Overview of the case

The story of the case is circulated around a small family owned manufacturing company named “The Will-Burt Company” based in Orrville, Ohio. But in October 1985 the company found itself on the verge of liquidation. Will-Burt had just had its insurance coverage cancelled following a liability suit in which the company lost $6 million and some additional suits are pending. In this situation the owners of the company told Harry Featherstone, the CEO of the company to find new owner of the company within December 31 otherwise the company would permanently close its doors in January.

Featherstone found himself at the control of a doomed company. Will-Burt had $20 million in sale, but profit had not topped 5% in the recent year. Workers were spending nearly 25000 hours a year remaking faulty parts since product quality was so poor. Its wage rate was $2 below the area average and turn over often topped 30%. Because of the lawsuit people did not see any future. But Featherstone did not lose heart. At first he decided not to tell any employee that the business was going to close. Finally Featherstone’s lawyer proposed that he do a leveraged buyout (Leveraged buyout- The acquisition of another company using a significant amount of borrowed money….) and place Will-Burt into employee stock ownership plan (ESPO). This plan saved the company from liquidation and he hopped that employees would be more committed to the company if they own a piece of the company. Then Featherstone’s first task is making his employees understand that they owned the company through ESOP. They provide some pamphlets to the employee but many of them had trouble grasping the concept. So Featherstone decided to help the new owners of Will-Burt to understand. First he began handing out profit and loss statement to all employees but this did not work. Then he simplified it and tells them the amount of sales, cost and profit. Thus the workers realize that they had a stake in Will-Burt’s success.

Will-Burt had $2.5 million in debts more then the company was worth in its books. IN addition the company owed $1 million to the bank in 1986, with the first payment of $250,000 due in only a few months. Will-Burt had earned $1 in its history for the first time. After analyzing Featherstone found that they spend $700,000 a year in remaking faulty parts. He thinks if they could make parts properly first time they can save money and attract new customers.

As an essential step in improving quality he decided to educate his workers with assistance of university of Akron. Worked based classes in math, blueprint reading, geometry and statistics were designed and made mandatory for all employees to improve their skills. Not all employee like education but 80% want more education to improve their lives. By the end of 1988, Will-Burt’s annual rework expenses had dropped almost 75% to $180,000, and the time devoted to remaking parts fell from 2,000 hours per month to only 400 hours per month. A new pay system caused employee moral to soar. Absenteeism fell to 2% and worker’s compensation cost dropped from $160,000 in 1985 to meager $662 in 1992. As a consequence of this success they were

adding more course including advanced blueprint reading, geometric tolerance and statistical process control. Featherstone also initiated a mini MBA program to help employees and they understand that education creates involvements and involvement creates knowledge. Camaraderie and pride replace apathy. According to Featherstone, ”We have formed a team, a solidarity- from our janitor to our salesperson to our clerk- when it comes to our customers.”

Answer to the questions provided in this case

Q1: What assumptions underlie the employer-employee relationship at Will-Burt prior to 1985?

What assumptions now drive the relationship?

Ans: Employer-employee relationship plays an important role in the success of every company. If this relationship is good, employee productivity and moral would be high. They fully devoted them to the work. If the relationship is bad employee productivity and moral would be low.

In this case Will-Burt is a small family owned manufacturing company. In this company prior to 1985 employer-employee relationship based on the assumption that employees gave their time, energy and skill for the company and they get wages. Employees did not feel that this is our company instead they feel that this is their company and we are only worker. Employees were not fully devoted them to work. As a result product quality was so poor in the recent years. Their average income was low and turnover rate often topped 30%. Employee morale was also low.

But now employer-employee relationship based on the assumption that employees are also a part of the organization, they are not only worker. Featherstone save the company from liquidation through ESOP plan. He hopped that employees would be more committed to the company if they own a piece of the company. He made the employee fell that they are the owner of the organization. They had a direct stake in the welfare of the company. They have to work together for the welfare of the company. Featherstone emphasized on owner ship and team work. This assumption now drives the employer-employee relationship.

Q2: What obstacles did Featherstone confront in motivating his employees?

Ans: Harry Featherstone, the CEO of the Will-Burt company had just taken charge in October and found himself at the control of a doomed company. Product quality was so poor in the recent years. Employee morale was also low.

Featherstone tried to motivate his employees. Motivating employees is very important for the company. If employees are highly motivated their productivity and moral would be high. He also tried to save the company from liquidation. He did this through ESPO plan. This plan saved the company from liquidation and he hopped that employees would be more committed to the company if they own a piece of the company. When Will-Burt temporarily saved from liquidation, Featherstone tried to make his employees understand that through the ESPO they owned the company. But employees did not understand properly what ESPO is? Company provides some pamphlets to the employee so that they could understand. But it did not make any sense to them. So Featherstone decided to help the new owners of Will-Burt to understand. Under ESPO law, Featherstone did not have to open the company’s books. But since workers had equity, he thought, they should know the numbers. If they had the facts, they would better comprehend his decisions. So in 1986, he began handing out profit and loss statement to all employees but they could not read the thing. Then he simplified it and tells them the amount of sales, cost and profit. Finally, the workers realize that they had a direct stake in Will-Burt’s success. They held the power to determine Will-Burt’s success.

Q3: How else could Featherstone have addressed Will-Burt’s employee-related financial difficulties? What would you have done?

Ans: Organizational change is generally looked at as a planned process. Yet, when the employees buy their own company they embark on a venture that eventually emerges as a self-growing culture. The article outlines major challenges and findings, including some of the emotional consequences. At first both management and workers expect each other to change. But gradually, a minority of technical activists sets an inspiring example for the rest to follow. As management and labor hereafter begin to listen to and recognize the need to remedy the concerns of each other, a new cooperative spirit of sharing, caring and honesty slowly emerges.

The CEO of the Will-Burt, Featherstone could have addressed Will-Burt’s employee-related financial difficulties with the help of Motivation. The theories of Maslow and Herzberg are very suitable for this kind of management; the outcome may not be what is expected, so this is the main discussion point about the relationship between theory and reality. The theories of Maslow and Herzberg are surely worthy to be the reference for implementation, but there are still some theories which assist and support these two theories to make it more complete, and it is also very important to take this into consideration.

In the following, I am going to discuss the combination of those theories and the practical method for execution:

The theory was developed by Abraham Maslow (1943, 1954, 1971), and his main argument was on the resolution between drives and motives and he claimed we have nine intrinsic needs. During the nine needs, from the basic biological requirements to the highest hierarchy self actualization and it really pointed out the progress of needs from human beings. However, the process could be stopped by any levels, and besides, maybe it is too vague for the Mr. Featherstone to predict the behavior from the employees of the company because there are different positions of jobs which have different working content. Although the Maslow’s theory still offers the correct concept, the situation nowadays may need some adjustment. The theory is more of a social philosophy which reflected white American middle-class value, so it cannot cover all the conditions. Clayton Alderfer (1972) claimed the ERG theory which included existence, relatedness and growth needs. Alderfer’s theory could be linked to the Maslow’s theory which is biological and safety needs, affiliation needs, and self-actualization and self-esteem needs. It simplified the process of the Maslow’s theory and making tasks more challenging and praising and rewarding high performance.

Q4: What was the impact of educating employees on Will-Burt’s performance?

Ans: Featherstone decided to educate his employees in order to improve their knowledge, skill and quality. Featherstone found that Will-Burt was spending $700,000 a year remaking defective parts. He thought that if we make the part properly the first time, we not only save the money but also able to attract new customers. So Featherstone decided to educate his employees with assistance of university of Akron. Worked based classes in math, blueprint reading, geometry and statistics were designed and made mandatory for all employees to improve their skills.

Featherstone made a great decision and it had a great impact over the employees and the company. The program worked out of 100 people and 80 of them want more education in order to improve their lives. As a result by the end of 1988, Will-Burt’s annual rework expense had dropped almost 75% to $180,000 and time devoted to remaking parts fell from 2,000 hours per month to only 400 hours per month. They had able to implement new pay system that resulted in a raise for nearly everyone in the company, caused employee moral to soar. Absenteeism fell to 2% and worker’s compensation cost dropped from $160,000 in 1985 to meager $662 in 1992. As a consequence of this success they were adding more course including advanced blueprint reading, geometric tolerance and statistical process control. A new emphasis on quality and innovation spread quickly throughout the company. They understood that education creates involvements. So they want more education to get more involved. Camaraderie and pride replace apathy.

Through the education program, Featherstone able to improve skill and knowledge of the workers and it works behind the success of the company.

Q5: To what do you attribute Will-Burt’s success?

Ans: Will-Burt is a family owned manufacturing company. In October 1985 the company found itself on the verge of liquidation and without new owner the company would permanently close its doors in January. It had no insurance at all and some lawsuits were pending. Because of lawsuits people did not see any future of the company. But Featherstone, the CEO of the company saved it from liquidation and made it profitable. There are many reason of Will-Burt’s success.

When the company lost its insurance coverage and was fighting against some lawsuits, Featherstone decided to make the company work at any cost. He did not lose heart. He had a strong desire to run the company. Through the ESOP plan he saved the company from liquidation. Through ESOP plan he tried to motivate employees so that they work hard for the company. Then he took several attempts to making his employee understand that they owned the company through ESOP plan. They provide pamphlets to employees and it did not work. Then they began handing out profit and loss statement to all employees and it also did not work. At last he simplified it and tells them the amount of sales, cost and profit. Thus the workers realize that they owned the company and had a stake in Will-Burt’s success. Then he turned his attention to profitability. He found that they spend a huge time in remaking faulty parts. He wants to remove this problem to save money and attract new customers. So he decided to educate his employees and developed a training program with the help of the University of Akron. As a result knowledge, skill and productivity of the employee increased. They can reduce annual rework expense and time in remaking faulty parts. As a consequence of these successes they were adding more course including advanced blueprint reading, geometric tolerance and statistical process control. Featherstone also initiated a mini MBA program to help employees and they understand that education creates involvements and involvement creates knowledge. Camaraderie and pride replace apathy. These are attributing Will-Burt’s success.