Case: APD Pty Ltd

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MCD2040: Managing People and Organisations Case Study Report Word Count: 2000 Words Marks: 30% Submission: Week 10 (Monday 23:59) – in Moodle and Turnitin Case: APD Pty Ltd

COMPANY HISTORY APD Pty Ltd manufactured large sliding doors made of many narrow aluminium panels held together by thick rubber strips, which allowed the door to collapse as it was opened. Some of the doors were as high as eighteen feet and were used in buildings to section off large areas. The company had grown rapidly in its early years due mainly to the expansion of the building program of the firm's major customer which accounted for nearly 90% of APD’s business. When Oliver James began the business, his was the only firm that manufactured the large sliding doors. Recently, however, several other firms had begun to market similar doors. One firm in particular had been bidding to obtain business from APD’s major customer. Fearing that the competitor might be able to underbid his company, Mr James began urging his assistant, Tony Snider, to increase efficiency and cut production costs. CONDITIONS BEFORE THE COST REDUCTION PROGRAMS A family-type atmosphere had existed at APD before the cost reduction programs were instituted. There was little direct supervision of the workers from the front office, and no pressure was put on them to meet production standards. Several of the employees regularly worked overtime without supervision. The foremen and workers often played cards together during lunchtime, and company parties after work were common and popular. Mr. James was generally on friendly terms with all the employees, although he was known to get angry if something displeased him. He also participated freely in the daily operations of the company. As Mr. James’s assistant, Tony was responsible for seeing to it that the company achieved the goals established by Mr James. Tony was considered hard-working and persuasive by most of the employees and had a reputation of not giving in easily to employees' complaints. Caleb James, Mr James’s son, had only recently become the production manager of APD. Tony had been asked to orient Caleb to his new position (see Exhibit 1). He was in his early

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twenties, married and had a good build. Several of the workers commented that Caleb liked to show off his strength in front of others. He was known to be very meticulous about keeping the shop orderly and neat even to the point of making sure that packing crates were stacked "his way". It was often commented among the other employees how Caleb seemed to be trying to impress his father. Many workers voiced the opinion that the only reason Caleb was production manager was that his father owned the company. They also resented him using company employees and materials to build a swing set for his children and to repair his camper. Caleb, commenting to Tony one day that the major problem with production was the workers, added that people of such calibre as the APD employees did not understand how important cost reduction was and that they would rather sit around and talk all day than work. Caleb rarely spoke to the workers but left most of the reprimanding and firing up to his assistant, Linda Porter. APD employed about seventy people to perform the warehousing, assembly, and door-jamb building, as well as the packing and shipping operations done on the doors. Each operation was supervised by a foreman, and crews ranged from three men in warehousing to twenty-five women in the assembly department. The foremen were usually employees with the most seniority and were responsible for quality and on-time production output. Most of the foremen had good relationships with the workers. The majority of the work done at APD consisted of repetitive assembly tasks requiring very little skill or training. For example, in the pinning department the workers operated a punch press, which made holes in the panels. The job consisted of punching the hole and then inserting a metal pin into it. Workers commented that it was very tiring and boring to stand at the press during the whole shift without frequent breaks. Wages at APD were considered to be low for the industry. The workers complained about the low pay but said that they tried to compensate by taking frequent breaks, working overtime, and "taking small items home at night". Most of the workers who worked overtime were in the door-jamb department, the operation requiring the most skill. Several of these workers either worked very little or slept during overtime hours they reportedly worked. The majority of the male employees were in their mid-twenties with about half being unmarried. There was a great turnover among the unmarried male workers. The female employees were either young and single or older married women. The 25 women who worked in production were all in the assembly department under Lizzie Johnson. THE COST REDUCTION PROGRAMS Shortly after Mr. James began stressing the need to reduce waste and increase production, Caleb called the foremen together and told them that they would be responsible for stricter discipline among the employees. Unless each foreman could reduce waste and improve production in his department, he would either be replaced or receive no pay increases.

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The efforts of the foremen to make the workers eliminate wasteful activities and increase output brought immediate resistance and resentment. The employees' reactions were typified by the following comment "What has gotten into the foremen lately? They've been chewing us out for the same old things we've always done. All they think about now is increasing production." Several of the foremen, George, Henry and Fred particularly, commented that they didn't like the front office making them the "bad guys" in the eyes of the workers. The workers didn't change their work habits as a result of the pressure put on them by the foremen, but a growing spirit of antagonism between the workers and the foremen was apparent. After several weeks of no apparent improvement in production, Tony called a meeting with the workers to announce that the plant would go on a four day, ten-hour-a day work week - in order to reduce operating costs. He stressed that the workers would enjoy having a three-day weekend. This was greeted with enthusiasm by some of the younger employees, but several of the older women complained that the schedule would be too tiring for them and that they would rather work five days a week. The proposal was voted on and passed by a two to one margin. Next Tony stated that there would be no more unsupervised overtime and that all overtime had to be approved in advance by Caleb. Overtime would be allowed only if some specific job had to be finished. Those who had been working overtime protested vigorously, saying that this would only result in lagging behind schedule, but Tony remained firm on this new rule. Shortly after the meeting, several workers in the door-jamb department made plans to stage a work slowdown so that the department would fall behind schedule and they would have to work overtime to catch up. One of the workers, who had previously been the hardest working in the department said: "We will tell them that we are working as fast as possible and that we just can't do as much as we used to in a five-day week. The only thing they could do would be to fire us, and they would never do that". Similar tactics were devised by workers in other departments. Some workers said that if they couldn't have overtime they would find a better paying job elsewhere. Caleb observing what was going on told Tony, “They think I can't tell that they are staging a slowdown. Well, I simply won't approve any overtime and after Fred’s department get way behind I'll let him have it for fouling up scheduling". After a few weeks of continued slowdown, Caleb drew up a set of specific rules, which were posted on the company bulletin board early one Monday morning (see Exhibit 2). This brought immediate criticism from the workers. During the next week they continued to deliberately violate the posted rules. On Friday two of the male employees quit because they were penalised for arriving late to work and for "lounging around" during working hours. As they left they said they would be waiting for their foreman after work to get even with him for turning them in. That same day the entire assembly department (all women) staged a work stoppage to protest an action taken against Nancy O’Keefe, an employee of the company since the beginning. The action resulted from a run-in she had with, Linda Porter, forewoman of the assembly department. Nancy was about 60 years old and had been turned in by Linda for

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resting too much. She became furious, saying she couldn't work ten hours a day. Several of her friends had organised the work stoppage after Nancy had been sent home without pay credit for the day. The stoppage was also inspired by some talk among the workers of forming a union. The women seemed to favour this idea more than the men. When Caleb found out about the incident he tried joking with the women and in jest threatened to fire them if they did not begin working again. When he saw he was getting nowhere he returned to the front office. One of the workers commented, "He thinks he can send us home and push us around and then all he has to do is tell us to go back to work and we will. Well, this place can't operate without us." Tony soon appeared and called Linda into his office and began talking with her. Later he persuaded the women to go back to work and told them that there would be a meeting with all the female employees on Monday morning. Tony wondered what steps he should take to solve the problems at APD. The efforts of management to increase efficiency and reduce production costs had definitely caused resentment among the workers. Even more upsetting was the fact that the company accountant had just announced that waste and costs had increased since the new programs had been instituted, and the company scheduler reported that APD were behind on shipments than ever before. Mr James, on being made aware of the situation, decided that it was necessary to call in outside consultants for help. He seeks advice from your consultancy company. Please provide a detailed analysis of the situation to date followed by recommendations for future action to ensure the company operates effectively and efficiently. EXHIBIT 1

Oliver James Managing Director

Sales Manager Scheduling Manager

Caleb James Production Manager

Engineering Manager

Accounting Manager

Tony Snider Assistant

Linda Porter Assistant

George Luca Supervisor Warehouse

Lizzie Johnson Supervisor Assembly

Mark Jones Supervisor Planning

Peter Bennett Supervisor Shipping

Henry Hobbs Supervisor Packaging

Fred Anderson Supervisor Door Jambs

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EXHIBIT 2 APD PTY LTD : PRODUCTION SHOP REGULATIONS

1) Anyone reporting late to work will lose one half hour for each five minutes of lateness. The same applies to punching in after lunch.

2) No one is to leave the machine or post without the permission of the supervisor.

3) Anyone observed not working will be noted and if sufficient occurrences are counted

the employee will be dismissed. Adapted from a case study in Ivancevich, J. M. and Matteson, M. T. (1987), Organizational Behavior and Management, Business Publications, New York.