MARKS: 80

SUB: ORGANIZATIONAL BEHAVIOUR

N. B.: 1) Attempt any Four cases2) All cases carry equal marks.

No: 1

Albertsons is a huge grocery and drug company. It has

more than 2,400 supermarkets, and it’s Osco and Sav-on brands

make it the fifth-largest drugstore company in the U.S. In a

typical year, shoppers will make 1.4 billion trips through its

stores.

Albertsons competes in tough businesses. Wal-Mart, in

particular, has been eating away as its market share. In 2001,

with revenues flat and profits falling, the company hired Larry

Johnston to turn the business around.

Johnston came to Albertsons from General Electric. And it

was while he was at GE, that Johnston met a training specialist

named Ed Foreman. Foreman endeared himself to Johnston

when the latter hired Foreman to help him with a serious

problem. At that time, Johnston had been sent to Paris to fix GE

Medical Systems European division. The division made CT

scanners. Over the previous decade, four executives had been

brought in to turn the division around and try to make it

profitable. All had failed. Johnston responded to the challenge

by initiating some important changes – he made a number of

acquisitions, he closed

down inefficient plants, and he moved factories to Eastern

European Countries to take advantage of lower labor costs.

Then he brought in Ed Foreman to charge up the troops. “After

we got Ed in,” says Johnston, “people began to live their live

differently. They came to work with a spring in their step.” In

three years, the division was bringing in annual profits of $100

million. Johnston gives a large part of the credit for this

turnaround to Foreman.

What is Foreman’s secret? He provides motivation and

attitude training. Here’s an example of Foreman’s primary

program – called the Successful Life Course. It lasts 3 days and

begins each morning at 6 A.M. The first day begins with a

chapter from an inspirational handout, followed by 12 minutes of

yoga – like stretching. Then participants march up a hill,

chanting, “I know I can, I know I can.” This is followed by

breakfast and then a variety of lectures on attitude, diet and

exercise. But the primary focus of the program is on attitude.

Says Foreman, “It’s your attitude, not your aptitude that

determines your altitude.” Other parts of the program include

group hugs, team activities, and mind-control relaxation

exercises.

Johnston believes strongly in Foreman’s program. “Positive

attitude is the single biggest thing that can change a business,”

says Johnston. He sees Foreman’s program as being a critical

bridge linking employees with customers. “We’re in the

business of the maintenance and acquisition of customers.” And

with so many shoppers going through his stores, Johnston says

this, “provides a lot of opportunities for customer service.

We’ve got to energize the associates.” To prove he’s willing to

put his money where his mouth is, Johnston has committed $10

million to this training. By the end of 2004, 10,000 managers

will have taken the course. They in turn, will train all 190,000

Albertsons “associates”, with the help of tapes and books.

Foreman claims his program works. He cites success at

companies such as Allstate, Milliken & Co. and Abbott Labs.

“The goal is to improve mental,

physical, and emotional well-being.” he says. “We as individuals

determine the success of our own lives. Positive thoughts

create positive actions.”

Questions:

1. Explain the logic as to how Forman’s 3-day course could positively influence Albertson’s profitability.2. Johnston says, “Positive attitude is the single biggest

thing that can change of business.” How valid and generalizable do you think this statement is?

3. If you were Johnston, what could you do to evaluate the effectiveness of your $10 million investment in Foreman’s training program?4. If you were an Albertson’s employee, how would you feel about going

through Foreman’s course? Explain your position?

No. 2

Mahendra Singh loves what he does. He just isn’t crazy

about how others see him. Singh is the owner of J & J

Automotive Sales, a used car dealership in Karol Baugh, West

Delhi, with about 30 cars on his lot any time.

“Used-car dealer’s deal with a pretty bad reputation,” says

Singh. Just why, he isn’t sure. He didn’t realize there was such

a stigma attached to used-car dealers until he opened his

dealership in 1997. “At Diwali, when family members would ask

what I was doing, I’d tell them, and they’d ask me why I’d want

to do that.

Regardless of the public’s impression of used-car dealers,

Singh loves his business. He enjoys being his own boss. He

likes being the sole salesman on his lot. He realizes the

diversity of his work – he does everything from buying the

vehicles, to fixing them up to sell, to helping buyers arrange

financing. And, very importantly, Singh likes the opportunity to

work with customers, “There are a thousand guys out there

selling cars who are better at selling than I am,” Singh says.

“I’m more interested in having a relationship.

One of Singh’s strengths is that he loves cars. It’s in his

blood-his father worked for a new-car dealer and frequently

traded the family’s cars. Singh believes his intimate knowledge

of cars makes it easier for him to sell them. “I can tell you

whether the car has 75 percent of its brake pad left or if the

brake pads are new, because I did it.”

To build a meaningful relationship with a customer, Singh

has to overcome the stereotype of a used –car sales-man. He

thinks this might be coming from the hard-sell techniques used

by some in his

business. “ I don’t think it would take a customer long to get

jaded if they’re out shopping for a car. That is a hard thing to

overcome.”

It’s frustrating to Singh when potential customers are him as

just another shady salesman. Because he works hard to build a

customer’s trust, it hurts him when he realizes that he’s failed.

“If they (customers) question my integrity that is the hardest

thing.”

Questions:

1. Explain how you think the stereotype of used-car dealers developed 2. What, if anything different, can Singh do to counter this Stereotype?3 In what ways might this stereotype be beneficial to

Singh? To potential customers?

NO. 3

Nafis Wadia is facing a dilemma. And he’s not alone. Like

many managers, Nafis is struggling to find creative ways to keep

his employees motivated.

Nafis is CEO of a robotics’ manufacturing firm located in the

Bangalore. The company prospered in the 1990s – sales

revenue nearly tripled and the company’s workforce doubled.

The price of the company’s stock rose from under Rs. 200 a

share to more than Rs. 3000. And his employees prospered

because the firm had a pay –for-performance compensation

system. Specifically, every year, 20 percent of the company’s

profits were set aside in a bonus pool and used to reward

employees. Profit sharing provided the typical employee with an

extra Rs. 5.5. lacs in 1998 and Rs. 8.4 lacs in 1999. Then it

dropped to just Rs. 2 lacs in 2000. The company lost money in

2001 and 2002, so there were no profits to share. Meanwhile,

Nafis’s executive team was not spared from watching their profit

– sharing bonuses disappear. The average executive bonus in

1999 was over Rs. 150 lacs. Like the company’s operating

employees, in 2001 and 2002, executives got nothing over and

above their basic salaries.

Nafis’s situation seems to be common among many firms.

While employees in 2002 and 2003 were often glad to just have

a job, the incentives they enjoyed in the 1990s were eroding.

For instance, many companies suspended contributions to

salaried employee’s retirement plans and merit raises for about

hundreds of senior executives; others froze wages and cut

senior managers’ pay by 5 percent; and some eliminated profit

sharing. A 2002 survey of 391 companies found that 48 percent

planned to lower performance – based rewards for both

managers and workers in the next 12 months.

Questions:

1. What implications can you draw from this case

regarding pay – for– performance?

2. If you were Nafis, what can you offer employees as

an alternative to compensation that will not place an

undue hardship on your organization’s bottom line?

Be specific?

NO. 4

Raj Gopalan, Anil and Deepshikha have something in

common. They all were promoted within their organizations into

management positions. And each found the transition a

challenge.

Raj Gopalan was promoted to director of catering for the

Sagar Group of restaurants in New Delhi. With the promotion,

he realized that things would never be the same again. No

longer would he be able to participate in water-cooler gossip or

shrug off an employee’s chronic lateness. He says he found his

new role to be daunting. “At first I was like a bulldozer knocking

everyone over, and that was not well received. I was saying,

‘It’s my way or the highway.’ And was forgetting that my friends

were also in transition.” He admits that this style alienated just

about everyone with whom she worked.

Anil, a technical manager at Satyam computers, talks about

the uncertainty he felt after being promoted to a manager from

a junior programmer. “It was a little bit challenging to be

suddenly giving directives to peers, when just the day before

you were one of them. You try to be careful not to offend

anyone. It’s strange walking into a room and the whole

conversation changes. People don’t want to be as open with

you when you become the boss.”

Deepshikha is now president of Maxlife Insurance, Mumbai.

She started as a customer service representative with the

company, then leapfrogged over colleagues in a series of

promotions. Her fast rise created problems. Collegues “would

say, ‘Oh, here comes the big cheese now.’ God only knows what

they talked about behind my back.”

Questions:

1. A lot of new managers err in selecting the right

leadership style when they move into management.

Why do you think this happens?

2. What does this say about leadership and leadership

training?

3. Which leadership theories, if any, could help new

leaders deal

with this transition?

4. Do you think it’s easier or harder to be promoted

internally into a formal leadership position than to

come into it as an outsider?

Explain.

NO. 5

For 32 years, Southwest Airlines has used the same formula to

maintain its position as the most profitable airline in the U.S. It

offers low fares, high-frequency fights, and good service; it files

only Boeing 737 s; it doesn’t offer connecting flights, reserve

seating; or free meals; it often relies on less expensive,

secondary airports; and it prides itself on having the hardest-

working and most productive employees in the industry. The

company believes its true competitive advantage is its

workforce.

Most of the major airlines ‘cost per seat-mile is nearly 100

per cent higher than Southwest. The company gets this cost

advantage by paying its pilots and flight attendants considerably

less than the competition and having them fly more hours. It

has made up for the lower pay with generous profit sharing and

stock option plans. In addition, because of Southwest’s rapid

growth, it has provided its employees with something rare in the

airline industry; job security. Because a large portion of a

Southwest employee’s compensation comes in the form of stock

options, they have worked harder and more flexibly than their

peers at other airlines. For instance, pilots will often help

ground crew move luggage and work extra hard to turn plane

around fast. Of course, many Southwest employees originally

joined the company and have stayed because of its spirit of fun.

The company has always encouraged employees to work hard

but to also have a good time. A sense of humor, for instance,

has long been a basic criterion in the selection of new

employees.

In the last couple of years, the environment has been

changing for Southwest. First, it faces a number of new, upstart

airlines in many of its markets. JetBlue, Frontier, Air Trans, Song

and Ted are matching Southwest’s low prices but offering

benefits like reserved seating and free live-satellite T.V. They’re

able to do this because they have newer, more fuel-efficient

planes and have young, lower paid workforces. In many

markets, Southwest’s planes and

service look dated. Second, the declining stock market of 2001 -

02 took much of the air out of Southwest’s stock. The

company’s stock option plan no longer looked so attractive to

employees. Third, Southwest has to deal with the reality that it

is no longer the underdog. For decades, employees enjoyed the

challenge of competing against United, American, Delta and

other major airlines. They loved the role of being the underdogs

and having to work harder to survive. Southwest’s employees

are increasingly vocal and aggressive in demanding higher

wages and shorter hours. In the past, workers were willing to go

beyond the call of duty to help the airline thrive. It’s harder for

management to motivate employees now by portraying the

airline as the underdog. Finally, as the company has grown and

matured management ha s become more remote from the rank

and file. When the company had a few hundred employees, it

was easy for management to communicate its messages. Now,

with 35,000 workers, it’s much tougher.

Southwest’s management realizes that times have changed.

Now they face the question of whether they need to make

changes in their basic strategy and, if they do, the effect it will

have on the company’s culture. For instance, in the fall of 2003,

the company was considering adding in –flight entertainment,

although it would cost millions to install and many more millions

to maintain; and purchasing smaller jets to maintain

competitiveness in smaller markets. The operating costs of

these smaller jets would be 15 to 25 percent higher than those

of its current fleet.

Questions:

1. What has sustained Southwest’s culture?

2. Do you think upstart airlines can successfully

duplicate this culture?

3. No longer the underdog, what can southwest’s

management do to retain its high-productivity

culture?

4. What does this case imply about sustaining culture in

a changing environment?

NO. 6.

Mark Colvard, a United Parcel manager in San Ramon, California,

recently faced a difficult decision. One of his drivers asked for

two weeks off to help an ailing family member. But company

rules said this driver wasn’t eligible. If Colvard went by the book,

the driver would probably take the days off anyway and be fired.

On the other hand, Colvard, was likely to be criticized by other

drivers if he bent the rule. Colvard chose to give the driver the

time off. While he took some heat for the decision, he also kept

a valuable employee.

Had Colvard been faced with this decision six months

earlier, he says he would have gone the other way. What

changed his thinking was a month he spent living in McAllen,

Texas. It was part of a UPS management training experience

called the Community Internship Program (CIP). During his

month in McAllen, Colvard built housing for the poor, collected

clothing for the Salvation Army, and worked in a drug rehab

center. Colvard gives the program credit for helping him

empathize with employees facing crises back home. And he

says that CIP has made him a better manager. “My goal was to

make the numbers, and in some cases that meant not looking at

the individual but looking at the bottom line. After that one-

month stay, I immediately started reaching out to people in a

different way.”

CIP was established by UPS in the late 1960s to help open

the eyes of the company’s predominantly white managers to the

poverty and inequality in many cities. Today, the program takes

50 of the company’s most promising. Executives each summer

and bring them to cities around the country. There they deal

with a variety of problems – from transportation to housing,

education and health care. The company’s goal is to awaken

these mangers to the challenges that many of their employees

face, bridging the cultural divide that separates a

white manager from an African-American driver or an upper-

income suburbanite from a worker raised in the rural South.

Questions:

1. Do you think individuals can learn empathy from

something like a one month CIP experience? Explain.

2. How could UPS’s CIP help the organization better

manage work / life conflicts?

3. How could UPS’s CIP help the organization improve

its response to diversity?

4. What negative, if any, can you envision resulting

form CIP?

5. UPS has 2,400 mangers. CIP includes only 50 each

year. How can the program make a difference if it

includes only 2 percent of all mangers? Doesn’t

this suggest that the program is more public

relations than management training?

6. How can UPS justify the cost of a program like CIP if

competitions like FedEx, DHL, and the U.S. Postal

service don’t offer such programs? Doesn’t this

increase costs or reduce UPS profits?