatives. No
communication of any kind would come. This is totally different at Well borne. If
they are in the process of buying new brand, everyone used to receive at least two
emails updates a day. Everyone has the same access to information. Internally, we all
know that there are lobbies blocking the deal, what questions they are asking, what
counter offer have been made to complete the deal, and so on. Every third day, the
chairperson tries to keep everyone informed.

At Charkraj, even commercial executives were not aware that the firm was in
the process of divesting a brand. Having seen openness, Raju was aghast. At old
method of secrecy of objectives at Charkraj, let alone organization objectives, Raju's
objectives were told to him late into the year. Raju cannot even imagine any of his
bosses discussing their goals and objectives with him! At Wellborne, the walls are
plastered with global objectives, their Indian country head's objectives, regional
head's objectives, and world chairperson's objectives. This way every one knows each
team's objectives, and in such a way, that each sees how his contribution links up to
total organization goals! People are encouraged to see what their chairman is thinking;
directionally this is what the Indian business is aiming for and we would like you to
orient your work in that direction for the year is the message Wellbonne wants to
diffuse.

At Charkraj, there was no attempt to be transparent. If anything, everything was so


couched in obscurities that it confused, rather than communicated. Many senior
mangers would mention, "There are many buffers operating at various levels, so any
goal stated can straightaway be discounted by 40%!" Even if the sales person is short
by 40% of target, the boss meets his target. The organization meets its targets even if
the bosses meet 50%of the targets. Therefore, at every level there is no transparency
and distrust. When a person joins an organization, they should not be trusted. At any
time, an employee is likely to cheat organization and we have to constantly look for
any weaknesses and exploit them! However, never sack them, keep them and keep
watching them. You are paid to watch them and correct them.

The vision at Wellbonne is "Values drive behavior and behavior drives bottom
line". Trust all unless proved otherwise", this makes a lot of sense. The values
propagated at Charkraj are "goals at any cost." The behavior that this value
perpetrates is desperation to meet objectives with poor commercial practices, leading
to a desire to be non-transparent, non-trusting and, consequently, irrational demands
not backed by reason or method. The result of this system of values is Short-term
gains, sub optimal gains, poor long-term health. It is like managing a leaking faucet. If
you start mopping the floor without first shutting it off, the problems is not going to
go away.

At Charkraj, everybody was encouraged to be a visionary, everybody can talk.


Nevertheless, Raju realized that there were few missionaries, few doers. In
Wellbonne, there is one visionary and everyone else is missionary. All shares the
strategic intent. So there is one message that is consistently followed down the line.
Take quality. There is no one at Wellbonne who doubts our Work back to Check.
WBC (work back to check) is similar to GE's Six-Sigma. In fact, it is brought from
that philosophy. Chairperson of Wellbrone spent three months drafting it, visualizing
it, and another three months visiting every office around the world to explain the need
for the programme. Once he had done that, it became religion. One visionary gives
the WBC and it now has the following of workforce the world over!

In Charkraj, people endlessly debate every concept. Partly, that comes out of
the organizational philosophy that encourages everyone to question everything. The
essence of that philosophy was to encourage contributive thinking and improvisation.
But slowly it degenerated into a kind of questioning everything. It is being used as a
tool to get rid of pent-up emotions by trying to blame everything for lack of focus.
The culture is aggression. In addition, it works complementarily. For example, when
our sales director recommended a new distribution method, each of us argued,
debated and conflicted. On the other side, it came to a stage, where the sales director
gave an ultimatum do it or leaves organization. Within three weeks, the new system
was in place.

Therefore, what comes first? The democratic style, which allows all and
sundry to debate? Alternatively, the opposite of it, which causes resistance to change?
At Charkraj, argument was invariably followed by an order. Unfortunately, it worked.

At Wellbonne, Raju was facing a completely different style. The system was
democratic. However, democracy did not lead to mindless arguments or resistance.
Neither was it autocratic in enabling change. Raju have not seen people getting
anxious or vicious; At Charkraj, it is always giving orders? Shouting and bad
language are the outcomes of discussions. Nevertheless, not in Wellbonne. Why?

Raju remembered his stressful days at Charkraj. He had objectives, sometimes


day-to-day objectives, which were tough. He had subordinates who resisted, debated,
argued. He had seniors who were autocratic, non-transparent, and wielded the stick
round the clock. His body language was aggressive. He carried a constant feeling of
persecution, existential fear, and excessive aggression. He had constant problems with
time planning, impatience obviously; he had constant problems with digestion and
sleep.

Charkraj is a successful firm. Its share prices are going up and even in worst days, it
never saw any downturn. The chief is respected in various industry associations. What
makes Charkraj successful in business, even with all the ailments that are given? It
has a HR system, excellent training programmes, very good recruitment processes
and, a very low staff turnover! It is a company on the ball, energetic, performancedriven, hard working, high on ethics and business practices (to outside world), good
managers...

At Wellbonne, Take something like error management. If there is a breakdown


of a process, a manger is expected to walk through the sequence of events with the
operating subordinate and see where the breakdown occurred. "Why this has
happened?" Not "Who did it?" What caused it? Can it happen again? And what steps
do we take to ensure that it does not happen again." Once it has identified that, people
will set about rectifying the process defect using WBC. Which means a team of four
will brainstorm; does a transaction audit of the actual transaction process that failed,
redefine the control or process objectives, and analyze the sequence of events? There

will never be a reactive defect fixing. The repair has to render the system robust for a
longer term. The process, naturally, identifies the human that erred or acted in haste;
he or she will then be evaluated on deliverables and values. If it was process defect
and not human error, which happen 90% of the time, life goes on for that person. But
if he, or she, is found wanting in values, the person will be asked to leave.

At Charkraj, all failed situations entirely attributed to human error! For


example, nobody asks, "Why isn't Product K selling? Why is the consumer not
buying...?" Somebody simply concludes that the salesman is not doing his job, and the
manager is inefficient. No, he will not be sacked, but he will be continuously bullied.
So, is it just a matter of time before Charkraj learns to change? Therefore, how is
Charkraj is successful despite being so different from companies like Wellbonne? The
success is not measured quantitatively; both companies have completely different
businesses, different market behaviours and different sizes. The difference is that
Charkraj has been around 50 years; Wellbonne came in 30 years ago. Charkraj is
FMCG, Well borne in durables, Charkraj was born and brought up in India from the
days of license, government interference and unappreciative era of the 40s and 50s,
Wellbonne was born in the US during the 70s. Charkraj had the typical, hard Indian
childhood, frugal means, and tough economy, corrupt and license obsessed
government, lots of hard work and tremendous determination, and not much public
adulation in its growing years. In contrast, Wellbonne lived well, had adequate means,
encouraging and supportive government, energetic environment that praised effort
generously, and a fair share of media adulation.

Will it be wrong in saying that Charkraj continues to live in the memory of a


tough childhood? That its beliefs on people management and operations management
are a legacy of other times? Any change now is likely to bring down the substructure
as it is built on different premises? Now that it has crossed the threshold and looking
towards global economy, should it do it differently?

Year 2002
Due to recession in Indian market and competition from Korean Majors made
Wellbonne to rethink its strategy. Its profitability started coming down. It posted loss

for second consecutive year. Well borne appointed a consultant to look into its
operations. One of the major suggestions of the consultant is to downsize the
organization by 30% every year for next two years. Outsourcing of some of the
services, such as customer interface, logistics etc. Many of the employees who are
performing well has to be given pink slip with two months salary as economy is down
and HQ is unable to support wage bill. Raju has been identified by organization to put
the plan into action. Raju started wondering what happened to the words "Value
driven, Corporate Ethic etc. He challenged the consultant and one of his senior
managers regarding the solution given. They said it is the method followed by
organization in all its operations globally. The manager told that we are in globalized
market economy and we have to accept these mantras. Raju felt very unhappy about
it. At Charkraj never this kind of solutions are put into practice. Even if there is no
profit it was shouting and passing bucks but not loosing jobs and colleagues.
Suddenly he started feeling lonely. Since he is responsible for downsizing, every one
the organization started looking at him differently. It is a totally different experience
for Raju. Raju took leave for three days and wanted to be at his native place for
sometime to feel good. At the airport, he happened to meet Dr. Rajesh, his past
employer. The IC flight was delayed for three hours and both Dr.Rajesh and Raju had
time to sit together and discuss. Raju told Dr.Rajesh about the value driven attitude of
his company and how it helped to build brands. Dr. Rajesh also was thinking in same
terms after his training programme at Harvard Business School. He asked Raju
suggestions to improve the processes in Charkraj. Raju's suggestions were well taken
by him. During the conversation, Dr.Rajesh requested Raju to come back and be a
change agent in Charkraj. The advantage is Raju knows the strengths and weaknesses
of the organization and improves it to world standards. His experience in Wellbonne
can be utilized. Dr.Rajesh told him, Raju can use his MNC experience to improve an
Indian organization and it is nothing wrong in leaving a MNC to help an Indian
organization. Raju started thinking. Why not join and improve Charkraj? It fed him
for twenty years. He is with Wellbonne only for three years. He has to do the
unpleasant task of downsizing. Raju asked him time to think for a week to reply.
While leaving for his flight, Dr. Rajesh mentioned about his training at Harvard. He is
fascinated by the GE way. He told Raju over a long period of time lot of inefficiency
has accumulated in Charkraj. He was convinced that bottom 20% of the employees
have to be removed every year to keep the organization healthy and growing in

shareholder value. He wanted him to take up the role of downsizing the organization
and make it mean and lean.
Raju bid goodbye to Dr.Rajesh. Raju is thinking.

Questions
I) what is the central issue to be addressed in this case?
2) If you were to be Raju what decision you will take?
3) Please indicate how you will justify decision of Raju as suggested by you.
4) Do you agree with the downsizing philosophy of Wellbonne because everybody
worked according to organization directions?