Paul Sanchez is the production manager for Echo Electronics, a small company that makes
and distributes communications equipment. Paul’s direct subordinates are the supervisors of the
four production departments in the company’s manufacturing plant. Six months ago, the engi-
neering manager at Echo Electronics proposed a plan to install new computerized workstations
to increase productivity in the plant. It seemed to be a good idea to Paul, and he welcomed the
change. The CEO also approved the plan, and the new equipment was installed immediately.
Three months later, Paul was surprised and disappointed to find that the expected increase
in productivity did not occur. In fact, productivity and quality actually decreased. The mar-
keting manager told Paul that several of their best customers complained about receiving Echo
equipment that was defective. Paul does not believe that the problem lies with the new worksta-
tions. Technicians from the firm that built the workstations recently checked them and found
that they were operating properly. Paul talked to someone at another company that uses the
workstations, and his contact reported that they were having great success with them.
When Paul discussed the problem with his four production supervisors, he found that they
shared his concern but did not agree among themselves about the cause of the problem. Reasons
given for the decline in performance included poor design of the workstations, inadequate train-
ing of the production workers who operate them, and lack of financial incentives for increasing
productivity. The supervisors also told Paul that the production workers have strong feelings
about the workstations. Morale declined, and two employees quit because they were upset about
the changes made in the way the work is done.
This morning, Paul received a phone call from the CEO who just received the production
figures for last month and was calling to express concern about them. The CEO indicated that
the problem was Paul’s to solve, but he must take immediate steps to deal with it. The CEO wants
to know by next week what steps Paul will take to reverse the decline in productivity and product
quality.
SOURCE: Adapted from a case by Timothy R. Hinkin and used with his permission.
Questions
1. What actions could Paul have taken to prevent the problem?
2. What steps should Paul take now to deal with the problem?