Participative Management at Alvis Corporation

CASE 5     Alvis Corporation
Copyright © 1988 by Gary Yukl

Kathy McCarthy was the manager of a production department in Alvis Corporation, a
firm that manufactures office equipment. The workers are not unionized. After reading an
article that stressed the benefits of participative management, Kathy believed that these benefits
could be realized in her department if the workers were allowed to participate in making
some decisions that affect them. Kathy selected two decisions for an 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, Kathy made this decision herself. She would first ask the workers to indicate their preferred
dates, then she 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, she 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 make it possible 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.

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

When Kathy returned to her department just at quitting time, she was surprised to learn
that the workers recommended keeping the standards the same. She had assumed they knew the
pay incentives were no longer fair and would set a higher standard. The worker speaking 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, while others
argued that priority should be based on productivity, as in the past. Because it was quitting time,
the group concluded that Kathy would have to resolve the dispute herself. After all, wasn’t that
what she was being paid for?

Questions
1. Were the two decisions appropriate for a group decision procedure according to the
Vroom–Yetton model?
2. What mistakes were made in using participation, and what could have been done to avoid
the difficulties the manager encountered?
3. Where these two decisions appropriate ones for introducing participation into the
department?

For this processes a leadership style is needed. Two decision that has been taken by manger are appropriate for group decision because for the first decision it is necessary to find out the possibilities that are convenient to the workers because sometimes it is very difficult to make the right decision to check the decision creditability and quality it is important to gather resources such as people information, time and others to ensure the decision usefulness. The second decision of implementing new equipment to increase the level of productivity is required to discuss because according to the model it has found that decision will last a great impact on performance of employee, a collaborative decision made as team will improve the quality of decision. The manger had called a meeting to discuss the two defined decision, the manager act as a leader and wanted to have a quality decision which encourages the employees or increased the productivity. But the manager recognized that some of the workers were hesitating to share their views if manager stayed with workers, so manager had left the room to let them discuss openly. Manager left over the participant to give their best so the decision could be made on fair basis. And in the mean time she had attended a meeting with the manager of quality control department to find out the reasons that why there is quality problems exist when the new equipment has been implemented in the firm.