When Anne Woodruff took over as chief executive officer at Tower Plastics, the company was in trouble. Tower had started out as an innovative company, known for creating exciting and popular new products. In two decades, it had become an established maker of plastics for the toy industry. Tower had grown from 15 employees to approximately four hundred employees. Woodruff’s predecessor, Willard P. Barnes, had found the company’s procedures unorganized and had instituted a uniform set of rules for all employees. Since then, manufacturing productivity had steadily declined, and the company’s engineering department had designed fewer new toys each year. When the company’s board of directors hired Woodruff, they emphasized the need to evaluate and revise the company’s formal procedures in an attempt to reverse the trends.

First, Woodruff studied the rules Barnes had implemented. She was impressed to find that the entire procedures manual was only twenty pages long. Woodruff had expected to find evidence that Barnes ran the company with an iron fist. But as she read through the manual, she found nothing to indicate this. In fact, some of the rules were rather flexible. Employees could punch in anytime between 8:00 and 10:00 a.m. and leave nine hours later, between 5:00 and 7:00 p.m. Managers were expected to keep monthly notes on the people working for them and make yearly recommendations to the human resources committee about raises, bonuses, promotions, and firings. Except for their one-hour lunch break, which they could take at any time, employees were expected to be in the building at all times.

Puzzled as to why there was a problem, Woodruff went down to the break room where the research and development people gathered. She was surprised to find a time clock on the wall. Curious, she fed a time card into it and was even more flabbergasted when the machine made a noise and then produced a time card without registering the time. Apparently the Research department was not happy with the time clock and had found a way to break it. When Woodruff looked up in astonishment, only two of the twelve employees who had been in the room were still there. They said the others had "punched back in" when they saw the boss coming.

Woodruff asked the remaining pair to tell her what was wrong with company rules, and she got an earful. The researchers, mostly chemists and engineers with advanced graduate degrees, resented punching a time clock and having their work evaluated once a month, when they could not reasonably be expected to come up with something new and worth writing about more than twice a year. Before the implementation of the new rules, they had often gotten inspiration from going down to the local dime store and picking up five dollars worth of cheap toys, but now they felt they could make such trips only on their own time. And when a researcher came up with an innovative idea, it often took months for the proposal to work its way up the company hierarchy to the attention of someone who could put it into production. In short, all these sharp minds felt shackled.

Concluding that maybe she had overlooked the rigidity of the rules, Woodruff walked over to the manufacturing building to talk to the production supervisors. They responded to her questions with one word: disorganized. With employees coming in any time between 8:00 and 10:00 and then leaving again by 11:00 for lunch, the supervisors never knew if they had enough people to run a particular operation. Employee turnover was high, but not high enough in some cases; supervisors believed the rules prevented them from firing all but the most incompetent workers before the end of the yearly evaluation period. The rules were impossible to enforce.

By the time Anne Woodruff got back to her office, she had a plan. The following week, she called in all the department managers and asked them to draft formal rules and procedures for their individual areas. She told them she wanted to see if they could improve productivity and morale by creating formal procedures for their individual departments.

Do you think Anne Woodruff’s proposal to different rules for different departments at Tower Plastics will work? Why or Why not?

How can the production managers solve the problem of having enough people to run an operation?

How can the research department managers solve the problem of the length of time it takes to get a proposal approved?

What kinds of rules and procedures do you think the production managers and the research department managers will come up with?

What risks will the company face if it has different procedures for different areas?