Case Study

Alvis Corporation

Kevin McCarthy is the manager of a production department in Alvis Corporation, a firm that manufactures office equipment. After reading an article that stressed the benefits of par- ticipative management, Kevin believes that these benefits could be realized in his department if the workers are allowed to participate in making some decisions that affect them. The workers are not unionized. Kevin selected two decisions for his experiment in participative management.

The first decision involved vacation schedules. Each summer the workers are given two weeks’ vacation, but no more than two workers can go on vacation at the same time. In prior years, Kevin made this decision himself. He would first ask the workers to indicate their preferred dates, and he considered how the work would be affected if different people were out at the same time. It was important to plan a vacation schedule that would ensure adequate staffing for all of the essential operations performed by the department. When more than two workers wanted the same time period and they had similar skills, he usually gave preference to the workers with the highest productivity.

The second decision involved production standards. Sales had been increasing steadily over the past few years, and the company recently installed some new equipment to increase productivity. The new equipment would allow Kevin’s department to produce more with the same number of workers. The company had a pay incentive system in which workers received a piece rate for each unit produced above a standard amount. Separate standards existed for each type of product, based on an industrial engineering study conducted a few years earlier. Top management wanted to readjust the production standards to reflect the fact that the new equipment made it possible for the workers to earn more without working any harder. The savings from higher productivity were needed to help pay for the new equipment.

Kevin called a meeting of his 15 workers an hour before the end of the workday. He explained that he wanted them to discuss the two issues and make recommendations. Kevin figured that the workers might be inhibited about participating in the discussion if he were present, so he left them alone to discuss the issues. Besides, Kevin had an appointment to meet with the quality control manager. Quality problems had increased after the new equip- ment was installed, and the industrial engineers were studying the problem in an attempt to determine why quality had gotten worse rather than better.

When Kevin returned to his department just at quitting time, he was surprised to learn that the workers recommended keeping the standards the same. He had assumed they knew the pay incentives were no longer fair and would set a higher standard. The spokes- man for the group explained that their base pay had not kept up with inflation and the higher incentive pay restored their real income to its prior level.

On the vacation issue, the group was deadlocked. Several of the workers wanted to take their vacations during the same two-week period and could not agree on who should go. Some workers argued that they should have priority because they had more seniority, whereas others argued that priority should be based on productivity, as in the past. Since it was quitting time, the group concluded that Kevin would have to resolve the dispute himself. After all, wasn’t that what he was being paid for?

QUESTIONS

1. Analyze this situation using the Hersey–Blanchard model and the Vroom–Jago model. What do these models suggest as the appropriate leadership or decision style? Explain.

2. Evaluate Kevin McCarthy’s leadership style before and during his experiment in partici- pative management.

3. If you, were Kevin McCarthy, what would you do now? Why