When preparing your response, take into consideration the following issues: Leadership and Motivation Workplace Communication Conflict Management Compensation and Benefits Administration

Practical Management Science
6th Edition
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
Chapter9: Decision Making Under Uncertainty
Section: Chapter Questions
Problem 30P
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As the Manager -Legal Services, advise on the course of action that should be taken to protect the financial situation and stability of Tuff Technologies Limited. When preparing your response, take into consideration the following issues:

  • Leadership and Motivation
  • Workplace Communication
  • Conflict Management
  • Compensation and Benefits Administration
However, the long term results of the new measures had a negative impact on staff, namely:
Disgruntled middle management who previously enjoyed a certain level of autonomy. There
were rumours of at least 4 out of 10 managers planning to leave for the competitor.
Additionally, there were complaints of not feeling appreciated for their efforts in turning
around the company.
• Complaints by the union that none of the company's success was being passed on to the
workers. The union demanded an increase in vacation days from 11 standard working days
(Monday to Friday) to 15 working days and an increase in salary by 8 percent. The last increase
was in 2000 of 5 percent.
• Employees were displeased and confused about the direction of the company. Staff were only
notified of the appointment of the new EVP and Executive Team one (1) week prior to their
assumption via the company's newsletter. The usual Town Hall meeting used to discuss
company changes was not held to allow employees the opportunity to ask questions and seek
clarification.
Transcribed Image Text:However, the long term results of the new measures had a negative impact on staff, namely: Disgruntled middle management who previously enjoyed a certain level of autonomy. There were rumours of at least 4 out of 10 managers planning to leave for the competitor. Additionally, there were complaints of not feeling appreciated for their efforts in turning around the company. • Complaints by the union that none of the company's success was being passed on to the workers. The union demanded an increase in vacation days from 11 standard working days (Monday to Friday) to 15 working days and an increase in salary by 8 percent. The last increase was in 2000 of 5 percent. • Employees were displeased and confused about the direction of the company. Staff were only notified of the appointment of the new EVP and Executive Team one (1) week prior to their assumption via the company's newsletter. The usual Town Hall meeting used to discuss company changes was not held to allow employees the opportunity to ask questions and seek clarification.
Tuff Technologies Limited is a plastic manufacturer operating in North America and Canada. Tuff
Technologies was founded in 1991 and specializes in the development and manufacturing of
diversified plastic materials with annual sales of $100 million. Tuff Technologies Limited employs a
total of 230 employees and has one branch each in Canada and Texas. This study focuses on the
operations of the plant located in Canada.
In 2001, the Canadian plant experienced serious financial losses owing to a declining demand for its
product in the face of mounting competition. The company was also subject to a strike that halted
operations for two (2) months in 2000. The union was not pleased with the existing working conditions
and with rates of remuneration as they were not competitive with industry standards. Initially,
Executive Management considered closing its operations as the Canadian plant was operating at a loss
and the actions of the union further exacerbated its financial situation. However, this was
reconsidered and the following measures were implemented:
• Nomination of a new Executive Management team responsible for improving the financial
situation from losses to a satisfactory level of profitability.
• Create better relations with the unions and the employees. The strike resulted in tense
management relations that diminished job satisfaction and the level of employee
engagement. The company conducted a job satisfaction survey and customer satisfaction
survey which revealed:
o Factory employees were not motivated to help in trouble shooting machine
malfunctions. The result was an increased machine maintenance cost and longer lead
times between manufacturing and delivery. Standards of performance for
manufacturing to delivery were not being met.
o Reduced discretionary effort by the sales staff and increased customer complaints.
o Low level of participation in any non-work related activities such as, Games Night and
the Annual Staff picnic.
Nomination of a new Executive Vice-President (EVP), Francis Noel to manage the Tuff
Technologies Limited (Canada) operations with a clear mandate to rapidly generate profits
within a one-year timeframe.
The EVP adopted the approach that all decisions were to be made by him only and also critically
reviewed previous decisions that challenged the current way of operating. This approach was opposite
to that adopted by the previous EVP Jane Cummings who sought consensus from the Executive
Management Team before making decisions and trusted Management as subject matter experts able
to make decisions in their areas of operation.
The Executive Management team was concerned with the negative consequences of implementing a
more tightly controlled leadership style. The leadership style challenged every previous decision
resulting in a lowered level of trust and reduced management autonomy. Despite this potential
negative consequence, top management came to the conclusion that they had no choice, but to
implement this tight control approach to achieve the financial turnaround objectives that would
hopefully result in a successful at the close of the fiscal year 2002.
At the end of the first quarter of 2002, there was a turnaround in the company's financial situation
allowing it to break even and then make a 10 percent profit at the end of the third quarter. Tuff
Technologies Limited was even able to revisit its plans for expansion.
Transcribed Image Text:Tuff Technologies Limited is a plastic manufacturer operating in North America and Canada. Tuff Technologies was founded in 1991 and specializes in the development and manufacturing of diversified plastic materials with annual sales of $100 million. Tuff Technologies Limited employs a total of 230 employees and has one branch each in Canada and Texas. This study focuses on the operations of the plant located in Canada. In 2001, the Canadian plant experienced serious financial losses owing to a declining demand for its product in the face of mounting competition. The company was also subject to a strike that halted operations for two (2) months in 2000. The union was not pleased with the existing working conditions and with rates of remuneration as they were not competitive with industry standards. Initially, Executive Management considered closing its operations as the Canadian plant was operating at a loss and the actions of the union further exacerbated its financial situation. However, this was reconsidered and the following measures were implemented: • Nomination of a new Executive Management team responsible for improving the financial situation from losses to a satisfactory level of profitability. • Create better relations with the unions and the employees. The strike resulted in tense management relations that diminished job satisfaction and the level of employee engagement. The company conducted a job satisfaction survey and customer satisfaction survey which revealed: o Factory employees were not motivated to help in trouble shooting machine malfunctions. The result was an increased machine maintenance cost and longer lead times between manufacturing and delivery. Standards of performance for manufacturing to delivery were not being met. o Reduced discretionary effort by the sales staff and increased customer complaints. o Low level of participation in any non-work related activities such as, Games Night and the Annual Staff picnic. Nomination of a new Executive Vice-President (EVP), Francis Noel to manage the Tuff Technologies Limited (Canada) operations with a clear mandate to rapidly generate profits within a one-year timeframe. The EVP adopted the approach that all decisions were to be made by him only and also critically reviewed previous decisions that challenged the current way of operating. This approach was opposite to that adopted by the previous EVP Jane Cummings who sought consensus from the Executive Management Team before making decisions and trusted Management as subject matter experts able to make decisions in their areas of operation. The Executive Management team was concerned with the negative consequences of implementing a more tightly controlled leadership style. The leadership style challenged every previous decision resulting in a lowered level of trust and reduced management autonomy. Despite this potential negative consequence, top management came to the conclusion that they had no choice, but to implement this tight control approach to achieve the financial turnaround objectives that would hopefully result in a successful at the close of the fiscal year 2002. At the end of the first quarter of 2002, there was a turnaround in the company's financial situation allowing it to break even and then make a 10 percent profit at the end of the third quarter. Tuff Technologies Limited was even able to revisit its plans for expansion.
Expert Solution
Step 1

For a company to survive and grow, the management control systems should be designed to provide timely inputs and adequate standards and actionable steps to overcome deficiencies. However, when there are significant challenges to the functioning of the company that result in adverse results such as financial losses, employee turnover, and so on, it would be better to look at address those challenges by modifying the management control systems. 

Tuff Technologies Limited, has a pan-North American operation and has been facing challenges in one of its geographical locations - Canada. The continuing financial losses and escalating employee relations made the company attempt to tackle these issues with a change in the executive management. The company has had some success in a turnaround of its financial results in the first quarter of 2002. This has been brought about by a complete change in the management style of the new EVP, who has adopted more centralization in decision-making. The company's union is unhappy as also managers who are looking to part ways with the company.

There is thus a need to address the non-financial issues in a constructive and collaborative manner so that the employees in the Canada branch can feel happier working for Tuff.

The Manager - Legal services could provide the following steps for improving the current situation:

1. The first and foremost step should be to improve communication and provide information in a transparent and timely manner. The townhalls should be restored and used as the forum to inform employees of the challenges that the company faces and the tough decisions needed to be made. It is also necessary to reassure employees that their jobs would be protected and their opinions would be sought in matters that affect them although vindictive or disrespectful comments would not be encouraged. If the townhalls cannot be held, managers should be allowed to conduct brief floor meetings to discuss their departmental changes. The employee concerns across departments can then be consolidated and presented to the higher management. In any case, constant communication is necessary and the newsletter cannot be used as the only avenue.

2. The management style of the new executive should be accommodative of the culture of Tuff, which has been one of collaboration. Therefore, while proposing any new decisions, it is necessary to take the managers into confidence and convince them of the necessity of those decisions. They should be empowered to suggest alternatives through better process control, cost management, and so on. Managers should be allowed autonomy to translate the plans into action by appropriately managing the employees under them. If managers cannot act with freedom, they will be merely executing orders, and may not be motivated to achieve efficiencies or identify gaps in employee performance. The executive management should remember that the managers who implement the plans can be motivated and provide leadership only when their responsibilities are balanced by appropriate autonomy. Adequate periodic review of managers will be sufficient rather than a heavy hand at all times.

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