Case Study 1.

0: Chilufya Industries
Paul Ngesa could not think of a time in the history of the company when there had
been as much anti-company sentiment among the workers as had emerged in the
past few weeks. He knew that Ackim Chilufya would blame him for problems in
the production division. Paul was supposed to be ‘smoothing the transition’ for
Chilufya’s son Musumadi as manager of the production division. Msumadi had
only recently taken over as production manager of the company (see Table 1.0).
Musumadi was very unpopular with most of the production workers, but the events
of the past weeks had caused him to be resented even more. Anger was so high in
the production division that several foremen had threatened to quit and several
female production workers had not come to work. Their resentment had flared into
an open threat: several female employees were preparing to file a harassment suit
against Musumadi.
The programmes that had caused the worker resentment were instituted by
Musumadi to reduce waste and production costs, but they had produced completely
opposite results. Paul knew that on Monday morning he would have to explain to
Mr Chilufya why the workers had reacted as they had and that he would have to
present a plan to resolve the employee problems, reduce waste and decrease
production costs.
Table 1.0 Lenton organisational chart
President
Mr Chilufya
Assistant
Paul Ngesa
Accounting Engineering Production Marketing Product Design
Musumadi Chilufya
Assistant
Meya Manda
Foreman Foreman Foreman
P. Nampindi N. Mooya G. Nkhoma

Company History
The firm makes integrated circuit boards and wireless modems for several large
clients (Apple, Hewlett-Packard, Acer and RIM). Chilufya purchases all the parts
and assembles the boards for direct shipment to several Asian manufacturers in
China and Taiwan. Chilufya had grown swiftly due to the expansion of its key
customers, which accounted for 90 per cent of Chilufya’s business. When Mr
Chilufya began the business, his was one of a handful of firms building the
products. Recently, several other international rivals in countries with lower labour
costs had started making similar products. One competitor had bid on business
with one of Chilufya’a major customers. Mr Chilufya’s did not know which of his
rivals had entered his market, but he was very concerned about his firm’s rising
production cost structure and was pressuring Ian to increase efficiency and cut
production costs to ensure low bids for all of Chilufya’s major customers.
Conditions before the Cost-Reduction Programmes
A family-type atmosphere had existed at Chilufya before the cost-reduction
programmes were installed. There was little direct supervision, and pressure was
seldom placed on employees to meet production standards. Several employees
worked overtime without supervision, and most employees socialised at lunch and
often played cards together after work. Mr Chilufya was on good terms with all
employees, but he was not perceived by employees as being involved actively in
routine operational decisions. He used Paul as his assistant, and he was responsible
for ensuring that company goals were achieved. Paul had a reputation as a firm
manager who seldom gave in to employee complaints.
Musumadi Chilufya – 25 and recently married – had recently been appointed
as production manager by his father. He supervised employees very closely and
was a stickler for detail in recordkeeping. Most of the production employees
believed that Musumadi was given the job of production manager because he was
the founder’s son. This widespread belief was only reinforced when he pulled
production employees away from their jobs to work on his ‘special projects’,
which were not always related to the work of the firm. Recently, several employees
had completed the installation of an integrated computer, Internet-streaming
service and digital entertainment system at his home.
While Musumadi took great personal interest in the details of recordkeeping,
his interest in personnel matters and production control was lower. He rarely spoke
to employees, and his habit was to leave ‘distasteful’ personnel decisions to his
secretary, Meya Manda.
Three production foremen supervised the repetitive work of 175 employees
who were assigned to three production lines that operated on a 24-hour basis (see
Table 1.0). The foremen had risen through the ranks, and they were sympathetic to
the workers’ complaints that the work was rather monotonous. Despite the nature
of the work, employee–foreman relationships were good. The foremen knew that
the work was monotonous, and so they often looked the other way if employees
took slightly longer breaks, especially if the employees were exceeding production
quotas. In some ways, foremen used the extended breaks as informal rewards.
Nobody questioned the practice even after a new quality control inspector was
hired under Mr Chilufya’s programme to improve quality and cut costs.
New Programmes in Production
Due to declining market share and cost pressures created by global competitors, Mr
Chilufya launched a programme to reduce costs and to control waste. Musumadi
called the foremen together and indicated to them that they would be responsible
for implementing tighter work rules in the two areas noted above. In the meeting,
Musumadi gave each foreman a sheet that summarised his new goals: 1) 10 per
cent higher production quotas, 2) 10 per cent more productivity per labour hour
and 3) 8 per cent lower waste. In addition, each foreman received a new company
handbook that summarised a new system of work rules and disciplinary
procedures. Musumadi ended the one-way meeting by telling the foremen that they
had one week to implement the new programme.
The foremen’s efforts to implement the goals met with immediate employee
resistance. The employees’ reactions were typified by Mary Mwanza, a modem
assembler on Patrick Nampindi’s production line: ‘I don’t get it; Patrick used to be
one of us. He knows how monotonous this work is; why is he being such a tyrant
all of a sudden? Nobody wants to be around him anymore. He complains about
Musumadi and his new production goals. What really ticks me off is we no longer
get to extend our break if we are ahead of the production quota. That really stinks!’
For several weeks there were no improvements in the three targeted areas.
Paul called a meeting with Musumadi and the foremen to announce another new
programme: the production division was going on a four-day, 40-hour work week,
and it was ending all overtime payments to hourly workers. There was
considerable grumbling about the new work hours, especially among the older
workers, who felt 10-hour work days were too long. The younger employees were
indifferent to the four-day work week plan. The suspension of overtime managed
to offend everyone, however. No one supported the plan because many employees
had come to depend on the extra income.
In response to the loss of overtime, employees from each of the production
lines agreed to stage a work slow-down. Hardworking employees who were loyal
to the firm voiced their support for the slow-down, reasoning that ‘the company
can’t fire all of us’. Paul and Musumadi soon observed the effects of the slow-
down, and Musumadi was livid. His response: a further tightening of work rules!
His harsh, new requirements included 1) a loss of half an hour’s pay for each five
minutes of lateness in reporting to work in the morning and after lunch, 2) reducing
breaks from 30 minutes to 15 minutes and 3) a tougher policy that resulted in
dismissal for a fewer number of work infractions.
The new rules drew fire quickly from the employees. For the next two weeks
they flagrantly violated Musumadi new rules and he retaliated by having G.
Nkhoma dismiss two employees under the new discipline system. Other problems
surfaced in Nathan Mooya’s assembly area, where employees slowed down the
pace of work by taking extra time to test circuit boards. Nathan’s employees had
been criticised by Musumadi for lax quality control. And so they had agreed
among themselves to increase the amount of time they spent on board inspection
regardless of its effect on production output.
Before the work slow-down occurred, Nathan had asked Musumadi to help
him design some new standards for quality control, but Musumadi had not done it.
Now employees were following their own quality control guidelines, and it was
hurting production seriously. Paul heard of the problem, and he promised Nathan
that he would meet with the employees and discuss a more workable system for
conducting good board inspection without serious disruption to production rates.
Paul’s Dilemma, As Paul sat at his desk, he gave serious thought to
resigning. The new emphasis on cost and waste control was spiralling badly out of
control. In fact, it was turning into a contest of wills between once loyal and
hardworking employees and Musumadi. His working relationship with Musumadi
was becoming more strained, and he felt as though he could no longer be honest
with the man. Worse, perhaps, was the total deterioration in cooperation between
Musumadi and the foremen, who were ignoring Musumadi’s tightened work rules.
Oscar Mwanakampwe, the company accountant, came into Paul’s office. He
dropped the previous month’s production efficiency and productivity report on
Paul’s desk. Paul flipped the printout to the summary of production figures and
knew instantly that he’d have to call a meeting with Mr Chilufya, Musumadi and
the production foremen. The report showed that new production quotas had not
been met, quality control had deteriorated and productivity per production
employee had declined. These figures indicated that the company was no longer
price competitive. The report also indicated that the decision to hire a quality-
control expert had been a complete failure given the rising cost structure in
production. Mr Chilufya would not be pleased.
Study the case study and attend to the following requirements:
1 What kind of leadership procedures are now needed to resolve the problems in
the production division?
2 Analyse the current problems in production from the standpoint of Mintzberg’s
managerial roles.

20 Marks

Due Date : October 21, 2020