Management paper

I. Summary.

In an effort to cut energy consumption, the Natural Resources Defense Council (NRDC), the Environmental Protection Agency (EPA), and a number of electric utilities put on a contest to see which company could build the most energy efficient refrigerator. They chose refrigerators because they can account for up to 20% of a household's electricity usage. A prize of $30 million was put up by 24 utilities that provide electricity to about 21% of U.S. households.

The winning refrigerator must (1) eliminate CFC (chlorofluorocarbons) and (2) boost energy efficiency by at least 25% over current regulations. These requirements make the contest tough because the goals are opposed to one another. Refrigerator makers have cut energy consumption by 50% in the last 20 years by the use of CFC. In other words, the best coolant known cannot be used and efficiency must still be increased.

The projected price of the unit is important because, in addition to the technical requirements, the winner must convince the judges that it can sell enough refrigerators between January, 1994, and July, 1997, to produce the energy savings it promises in its bid. The competitors included GE, with 35% market share, Whirlpool (25%), Frigidaire (17%), and about a dozen others. After a preliminary round, the number of contestants was narrowed to two: Whirlpool and Frigidaire. This article concentrated on Whirlpool's struggle to put together its entry.

Due to slowing sales and tough EPA rules going into effect in 1993, Whirlpool executives debated whether to even enter the contest. After an affirmative decision, Vincent Anderson, 33, an engineer with an MBA, was chosen to head the team. One of the major decisions facing the group was whether to be conservative and use only tried-and-true technologies or "pull out all the stops" and go with newer, but uncertain, innovations. The more aggressive approach was chosen.

One of the more frightening challenges Anderson's group faced was the possibility that a "slow failure" could result in numerous breakdowns and huge recalls years in the future. Techniques used to assess Frigidaire's likely progress were to (1) analyze Frigidaire's 1993 models and (2) conduct a worldwide patent search to see if Frigidaire had developed any new "whiz-bang" technologies. The prototypes were tested by an independent laboratory. Two days before the final deadline, Whirlpool's entry developed a failure. The problem, a failure with a fan, was found and corrected in time. The winner will be announced June 29, 1993.

II. Importance to the study of organizational behavior.

1. (Individual level) It is likely that Anderson will want individuals on the team that have high need for achievement1, high self-concordance1, and high self-efficacy.1 Need for achievement is the drive to excel, to achieve in relation to a set of standards. This project requires achieving a set of high standards and Anderson will want team members with the motivation to meet or exceed them. Self-concordance is the degree to which peoples’ reasons for pursuing goals are consistent with their interests and core values. This project requires delving into the untried and untested. People whose interests are consistent with this requirement are more likely to give their best efforts to the project. Self-efficacy is the degree to which an individual believes he or she is capable of performing a task. Those with low self-efficacy tend to give up when things become difficult whereas those with high self-efficacy tend to try harder. In a project of this type there are very likely to be setbacks. Therefore, Anderson will want those on his team who will try harder when things become difficult.

1. Ch. 7: Motivation Concepts.

2. (Individual level) The Hackman and Oldham Job Characteristics Model1 proposes that any job can be described in terms of five core job dimensions: (1) skill variety, the degree to which a job requires a variety of different activities; task identity, (2) the degree to which a job requires completion of a whole and identifiable piece of work; (3) task significance, the degree to which a job has a substantial impact on the lives or work of other people; (4) autonomy, the degree to which a job provides substantial freedom and discretion to the individual in scheduling the work and in determining the procedure to be used in carrying it out; and (5) feedback, the degree to which carrying out work activities generates direct and clear information about one’s own performance. The model includes the idea that these dimensions are related to positive work outcomes and that an individual worker’s need to grow on the job is a moderating variable for these relationships. That is, the higher one’s growth-need strength the stronger the relationships between the independent and dependent variables. We believe that the jobs associated with this project are high in all of the core job dimensions. Therefore, to achieve positive work outcomes, Anderson will want members who are high in growth-need strength.

1. Ch. 8: Motivation: From Concepts to Applications.

3. (Group level) According to leader member exchange1 (LMX) leaders think of their subordinates in terms of an in-group and out-group. We believe that Anderson should make every effort to avoid this natural process and make all team members part of the in-group. We believe this is possible because the group is small so Anderson should be able to have high interactions with each one. Also, since Anderson hand-picked them, all should have considerable competence as well as personal compatibility.

1. Ch. 12: Leadership.

4. (Group level) Anderson should strive for the rapid development of high group performance norms,1 the minimization of social loafing,1 and high team cohesiveness1. Norms are acceptable standards of behavior within a group that are shared by its members. Performance norms are, therefore, acceptable standards of behavior that relate to performance. Social loafing is the tendency for individuals to expend less effort when working collectively than when working individually. Cohesiveness is the degree to which group members are attracted to each other and are motivated to stay in the group. Anderson should strive to eliminate social loafing. This shouldn’t be a problem since Anderson hand-picked each member of the team. Most importantly, Anderson should strive for high performance norms and high cohesiveness for his team. Research has shown that high group cohesiveness in conjunction with high performance norms result in high group productivity. Anderson needs high productivity for the team to meet its objectives and it must do so rapidly because a strict deadline is in place.

1. Ch. 9: Foundations of Group Behavior.

5. (Organizational level) Anderson’s team is an organization, albeit a small one. Hence it can have its own organizational culture.1 Organizational culture is a system of shared meaning held by members that distinguishes the organization from other organizations. The text lists seven characteristics1 that capture the essence of an organization’s culture. We believe that four of them are of particular importance here: (1) innovation and risk taking, (2) attention to detail, (3) outcome orientation, and (4) aggressiveness. Innovation, risk taking, and attention to detail are important because the team must produce a new product that performs to exact and heretofore unobtainable specifications. The team must be outcome oriented because it will be evaluated on the results produced. It cannot be process oriented because no process is in place. Team members need to be aggressive to achieve exact standards previously unobtainable prior to the strict deadline.

1. Ch. 16: Organizational Culture.

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Individual Contribution

Of the contribution expected from each member of the group the following percentage was delivered.

James W. Bishop 100%