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STAFFING MANAGEMENT CASE STUDY

After the Merger: D- Bart Industries Scenario F: Downsizing and Performance Appraisal

By Myrna L. Gusdorf, MBA, SPHR

PROJECT TEAM

Author: Myrna L. Gusdorf, MBA, SPHR

SHR M project contributor: Bill Schaefer, SPHR, CEBS

External contributor: Sharon H. Leonard

Copy editing: Katya Scanlan, copy editor

Design: Blair Wright, senior graphic designer

Case Abstract

This case involves a fictitious company, D-Bart Industries, formed by the

Merger of Davis Manufacturing and Bartlund Technologies, two former

rivals in the fabrication of precision parts used in medical equipment and

airline manufacturing. T h e e x e r c i s e r e q u i r e s a n a l y s i s a n d

a p p l i c a t i o n o f v a r i o u s s t r a t e g i e s u t i l i z e d d u r i n g d o w n s i z i n g

a n d t h e u s e o f p e r f o r m a n c e a p p r a i s a l s i n t h e d e c i s i o n m a k i n g

p r o c e s s .

The Organization Before the Merger

DAVIS

MANUFACTURING

Spokane, WA

(headquarters)

BARTLUND

TECHNOLOGY

Portland, OR

(headquarters)

Lewiston, ID Centralia, WA

Boise, ID Medford, OR

Pocatello, ID San Jose, CA

San Francisco, CA

After the Merger: D-Bart Industries

The New Organizational Structure and Management Staff

Finance Accounting

D-BART

Ted Davis

Co-President

Erik Bartlund

Co-President

Operations

Human Resources

Research & Development

Marketing

Director of Human Resources

Wendy Wright

Centralia, WA

Mary Haggerty, Division Manager

Lewiston, ID

Kendal James, Division Manager

Medford, OR

Ray Houser, Division Manager

Boise, ID

Lois Franklin, Division Manager

San Jose, CA

Karen Howell, Division Manager

Pocatello, ID

Rick Stephens, Division Manager

San Francisco, CA

Brad Smith, Division Manager

After the Merger: D- Bart Industries

THE ORGANIZATION

This case involves the recent merger of Davis Manufacturing and Bartlund Technology.

Before the merger, the organizations were fierce competitors in the manufacturing of

precision parts used in building medical equipment and airplanes. When the economy

slowed in 2008 and 2009, it became apparent that the two organizations would have a

stronger market presence if they joined forces. The merger was approved in late 2009, and

on March 1, 2010, the two former rivals became D-Bart Industries.

This was a true merger of equals, not an acquisition of a smaller company by a larger

company, and although Davis and Bartlund had very different corporate cultures, the

new leadership team embraced a philosophy of collaboration. There was no power

structure being imposed by one company over the other and no assumption that one set

of employees had priority over the others. New structures were forming to play on the

strengths of each organization. As things changed, nothing was guaranteed and employees

were nervous about what was to come.

Because the original organizations were led by very different personalities, it would take

some time before a comfort level was established. Bartlund’s founder, Erik Bartlund, was

an idea man with seemingly boundless energy. He claimed to sleep little, and in the early

years of the company, he kept a notepad on his nightstand so he could jot down ideas as

they bubbled forth in insomniac sprees of creativity. His notebook was now an electronic

tablet, but his ideas were no less frequent, if sometimes a little bizarre. He was always

more interested in product design and innovation than in the nuts and bolts of running his

company.

As one would expect, Bartlund Technology developed into a creative workplace where

risk taking and working outside the box was the norm. Employees had authority to make

decisions and the autonomy to structure their work. The dress was casual, and there were

lunch-hour games of competitive volleyball in the grass next to the parking lot. Employees

brought their dogs to work, and a water bowl and dog biscuit jar were standard in the

break room along with coffee and pastry. That was fine with Erik. As long as employees

got the job done, produced a quality product, and Bartlund was considered the most

innovative in the industry, he was satisfied.

Although Davis had a very different corporate culture from Bartlund, it, too, was highly

respected in the industry for its quality products. The CEO, Ted Davis, was a retired

Marine who took over the company when his father, the founder, retired. Davis ran a tight

ship. True to his military background, he believed in having a procedure and policy in

place for every eventuality. He had a top-down management style and liked to maintain

personal control over decision-making, a characteristic some employees found oppressive.

It was understood by all that nothing happened at the organization that Davis didn’t

know about and personally approve.

When Davis production and shipping employees voted to unionize in 2003, Ted was

not particularly happy, but he did little to oppose the process, saying that it was their

right to do so. This accepting attitude has served Davis well; union/management

relations have always been excellent, with a level of respect and cooperation not

always found in union environments. The union contracts from Davis were honored

by D-Bart with the intent that employees previously represented by unions would

continue to be represented by their bargaining units. Bartlund employees have never

been unionized.

Both organizations were located in the West. Bartlund had five facilities: Portland

and Medford, Ore.; San Jose and San Francisco, Calif.; and Centralia, Wash.,

Bartlund’s headquarters in Portland was the company’s newest facility. Davis had

its headquarters in Spokane, Wash., and three facilities in Idaho: Lewiston, Boise

and Pocatello.

Although there had been no official announcement from D-Bart, it was expected

that the merger would necessitate scaling back some facilities, with employees

transferred to other locations or laid off. At the same time, other facilities could add

new employees. It was rumored that the Centralia and Pocatello facilities would be

shuttered and put up for sale. Employees at the Centralia and Pocatello plants were

understandably nervous.

Davis and Bartlund worked cooperatively to select a new management team for D-

Bart. Davis and Bartlund were appointed co-presidents, with Davis assigned to

the day-to-day operations and Bartlund managing the products. Davis had recently

relocated to the Portland headquarters, where he was responsible for operations

and production, finance and HR. Bartlund managed research and development,

product innovation and marketing. He remained in the San Francisco office. Wendy

Wright, director of human resources for Davis, was appointed the new HR director

for D-Bart, and she also relocated to the Portland headquarters. Although many

positions were still vacant, it was expected that the rest of the employees would be a

mix of workers from both companies, with no clear power structure that favored one

group over the other.

Scenario: Who Gets the RIF? Downsizing and Performance

Location: D-Bart Facility, formerly Bartlund Technology, San Jose, Calif.

Players: Karen Howell, division manager

David Bradshaw, production supervisor

Ben Renfro, production employee

Jackie Callahan, production employee

Employees at D-Bart’s San Jose facility have reason to be concerned. Division Manager

Karen Howell received word from headquarters that the San Jose plant would be closed,

with operations merged into the San Francisco facility. Most of the San Jose staff would

be transferred to San Francisco, since the change was more an effort to save facility costs

than to eliminate workers. Even so, approximately 20 percent of the San Jose staff would

be let go. Howell was to work with supervisors to decide who would go and who would

stay. Since there was no particular area that is to be reduced, Howell thought the most

straightforward and equitable method to determine staff cuts was to eliminate 20 percent

from each department, with termination decisions based on performance appraisal scores.

She has reviewed appraisal records and generated a list of employees she believed should

get notice.

Howell has not yet shared her list with managers, and no general announcement has been

made to employees. Managers have been informed of anticipated cuts and were asked

to come up with suggestions on which employees to cut. Howell planned to meet with

each department manager to finalize their decisions before they took any action. Howell

met with Production Supervisor Dave Bradshaw this morning. They needed to cut five

people from his department. Howell and Bradshaw both agreed that reductions would be

difficult, but she was surprised when Bradshaw said, “I know this is going to be hard for

some people, but it’ll be a good thing, too. I’ve got a couple of people I have wanted to

get rid of for a very long time.”

“Who’s that?” asked Karen.

“Ben Renfro and Jackie Callahan,” Dave said without hesitation.

“Why?” asked Karen, “They both have outstanding performance appraisals.”

“Well, it doesn’t matter what the paperwork says,” he answered, “they’re both terrible.

Renfro’s always wasting time chatting with other employees. He keeps everybody from

working, and he never meets production goals. Callahan can’t get to work on time. I bet

she’s late three days out of five.”

“How do you know she’s late three days out of five?” Karen asked. “Have you kept a log

or documented her absence?”

“No, but I work with these people. I know what they’re doing. We’re pushed to meet

production numbers,” Dave said in his defense. “We don’t have time for that paperwork

stuff, and besides, people know they have to be at work on time. If they can’t even do that, we

should just get rid of them!”

Howell found much the same response from all the managers. It appeared that no one had

been taking the appraisal process seriously. Feedback to employees had been haphazard at

best, and discipline, if it had occurred at all, had been arbitrary and not properly documented.

Managers simply checked off boxes on the appraisal forms so they could get back to the “real”

work of production.

Howell shook her head. Obviously, the existing performance appraisals could not provide

reliable documentation on which to base reduction decisions. She would have to come up with

a different reduction plan.

Questions

1. What should Howell do? How should D-Bart make reduction decisions when

performance appraisal documents are inaccurate?

2. How can D-Bart improve its performance appraisal process?

References and Additional Reading

Ditelberg, J. (2002, March 1). March-April 2002: A practical guide to workforce

reductions. Retrieved October 16, 2010, from

www.shrm.org/Publications/LegalReport/Pages

/CMS_000974.aspx.

Kuhn, D., & Stout, D. (2004, May). Reducing your workforce: What you

don’t know can hurt you. Strategic Finance, 40-45.

Marshall, A., & Broas, J. (2009, May). Getting it right in reductions in

force: How to minimize legal risks. Employee Benefit Plan Review, 18-25.

Mondy, R. (2010). Human resource management (11th ed.). Upper

Saddle River; Prentice Hall.

Van Slyke, E. (2010, June 2). An alternative to performance appraisal.

Retrieved October 15, 2010, from

www.shrm.org/hrdisciplines/employeerelations/articles/Pages

/AnAlternativetoPerformanceAppraisal.aspx.

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