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CASE STUDY – 9
Submitted to,
Professor Abhilash G N
On
August 8, 2014
In partial fulfillment of the requirements of
the course
Principles of Management
By
Nivin Vinoi
P14199
PGDM-B
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Table of Contents
Executive Summary…………………………………………………………………3
Situational Analysis………………………………………………………………….4
Problem Statement………………………………………………………………….4
Action Plan…………………………………………………………………………4
Implementation……………………………………………………………………..4
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EXECUTIVE SUMMARY
This case is about a manufacturing firm which is in the midst of shutting down due to
liabilities and lack of skilled labours. So the CEO of the company leveraged it and introduced
ESOP concept and motivated employees through education to increase efficiency and to get out
from the crisis.
(Word count: 50)
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SITUATION ANALYSIS
Will-Burt Company was on the verge of liquidation. CEO Harry Featherstone was trying all the
possible ways to get out the company from getting closed. Company’s profit was declining and
workers’ wages was less. Featherstone also found out that the product quality was so poor that
workers spend nearly 25,000 hours a year remaking faulty parts. Featherstone’s primary aim was
to prevent company from shut down and then give attention to profitability so they can get out
from all these liabilities. He was an enthusiastic person, so he planned to rework on the wastage
of raw materials, qualityof product, time consumed for remaking the product and the expense
due to this rework.
PROBLEM STATEMENT
How to prevent Will-Burt Company from closing and then change it into a profitable
organization?
ACTION PLAN
Introduced Employee Stock Ownership Plan (ESOP).
Improve quality.
Motivation by giving education.
IMPLEMENTATION
When Featherstone introduced Employee stock ownership plan (ESOP), he knows that if
company is not leveraged and if he keeps all shares with him no one will take responsibility and
no one can save Will-Burt. At that critical condition no one from the outside world will not be
ready to buy Will-Burt’s shares. So he leveraged company and give employees each shares. Thus
rather than mere employee, they became associates of the company. So for all profit and loss of
the company employees also became responsible. If the company dooms, as owners the
responsibility will come to employees also. So employees became more conscious towards their
working attitude and also it increased their morale. It helped Will-Burt from liquidation as well as
from further lawsuits He alsostarted handling out profit-and-loss statementstoall employees. But
lack of knowledge they didn’t understand it. So he simplified the hand-outs to a few lines stating
what sales were, what the cost were, whatthey made. Thus employeesbecame aware that they had
direct stake in the welfare of the company.
His next step was to increase profitability. After months of analysing and reanalysing the
company’s book, he found out that quality was a major issue. Will-Burt was spending $700,000 a
year reworking defective parts. He found out that by making the parts properly the first time, the
company would not only save money but also attract new customers. As an essential step in
improving quality he decided to educate his workforce. Featherstone invested in the teachers and
materials, and, in addition, paid employees at their normal hourly wage rate for their time spent in
class. The program worked. The annual rework expenses had dropped almost 75 percent and time
devoted to remaking parts fell to only 400 hours per month. Thus the wastage of raw materials
where reduced and quality increased and thus their pay increased.
Featherstone had the view that for empowering his employee’s skills should be given to them. His
initiation to study them was success and the employees responded positively to it. Through this
motivation the wastage of raw materials were reduced, time consumption decreased and
compensation alsodecreased. Thereforehe introducedMini MBA in a viewto createmore owners
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through business education. As an employee he will think about his work efficiency, but when he
become owner his view changes. But Featherstone was ready to face all these challenges and thus
he succeeded.
(Word count: 546)
