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Case: 4 Eastern Tires Co: What's wrong with Carl?

QUESTIONS:

  1. What is wrong with the company organization? Support your claim with evidence from the case. How would you suggest to rectify the situation?

  2. What are the necessary management skills for an administrator like Mr. Carl Lee?

Suggested solution:

Question 1

There is a lack of good management practice within the company organization. Evidence:

  1. The president says a computer costs too much.
  2. The president makes the final decisions.
  3. Bush feels that this executive could take over some of the duties now performed by the president.
  4. Carl is also unwilling to delegate responsibility.
  5. Due to Carl's illness, the company lost a major contract.

It is suggested that the Eastern Tires Co. should adopt the functions of management to rectify the situation. They are planning, organizing, directing and controlling.

  1. Planning involves deciding on a course of action. Planning is deciding what to do, setting company objectives, determining strategy, and selecting alternative course of action. It involves the following activities:
    1. Determining Eastern Tires Co's short and long-term objectives;
    2. Formulating policies, programmes, and procedures;
    3. Considering information from periodic follow-up reviews to determine what changes in plans may be needed.

  2. Organizing is the way managers divide up the work to be done and the structure they develop to see that it is complete. It involves the following activities:
    1. Divide the work to allow specialization;
    2. Group like or related jobs together;
    3. Delegate authority to supervisors to run the various subunits;
    4. Develop co-ordination mechanism to see that things run smoothly.

  3. Directing, as a part of the management process, is achieving organizational objectives by motivating and guiding subordinates. Leadership is the ability to influence others to behave in a certain way. Different leadership styles have been found effective in different situations:
    1. Automatic leader who makes decisions autocratically without consulting subordinates. As in this case, "usually the president [Carl] makes the final decision ..."
    2. Democratic leader who consults with subordinates before making a decision. As in this case, "Bush has urged his brother [Carl] to seek the directors' approval to appoint an executive vice-president."
    3. Free-rein leader who allows most decisions to be made by subordinates with a minimum of direction from the leader.

  4. Controlling is a procedure for measuring performance against objectives. It is the mirror image of the planning, in that it is designed to see that what was supposed to happen is happening. It involves the following activities:
    1. Establishing standards from planning;
    2. Scheduling work;
    3. Reviewing costs;
    4. Exercising supervision; and
    5. Taking corrective action.

Question 2

An administrator like Mr. Carl Lee is a top-level management person responsible for the work performed by others under his supervision. He originates orders, makes decisions, and sets company policy. As a decision maker, administrator should possess three interrelated basic skills -human, technical, and conceptual skills. (Robert Katz who classified three basic types of management skills leading to effective management.)

Human skills refer to the managerial ability to communicate, understand, lead and motivate others. They are of particular importance for managers at the middle level because they have more frequent contact with people and get things done properly through people.

All levels of management need human skills but other skills should not be ignored, especially for senior management and supervisory management.

Technical skills are important to supervisory management because they are more involved in operations. Technical skills refer to the ability to use the methods, tools, procedures equipment and techniques in performing specific tasks in a specialized area.

Conceptual skills are also important. Senior managers must have the mental ability to co-ordinate and integrate all of an organization's activities, especially in the long-term decisions affecting the organization. In addition, conceptual skills are needed to see the organization as a whole and recognize how the various factors in a situation are interrelated so actions taken are in the best interests of the organization.

Human skills and technical skills are more important at a lower level, where more manager-subordinate interactions occur. Conceptual skills are needed at all levels of management.

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Eastern Tires Co: What's wrong with Carl?

Eastern Tires Co. is having a managerial problem with its top management. In general, the company's executives feel that the president lacks leadership qualities and does not know how to get along with others.

Mr. Carl Lee and Bush Lee, brothers, established the company in 1963. The company manufacture tires and brake pads for bicycles. These products are marketed under the brand name of Steel-Rubber through bicycle dealers and service stalls in Hong Kong and China as replacement parts. They are still the principal shareholders. Mr. Carl Lee owns 51% of the outstanding common stock, and Mr. Bush Lee owns 19%. Through a perk package, other six employees, including two of the company executives, own the remain stock.

Mr. Carl Lee is the president. Mr. Bush Lee is the treasurer in charge of all accounting matters including the payroll department. The company currently employs 225 workers on the production floors and 23 clerks in the management office.

During the years of his tenure as president, Mr. Carl Lee has displayed the philosophy of leadership which may have an negative impact on the management of the Eastern Tires Co:

  1. He has never considered the benefits but the costs. When Mr. Derick Au, the plant superintendent, has requested to install a computer for quality-control purposes in the plant. He has rejected the request simply because it costs too much.

  2. He has never permitted worker grievances on the shop floor. He dismisses whoever files a complaint.

  3. He has never provided an inventory human resources suitable for promotions. There is no guidelines for promotion and further training.

  4. He has never set the salary scale. He decides individual salary based on his favourableness.

  5. He has never provided a sytem of appraisal which is clear, informative, and equitable.

  6. He has never planned ahead.

  7. He has never utilized upward communication channels.

  8. He has never reached a group decision with other directors. He always makes his snap decisions.

  9. He has never delegated authority and responsibility to subordinates. He requires all sales people to call in for approval of sales whenever on business trips in Hong Kong or China. On one occasion, during his illness, the company has once lost a major contract with an agent for 5,000 replacement tires in China.

On several occasions, Mr. Bush Lee has urged his brother to seek the directors' approval to appoint an executive vice-president. Mr. Bush Lee feels that this executive could take over some of the duties now performed by the president. Mr. Carl Lee's philosophy and beliefs are often at odds with Mr. Bush Lee's, and this has result in some heated quarrel.
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