Case Study 1

Modern Industries Limited

Question.1. Is it right on the part of the Chairman to protect the senior employees,

thereby causing problem to the new MD?

Answer.1. When Mr. Anil Shah, the new MD tried to revitalise and diversify MIL (by

modernising and change in management) the older employees felt threatened and resented

the changes and the resulting pressures they collectively approached the Chairman and

requested him to interfere and protect their interests. The Chairman (also himself not happy

with changes) issued instruction to the MD that no old employee should be dislocated. Also,

when Mr. Kumar apprised the chairman of the troubled situation he was in turn blamed by

the Chairman.

Thus, we can say that though the senior employees are important and have contributed in

the growth of the company they are being over protected by the Chairman. The Chairman is

right to be concerned about the older employees but protecting them too much will lead to

company’s loss and backwardness.

His part on protecting the employees seems fair if we see that the present Chairman Mr.

Shah has been with the company right from the beginning. As he has been working for a

long period of time in MIL he has acquaintance with every senior employee (other

employees working from long). He continues to keep close touch with them and is easily

accessible overruling the hierarchy. He strongly believes that each one has them has

significantly contributed to the company.

But if we see the fact that the older employees who are not adequately qualified or

developed have grown into senior positions they are becoming dead weights and hindering

the further development and growth of the company. Thus the MD is unable to bring in the

changes required to revitalise the company and diversify into high technology areas. He

can’t modernise the plant and bring changes in the management style. The over protected

employees (Mr. Thakur) resent the changes and hinder other people’s work not able to

adapt to changes overcome frustration. He feels that the MD is powerless to do anything to

them and ignore him. Thus the MD caould not even try out the HRD approach to train all the

employees. Such employees will not allow MIL to move with the times. Hence, it is not right

on the part of the Chairman to protect the senior employees, thereby causing problem to

the new MD.

Question.2. Is the Chairman not over rewarding service?

Answer.2. The Chairman firmly believes that each of the old employees has contributed

significantly in the MIL’s growth. The company maintained a ‘strong utilitarian culture’ all

along, the contribution of each and every employee had to be substantial and they were

rewarded accordingly. Thus a high premium is placed on loyalty and their long services are

valued. The rewards make the employees loyal and encourage hard work. Though over

rewarding can be dangerous to the company itself.

Though he employees deserve the rewards for their service as MIL is well-known for its

aggressive personnel policies and there were many instances where the services were

terminated due to inadequate performance particularly in the case of new appointees the

Chairman is over rewarding the employees in the sense that he is giving security to older

employees in terms of job (issuing instruction to MD that no old employee to be dislocated)

and protecting employees such as Mr. Thakur who were a nuisance in the company who put

themselves (Mr. Thakur ignored Mr. Kumar) before the company and . This gives the

employees a feeling that they can do whatever they want to without any repercussions (Mr.

Thakur challenging Mr. Kumar he could neither promote nor demote him), which only

deteriorates the work atmosphere. The over rewarded employees begin to hope for even

more (Mr. Thakur wanted promotion when he was over promoted and over paid for the job

he was doing). The annual increments and general raises termed as ‘Janata raise’ given to

employees gave them ‘flat security’.

The employees are not being rewarded on the competence (such employees turn as

deadwoods), specially in the case of older employees who have had grown into senior

positions not being adequately qualified or developed.

Changes are needed if the company has to remain competitive and maintain profits. There

should be a formal performance appraisal system. Promotions and extra increments should

not be given randomly by the Chairman but on objective analysis of performance and

potential of an individual.

Question.3. Are the senior employees too sensitive and over reacting to the changes?

Answer.3. The senior employees have been working in the company for almost two decades

and were used to a different culture of work until the new MD came up with the changes to

modernise the plant and change the management style from traditional direct control

approach to a systems controlled approach.

The senior employees thus were the most concerned, because though they were not

enough qualified or developed, they had grown into senior positions in the light of the fact

that the company maintained a ‘strong utilitarian culture’ and earlier the touchstone was

loyalty and hard work rather than competence.

Thus, new competent professionals were needed to be hired to introduce the desired

changes in the company. And MIL was well-known for its aggressive personnel policies and

sacking those who did not meet the requirements. Hence, the employees felt they could

lose their jobs and felt threatened resenting the changes and the pressures they brought

with them. They had a good rapport with the Chairman of the company who himself was an

old employee and cared for them. He understood every minute detail of the company and

the senior employees rightly thought that he might understand their situation and do

something about it. So they collectively approached him and requested to intervene and

safeguard their interests which he did.

Thus, we can say that the senior employees are just sensitive and not over reacting to the

changes as if they wouldn’t have approached the Chairman many of them could have lost

their jobs. The Chairperson was accessible to them overruling the hierarchy and they just

used this to their interest.

Question.4. Did the MD adequately prepare the ground for introducing the changes? Was

he too hasty?

Answer.4. The MD Mr. Anil Shah, the son of the founder industrialist wanted to revitalise

the company and diversify into high technology areas. He wanted to modernise plant and

change management style from traditional direct control approach to a systems controlled

approach. The problem was the senior workers who were turning out to be deadwoods. His

situation in the company called for tact and sensitivity. It can be said that the MD did not

adequately prepare the ground for introducing changes and was too hasty.

He should have properly planned the change and worked on the following w.r.t senior

employees in MIL – Consider how they will be affected, involve them in the change, consult

and inform them frequently, try to be firm but flexible, make controversial change as

gradually as possible, monitor the change and develop a change philosophy.

He should have planned for short term results and tried to realise them. He should have

introduced the changes step wise so that the employees could get adjusted to the new

changes slowly with time. He instead created excess work pressure on them. He did not deal

with their fears and anxieties of losing their job due to introduction of new technology and

management practices that required skill not possessed by them.

He kind of ignored the resistance or took it lightly. With so much age gap, there’s an obvious

difference in attitude, mindset and approach to work and life he should have tried to

convince the senior employees that they will not be overlooked and their concerns will be

addressed. A little patience and some sensitivity while communicating can go a long way.

He failed to clearly communicate the vision. Employees do not understand the purpose or

even the need for change. The existing HR policies were not standard ones as the top man;

the Chairperson promoted and gave increments randomly. He should have shared the vision

with them by telling them how the changes in HRD approaches would only benefit them in

the long run. This is why Mr. Thakur went against Mr. Kumar.

MIL is well known for its aggressive personnel policies. Anybody who did not meet the

requirements was sacked. As a result when changes were introduced the senior employees

felt threatened and collectively approached the Chairman who was at their disposal. He

should first have collected information from employees about their fears, thoughts and

concerns relating to these events. Even if they were unfounded, should have treated them

with respect and honesty.

He should have talked to the Chairman beforehand so that the chairman could take a better

decision and not get influenced by the senior employees or tried adapted to the

environment and dealt with more tact and patience by forming a coalition with them. He

should have consulted with them.

Six ways of overcoming resistance by the MD to change by senior employees -

(1) Education and communication so that if senior employees understand the needs for

change and what is involved them are more likely to co-operate.

(2) Participation and involvement to encourage senior employees to feel ownership of the

change.

(3) Facilitation and support by listening to the real concerns of senior employees.

(4) Negotiation to come to an agreement/compromise if necessary.

(5) Manipulation e.g. “buying off” leaders of resistance.

(6) Explicit and implicit coercion threats where necessary but this is a high risk strategy.

Question.5. Would it not have been wise for Mr. Kumar to promote Mr. Thakur without

bothering about the logic which is not applicable in MIL?

Answer.5. Mr. Thakur was a senior employee of the company. Despite having not much

change in his job content he was promoted to the rank of training superintendent. Also with

the changing scenario, there was not much role of this person. Also the HRD was trying to

train all the employees. Mr. Thakur was given a job next to Assistant manager but still he

was not satisfied and demanded to be promoted to senior manager as he was the senior

most person in the previously existing department.

As Mr. Thakur was one of the senior employees of the organization, he cannot be thrown

out of the company as directed by the Chairperson, but he should be handled differently.

Mr. Kumar should be more flexible in his approach and try hard to win the faith of Mr.

Thakur as he has been a very loyal worker of the company. Mr. Kumar can have an easy way

out by giving promotion to Mr. Thakur but had Mr. Kumar wanted an easy way out he would

have not gone this far. Actually giving promotion to him will only in increase such incidents

in the company.

He should continue in his efforts to change the other difficult employees because if he

promotes Mr. Thakur, the other old employees will follow the example. They will not

perform their job seriously and will not care for their seniors in hierarchy. The purpose of

trying out new HRD practices would fell flat. The changes desired in the company will not be

achieved.

Employees do not understand the purpose or even the need for change. The existing HR

policies were not standard ones as the top man; the Chairperson promoted and gave

increments randomly. Mr. Kumar should have shared the vision of MD with Mr. Thakur by

telling them how the changes in HRD approaches would only benefit them in the long run.

Although loyalty and long services are valued in MIL but it is also known for its aggressive

personnel policies. If Mr. Thakur is not performing his natural work and behaving strangely,

he should be warned about it. Some minor actions can also be taken against him. Just

because older workers remember the days before computers doesn’t mean they’re

exempted from learning new technology.

So, it would not have been wise for Mr. Kumar to promote Mr. Thakur without bothering

about the logic which is not applicable in MIL.

Question.6. Is the assumption of the Training Manager that ‘Over protection is the root

cause of trouble’ right?

Answer.6. The assumption of the Training Manager that ‘Over protection is the root cause

of trouble’ is right as it creates a sense of over security among the employees. It always

makes them feel that they have someone to protect them if something happens. Sometime

they take full advantage of it and stop performing well. It causes lack of seriousness among

the employee, disinterest towards work and the organization. The senior employees are

backed by the Chairperson and have job security. Besides they get the ‘Janata raise’ every

year which is annual increments and a general raise which makes the employees more

secure. They need not work hard for promotions and begin to lack respect for authority.

Here, we can cite the example of Mr. Thakur who challenged Mr. Kumar and made him feel

powerless.

It can also create lack of good work environment with lack of clear values and goals and lack

of loyalty and hard work. Sometimes less skilled person acquire the job of high responsibility

and make everything wrong. This results in the loss of profitability, loss of value and loss of

fame of the organization. This basically hampers the growth of the organization and its

smooth running.