Arslan Ahmed

Treetop Industries and TriVac Industries Case Study Analysis Arslan Ahmed 822 MBA 2015 1/25/2016 Submitted to: Miss Saima Asad Submitted for: Organizational Behavior Treetop Forest Products Treetop Forest Products Overview of Critical Issues Treetop Forest products Inc., a sawmill operation in Oregon owned by major forest products company engages in the cutting of raw logs and in packaging them into marketable products. Packaging department with the highest workload—Sixty percent of logs from the sawmill department at Treetop are sent directly to the packaging department while the remaining low quality logs are first sent to the planer department and then end up in packaging, making it the department with the highest workload and among the three that require a double shift to accommodate this workload. Even then, this department has only two temporary supervisors that also serve the sawmill and the planer departments. Building Backlogs—Recently, the sawmill and planer departments have increased productivity to a remarkable extent however the packaging has lagged behind to the extent that major backlogs requiring costly overtime have been created. Importance of Packaging—Treetop products are sold internationally through a major marketing agency, Westboard Company, which sells the products of almost all the brands owned by the parent company of Treetop as well as of several other clients in the region. Since the forest products market is highly competitive due to little points of differentiation among the companies the customers ultimately choose products based on how well they are packaged. Problems  Packaging department does not have separate supervisors.  Large customers have switched to competitors’ lumber due to treetop’s substandard packaging.  Decrease in Productivity in the packaging department over the past couple of years.  Overtime workers have to be given 1.5 to 2 times more than the normal wages.  Studies have confirmed that packaging department does not need overtime.  People in packaging department extend their lunch and coffee breaks and they even start their lunch breaks earlier than they should. Major Problem: Decrease in the productivity and the package quality of the packaging department has made several large customers take to other competitors. Possible Solutions The solutions that will be helpful must focus on increasing productivity in the packaging department. Possible alternative solutions are: 1. Having separate supervisors: This will allow two different supervisors for the morning and the afternoon shifts to oversee the activities of the workers in the packaging departments. Pros: Supervisors will make sure that coffee and tea breaks are not extended beyond the stipulated time limits. Also they will ascertain that the workers are not leaving earlier than the day’s official end. In order to end the overtime, they can also closely observe the reasons for the decline in the workers’ working speeds and try and end the causes. Also, the supervisors of the planer and the sawmill can concentrate on their respective departments. Cons: Two separate supervisors will have to be given monthly salaries which will increase the expenses of the company, possibly boosting cost-competitiveness problems. 2. Having a packaging department reward system: Having quarterly performance based rewards for the packaging department will allow the creation of incentives capable of boosting worker productivity in the departments. The incentives can be based on the individual worker performance with most points awarded to those giving full time, fastest speeds and the best packaging quality. The prerequisites for this system are having a check-in/checkout portal and developing quantitative key performance indicators for assessing the quality of packaging. Pros: A competitive environment can be created which will make the workers in all departments get speedy and productive. The employees who work in other departments efficiently but tend to follow the relaxed time pattern in the packaging department will change their relaxation habits when they will know there are benefits to be had by working fast. Cons: Supervisors who also supervise the planer and the sawmill departments will have to oversee more closely the activities of the packaging department. They may not have the time to do that. 3. Having fine imposition on production delays, extended breaks and earlier departures from work: The fine should be structured in the following way:  Every minute spent on extended breaks should result in a deduction by a dollar per minute in the final pay calculated through the unionized wage rate.  The difference in minutes between the official time for departure from work and actual time for departure from work whenever positive should result in a deduction in the final pay by the same amount as that of the difference.  There should be set a production quota per employee in the packaging department not fulfilling which should also result in a fine imposition of one dollar per unfinished log. Pros: One advantage is that the workers will try not to lose out on their wages. Usually wage rates are set at $5 per hour worked. The costs of a $1 per minute associated with not fulfilling the production quota, leaving early or taking extended breaks are pretty high, keeping the workers in line. Cons: Once again the supervisors do not have full time to oversee the workers’ behavior in the double shifts of the packaging department, making the imposition of fines impossible. Plan of Action The first solution, although it requires two additional monthly salaries to be paid to the supervisors, is better than the other two solutions as most problems stem from a lack of effective control and supervision of the workers’ activities in the packaging department. The third solution that of fine imposition combined with the first solution offers the best way to increase productivity; the presence of fulltime supervisors enables the effective calculation and imposition of the fines. In the long run, solution one is more cost effective than having to pay overtime. Nearly 18 employees work in the packaging department. If all of them are paid 1.5 to 2 times the normal wage rate per hour for overtime that translates to a minimum per day total expense of $135-180 and minimum monthly expense of $-. Of course overtime can vary greatly from a single hour and so can these expenses. Theory Application First concept that applies to this case is of motivation through suitable rewards. The second concept is groups and teamwork and the third relates to how organizational structures for monitoring and control can affect productivity. TriVac Industries Inc. TriVac Industries Inc. Overview of Critical Issues Problems of cash flow led Heinrich to sell his shares to give controlling interest to Rohrtech. This one bad decision became a starting point for major change in the company. Following issues surface from the play out of the events. Low business acumen—led Heinrich to take bad business decisions and the pattern continued with Rohrtech unable to predict the politics within Trivac. Heinrich could have used other options such as take loan or offer an IPO to solve his restricted cash flow problems other than having to sell his company to a majority shareholder. Power play—Also, Heinrich was unable to predict the politics Weston, an original investor and a long time executive, used to oust him from the company. The joining of Devine as COO exacerbated the politics played within the TriVac Industries. Tom O’Grady, VP of finance and administration teamed up with Weston to create pitfalls against Devine’s work; pitfalls like providing incomplete information, criticizing his decisions, refusing to help him and encouraging the people to act against him. The final result was such that Tom O’Grady supported by Weston proved to the board of directors how Devine was incompetent to be the COO. The board agreed to replace Devine with Tom O’Grady as COO. Negative influence tactics—Even then Weston was not placated and used negative politics to convince the board to fire Devine, making sure that Rohrtech was left without any financial transparency into and controls over Trivac. Rohrtech BOD played right into the hands of Weston and Tom O’Grady, who used negative influence tactics by saying that a mass exodus of key managerial and other employees will leave the company if Rohrtech tried to make Trivac into a German branch office. Problems 1. Wrong decisions to solve Cash Flow problem. 2. Changed Rohrtech Ownership wanted more control. 3. Lack of transparency and Control over TriVac by Rohrtech. 4. Pressure Politics and influence tactics used by Weston and O’Grady. Major Problem—Rohrtech has majority of shares, by two thirds, but they don’t have any real power over Trivac. They are owners in name only but they don’t have any actual control. Possible Solutions Hire an outsider to replace the President—Mr. Kurt Devine (COO) wanted to do work but the problem he faced was that the Vice President of Finance & Administration, Mr. Tom O’Grady, backed by Mr. President (Weston) was not supporting him. One possibility can be to terminate and replace Mr. Weston’s with a capable and neutral outsider. With the hiring of a neutral person Tom O’Grady will not have the support to play out his politics. However, Mr. Weston is one of those investors who have been with the company since its start. He knows well about the company, therefore a newly hired president may not justify the title as Mr. Weston could. Shuffling of Management Ranks--President and COO have made an alliance. In order to break the alliance, both can be appointed on some managerial posts in different departments. The vacant seats can be filled as per requirement either internally or externally. But again, current president and acting COO are well experienced and skilled persons. By shifting, they can be demotivated. They may not work as well as they are doing in these positions. Let the system work the way it is working Another solution can be that let the system work the way it’s working. Because, apart from all the problems the company is facing, the core purpose of the business is being fulfilled and that is Profit or we can call it Performance. Yes, there are some serious issues going on, but ignoring it can also be an option. Changing the management structure may or may not solve the problem, so why risk it? And apart from that, changing management can be very costly too. This is a good picture of such solution, but in the long term can be very problematic too, as the performance of the company is dependent on the motivation of the employees. Negotiation Negotiation is another majorly used solution; a meeting can be called to discuss and eliminate all the issues among the management. They can be given concessions allowing them to run the company the way they wanted but with some compulsory terms and conditions supporting Rohrtech; these can include complete transparency and major influence in the company among several others in return for not hiring anyone from outside the organization. In case, the negotiation doesn’t work, BATNA (best alternative to a negotiated agreement) can be to fire the current President, Weston. Action Plan All the above mentioned solutions have their own plus points and draw backs as well. An action plan is needed which can combine the good points of all the other solutions and can reduce or try and cancel out the drawbacks. Rohrtech should go ahead with the negotiation. It should tell Trivac’s management that Trivac is now a subsidy of Rohrtech but still will be allowed to run itself without interruption but on the condition that there shall be complete transparency and that Trivac should consider the authority of Rohrtech over Trivac. Failure to do so will be a sign of weakness on the President’s part and he should resign immediately in that scenario. As far as the vacant seat is concerned Rohrtech should make it clear that it will be filled by a Rohrtech representative and Trivac has no right to protest in this matter. If Trivac feels that it cannot support the decision to place a Rohrtech representative then the company is ready to oust the present leadership and able to face the consequences of this action. Theory Application The case study shows how power and politics run side by side within an organization, triggered especially in cases where major changes are taking place; as reflected in the concept of change politics found in Organizational Behavior theory. Legitimate power shows how position authority can be used to justify decisions—in this case shown in the power gained through share ownership and also through appointment to positions of high authority. Negative influence tactics once again a part of power and politics in organizational behavior study are seen in the way high position holders within TriVac impacted the decisions of BOD. The concept of negotiation as a means of conflict resolution or for creating a win-win situation has also been borrowed from theory of organizational behavior.