Reference no: EM132904588

Question

Background
Media AG is a German company founded as a small printing operation. Over the past few years the company has, through skilful management, expanded rapidly and now has interests in many other areas of the media industry. As part of this strategy the company decided to take advantage of the opportunities provided by the Single European Market to expand its interests into other countries in Europe.

A particular opportunity arose to purchase a majority share in a French company which specialises in security printing including the production of cheques and banknotes. The French company operated exclusively in its home market of which it had a significant share. It had been built up by a technically well qualified team and was financially sound. These factors led the Germanparent company to decide initially that the subsidiary should operate autonomously and to limit its involvement to long-term strategic decisions.

The French company is headed by Monsieur Warner, the President Directeur General (PGD). He graduated from one of the leading French 'Grand Ecoles' and worked for ten years in the Ministry of Finance in Paris. During this time he developed a close working relationship with the French subsidiary which had many national contracts with the Ministry for the production of banknotes and other security work. When the position of PGD became vacant, M. Warner expressed an interest in the post which provided him with the opportunity to move from the civil service and into industry, a move which had been a long-term objective of his career.

French institutions are, regardless of their size, often highly centralised. The PGD manages through a strict hierarchy according to functional lines and top-down communications; the matrix structures found in many enterprise cultures are very rare in France and communication and authority lines run vertically from, and to, the PGD. In taking up this position M. Warner entered at the top of this formal hierarchy with no experience of managing in the private sector or of the detailed work going on in the company. He therefore relies heavily on the experience of his senior managers in the day-to-day management of the company.

The responsibility for production matters within the company rests with Monsieur Abel, the production director, who reports directly to the PGD. He has been with the company for most of his working life and has held his present position for 20 years. His background is very different to that of the PGD. He received no formal higher education and his career progression has been achieved through his dedication and effective performance within the company.

M. AbeI's leadership style reflects the typical behaviour of the French patron' - a style still found in many medium-sized French companies. It can be characterised as being highly task orientated with social relations between the 'patron' and his employees conducted on a paternalistic basis. Abel has worked hard at improving the performance of the company, relying on his lengthy experience of the business to make his decisions. His detailed knowledge of the business, with which no one in the company can compete, has led to his authority within the company being beyond dispute. Consequently he exercises what he perceives to be his right to make decisions independently and without consultation. His colleagues and subordinates are not, therefore, involved in the decision making process, there is limited delegation and subordinates are regularly required to seek M. AbeI's advice over production matters. This approach has led to the staff having a high level of dependency but it has equally created a high degree of security for his employees. Abel's approach seems to complement the attitudes of the workforce, many of whom are middle-aged or older. These employees seem strongly influenced by such traditional work ethic criteria as duty, obedience and following orders without criticism.

An important element of French business culture is the 'cadre'. The term 'cadre' symbolises and independent and professional strata of employees with its own access criteria and regulations. Membership reflects a degree of competence and becomes a key recruitment criteria for companies when hiring managers. Cadre personnel benefit from a special legal status with additional periods of notice and enhanced pension rights. Access to the group of cadres is possible through three different routes:

- Without any higher education qualifications, entry is restricted to those who can demonstrate competence over a period of a number of years with one employer. This is the case with M. Abel.

- With a higher education qualification, taking up to two years study to obtain, additional relevant experience of between five and ten years is required.

- Immediate access to cadre status is given normally to graduates of the leading 'Grand Ecoles'. This is the case with M. Warner.

The Situation

M. Abel has recently suffered from two heart attacks and the PGD believed that it would be wise to replace him with a younger manager. Abel is close to retirement age and, with the additional pension benefit entitlement due to him through his membership of the cadre, his standard of living would not be significantly affected by this decision. Abel accepted the decision and the company began the search for a replacement. However, when the idea was proposed to the German parent company the head office felt that this would be an appropriate time to become more closely involved in the affairs of the subsidiary. They decided to initiate a management exchange between the two countries and to make M. Abel's replacement the first of these appointments.

The person chosen as the new production director of the French subsidiary was Dr Bernard. He is 35 years old, an engineer by training, with a Masters degree in engineering and a PhD in business studies obtained at the technical university of Munich. His thesis dealt with the topic of 'Profit sharing - a comparison of American and German views and ethics'. His educational career has placed a premium on the acquisition of intellectual capability and the ability to solve problems systematically. During several of his vacations from college he undertook work placements in France and on his own initiative he took an intensive French language course in Paris. Dr Bernard joined Media AG some five years ago as the personal assistant to the chairman. While in this post he has successfully completed a number of projects, some at his own initiative, in the areas of finance, sales and, particularly, production. The combination of his academic training, language skills and experience, together with his insights into the strategic issues at the parent company made him, in the view of head office, an ideal candidate for the post.

Even though the French were not particularly in favour of Bernard's appointment (they would have preferred a Frenchman), they accepted the decision, recognising that it would create stronger links between the two companies. One of M. AbeI's colleagues, commenting on the change of leadership said, 'I knew Abel 40 years ago when the company was being built up. He started in charge of printing and worked himself up through the company. We often had arguments with him and he occasionally treated the workers as if he was a dictator, but production ran smoothly and, in the case of an emergency, we all stood behind him. Dr Bernard is a sensible guy, has excellent qualifications, but is always so serious, somehow cold.'

Dr Bernard relished the challenge of his new position as Production Director in a foreign country and had developed firm ideas on how he would tackle his management role. He had closely studied the features of participative leadership styles and was determined to introduce them to the company. Delegation wherever possible, teamwork and joint decision making, if necessary all the way down to the shop-floor, regular two-way communication and the systematic enhancement of skills through training were to be foundations of his approach. ln particular he planned to introduce a management by objectives scheme similar to that operating in the parent company. Before taking up his appointment he had discussed these matters with senior management at Media AG and received their support for his ideas.

Bernard had been told several times about M. AbeI's leadership style and realised how different it appeared to the approach he planned to take. He was sure, however, that the employees would like his style which would develop the potential within the workforce, not least because of the greater involvement and autonomy his way would provide for them. For the first eight months Dr Bernard was satisfied with the way things were going at the subsidiary. Productivity levels had been maintained while the employees had adjusted to his style of management. Three employees had resigned from the company during this period; two fully qualified operators and one young technician. As was typical of his approach, Bernard examined their reasons for leaving very carefully and established that all three had left for reasons unconnected with their jobs. In one case, the employees father-in-law had died and he had inherited the tobacconist's shop the relative had owned. Another had built his own house outside of the town and had found a similar job nearby and the technician had been offered a job which promised much faster progression than he could expect at the company.

Bernard is very surprised, therefore, when, a couple of months later, he is called to Warner's office and handed a letter by the PGD who says 'read this and tell me what you think'. He takes the letter and recognises the author as being Andres Maillot, the head of production planning and one of Bernard's immediate subordinates. Maillot is a serious person, 61 years old, a dedicated company employee and extremely competent in this job. Bernard has a high regard for Maillot's work and has taken every opportunity to personally recognise his contribution to the company.

Andres Maillot writes:

Dear M. Warner,

Over the past few weeks I have asked myself many times whether I should write a letter. Please do not misunderstand my intentions in the criticism I am about to make of the Production Director. I recognise that he is technically very good in his field, but at present the production operation is not working as well as it used to. Soon, I believe, there will be even greater difficulties and it is in order to prevent these that I am writing to you. I have explained all the problem areas to Dr Bernard but in vain. His way of thinking makes it difficult for him to understand what I and the rest of the staff are feeling. Perhaps I can best explain our worries more clearly by comparing Dr Bernard with M. Abel.

When M. Abel had to deal with one of us on a production matter he would call us into his office, tell us the details of the problem, the solution he required and what we were to do and by when. When we left the office we knew clearly what was expected of us. With Dr Bernard it is very different. We frequently have meetings (I counted them in July - of 184 working hours 58 were spent in meetings called by him), where we would have long discussions at the end of which Dr Bernard did not come to a decision. What he repeatedly says is 'the success of the company depends upon us working together as a team to find a solution with which we are all satisfied. It sounds great and we are doing our best to help but at the end of the day we are only responsible for our own area of work.

If we took a question to Abel we would either get a straight answer or, if he felt we should know the answer, we would get a telling off. I remember him saying to me on more than one occasion, 'After 24 years you should have learnt this by now'. Well, you certainly got an answer! We were all used to his way and realised that nothing personal was intended. Abel knew all there was to know about printing and the decisions he made always worked.

Dr Bernard, on the other hand, always starts by asking us what the problem is and we have to systematically explain everything. Then he asks, 'What would you suggest as the solution? - What are the advantages? - Disadvantages?' and 'Do you want to discuss this with Mr X or Mr Y and see what he thinks'?' At the end of the meeting we are no wiser than we were at the start. The only thing that has been achieved is the time of another meeting a few days later to discuss solutions.

Dr Bernard encourages us to take responsibility for making our own decisions and to use our initiative in work matters. But two years ago when, on my own initiative, I gave the go-ahead to print an order to eurocheques, I nearly lost my job as no one told me that the contract had been cancelled eight weeks prior to the scheduled start of production. The stress that I felt as a result of this incident forced me to take several weeks off work.

Also significant is Jean Fleur, the print technician's reason for resigning. He pointed out a technical inadequacy on one of the machines to Dr Bernard. Bernard was very appreciative and friendly and told him to come up with a solution within the next three months. Fleur was so surprised and concerned that he took a job in another company because he was afraid he could not solve the problem and would be sacked. After this event the employees feel that it is better not to make any suggestions to Dr Bernard if they want to keep their jobs.

Abel was frequently found in the production area; he talked to all the staff and occasionally joked with them. He could spot when people were not pulling their weight and would tell them off there and then but he was always available if people needed help. Dr Bernard goes through the production area every day but because virtually everything is discussed in meetings personal contact is rare and he is like a stranger to most of the staff. They also believe that he has no sense of humour. When he first started at the company some of the employees tried to speak to him in the same way as they had to Abel but he did not seem interested in conversation so now none of them speak to him anymore except to say 'good morning'.

Abel was, at the same time, the most loved and the most hated person in the company but we all knew were we stood with him. We are much less sure of Dr Bernard's management style and his personality is alien to most of us. The training courses on management by objectives which he set up were interesting and we know that he wants to introduce this scheme into the company and so change the way it is managed. I am not alone in believing that these ideas will just not work in our company. We are all very worried about the future.

He does not take our concerns seriously. His standard reply is that we should all want the company to prosper and to make work more satisfying for everyone. At the moment, however, satisfaction has decreased.

(Following this there was another apology and a statement that he would inform Bernard of the contents of the letter if necessary but preferred it to remain confidential for the time being.)

Dr Bernard laid the letter down. The contents came as a complete shock to him. He felt that through his participative, reasoning approach to management the staff would see the benefits it offered themselves and the company. Their reaction went against everything he had learnt about leadership and he is upset that they did not understand his managerial philosophy. He accepts he is not good at social conversation but is hurt that despite his politeness and inner belief in people his attitude was viewed so negatively by the employees.

Bernard reflects upon the events that have occurred and thinks to himself 'This has been my greatest failure'.

Q1 Identify the problems in the case from the perspective of the Company. In identifying the problems, differentiate between the symptoms of any problems and the causes. Relate your answer to the theories we have covered on the module.

Q2. Identify what appear to be the most appropriate solutions to the problems identified & give reasons for your choice. Explain why other solutions have been rejected. In answering Q2 include your view on whether it is appropriate or not to continue working with Mr Abel. (50% marks)

For question one how would i apply the concept of unitary perspective and pluralist perspective to the two different people in the case study of Mr Abel and Dr Bernard. Also, how could i apply the concept of the managerial escalator, managerial gap and managerial hybrid to the case?

For question two, can you explain to me what it means by giving the appropriate solutions, does it mean for example in this case either training Dr Bernard, or getting Mr Abel back into the business because he was better than Dr Bernard in terms of his style and approach?