Gil Reihana was the chief executive officer an X-streme, company he launched in Auckland New Zealand, six years ago at the age of 25, after graduating with a bachelor's degree in information technology and management. He had inherited $300,000 and he persuaded various family members to invest additional money. X-Streme assembled personal computers for the New Zealand and Australian markets and sold them through a number of chain stores and independent retailers. The company had soon established a reputation for quality hardware, customized products, excellent delivery times, and after-sales service. Six months ago it had started a software division, specializing in web design and consulting on various applications for the development of electronic business. Gil was driven by a desire to succeed. He had started working part-time at an electronics retailer at age 16 and in his spare time took apart old computers in his garage to see how they were made. He was extroverted, energetic, and enthusiastic, often arriving at work before 5 AM and seldom leaving before 7 PM. He felt that work should be challenging but fun too. He had initially picked a young senior management team that you thought shared his outlook. A casual, almost irreverent atmosphere developed. However, a poorly organized accounting department led to the demise of the first accountant after two years. Gil believed that major decisions should be made by consensus that individuals should then be empowered to implement these decisions in their own way. In the beginning he had met with this with each staff member in January to discuss with them how happy they were in their jobs, what their ambitions were, and what plans they would like to make for the coming year in terms of their own professional development. As the company had grown this had become more difficult and he had left each member of the senior management team to do this with their own stuff, but did not monitor whether they were doing and how well it worked. Now he tried to keep in touch with staff by having lunch with them in the cafeteria occasionally. Denise Commins (affectionately known to all staff Dot Com) was the chief financial officer. She and Gil could not be more different. Denise was quiet, methodical, and very patient. Her superb interpersonal skills complemented a highly analytical mind. At 55 she was considerably older than most of the employees and often showed a strong maternal side. Many of her team (and several from other departments as well) frequently consulted her on work issues and personal problems too. She enjoyed the informal relationships she had built up but found that the technical aspects of her role were becoming less rewarding. Don Head, the marketing manager, was considered to be a rather ruthless operator, often undercutting the competition in terms of price, and, on more than one occasion, by circulating false rumours of defects in their products. He deemed himself "a ladies' man" and was.

1. Gil Reihana was the chief executive officer an X-streme, company he launched in Auckland New
Zealand, six years ago at the age of 25, after graduating with a bachelor's degree in information
technology and management. He had inherited $300,000 and he persuaded various family
members to invest additional money. X-Streme assembled personal computers for the New
Zealand and Australian markets and sold them through a number of chain stores and independent
retailers. The company had soon established a reputation for quality hardware, customized
products, excellent delivery times, and after-sales service. Six months ago it had started a
software division, specializing in web design and consulting on various applications for the
development of electronic business.
Gil was driven by a desire to succeed. He had started working part-time at an electronics retailer
at age 16 and in his spare time took apart old computers in his garage to see how they were
made. He was extroverted, energetic, and enthusiastic, often arriving at work before 5 AM and
seldom leaving before 7 PM. He felt that work should be challenging but fun too. He had initially
picked a young senior management team that you thought shared his outlook. A casual, almost
irreverent atmosphere developed. However, a poorly organized accounting department led to the
demise of the first accountant after two years. Gil believed that major decisions should be made by
consensus that individuals should then be empowered to implement these decisions in their own
way. In the beginning he had met with this with each staff member in January to discuss with them
how happy they were in their jobs, what their ambitions were, and what plans they would like to
make for the coming year in terms of their own professional development. As the company had
grown this had become more difficult and he had left each member of the senior management
team to do this with their own stuff, but did not monitor whether they were doing and how well it
worked. Now he tried to keep in touch with staff by having lunch with them in the cafeteria
occasionally.
Denise Commins (affectionately known to all staff Dot Com) was the chief financial officer. She
and Gil could not be more different. Denise was quiet, methodical, and very patient. Her superb
interpersonal skills complemented a highly analytical mind. At 55 she was considerably older than
most of the employees and often showed a strong maternal side. Many of her team (and several
from other departments as well) frequently consulted her on work issues and personal problems
too. She enjoyed the informal relationships she had built up but found that the technical aspects of
her role were becoming less rewarding.
Don Head, the marketing manager, was considered to be a rather ruthless operator, often
undercutting the competition in terms of price, and, on more than one occasion, by circulating false
rumours of defects in their products. He deemed himself "a ladies' man" and was known to flirt
with the number of the staff. A case of sexual harassment had been dropped after a 22-year-old
secretary had been paid a sizable sum of money. Gil and the members of the senior management
team had been furious but Don had denied any wrongdoing, claiming that she had "led him on".
He had been at University with Gil and they spent many hours after work at a pub around the
corner from the factory. With sales rising year after year his marketing expertise and cunning were
regarded as essential to the company's continuing growth. He had a department of eight whom he
had carefully screened hasn't as ambitious self-starters. They were required to set and achieve
their own targets, as long as they were "big hairy ambitious goals", a phrase he had heard at a

2. seminar.
Jason Palu, the production manager, was a soft-spoken man who had started as a supervisor and
who had worked his way to the top position. He set extremely high standards for the production
staff and was considered to be a perfectionist. He was a highly regarded by his colleagues for his
efficiency and reliability. There were very few occasions when an order could not be fulfilled on
time and his goal was zero defects. He tended to be autocratic and some people complained that
he never listened to them, allocated work hours and did not suit people, often insisting on (paid)
over-time but at very short notice. When one production worker complained he tersely remarked
that "we have a job to do and we are just we just have to get on with it. The company depends on
us."
Heather Berkowitz was the chief web designer. She had blue hair, several piercings, and dressed
in a variety of exotic clothes that had been sourced from a number of thrift stores. She seldom
arrived at work before 11 AM and often left before 4 PM. She said she did her best work at home,
often at night, so why should she "punch the clock like the drones on the assembly line'? Gil and
others and often received emails from her that had been sent at all hours of the night. She had
established a reputation as a top web designer, and although her physical appearance did not go
down too well with some of the companies clients (or staff) the quality and quantity of her work
was extremely high.
On Tuesdays at 9 AM the senior staff met to discuss weekly plans and any significant issues that
had arisen. All employees were invited to the meeting, an opportunity that some took advantage of
by attending. Gil trusted all staff to keep confidential matters within the company. He believed that
if the organization shared information with employees they would be more likely to support
management decisions. The meetings lacked formality and usually started with some jokes,
usually at the expense of some members of staff. By and large the jokes were meant to be
inoffensive, but were not always taken that way. Nicknames were often assigned to staff, mostly
by Don Head, some quite derogatory. You were thought to be a loser if you objected. Don seemed
oblivious to the unflattering nickname he had been given, preferring to call himself Madman,
sometimes even signing his memos in this fashion.
Although employment agreements referred to a 40 hour work week there was an expectation that
staff would put in substantially more than that. Only the assembly-line workers had to clock in and
out but this, Jason had explained, was due to the overtime that assembly staff were required to
work to meet deadlines. The overtime pay was welcomed by some production staff and resented
by some employees in other departments who believe they should be entitled to the same
benefits.
Recently a conflict arisen between Jason and Don. The company had been developing for some
time a top-of-the-line laptop that was scheduled for launching into weeks' time. Jason had been
urging senior management to delay the introduction of the new X-MH until some hitches had been
sorted out. A batch of chips acquired from abroad had contained some defective features. He
wanted to postpone the new model until these problems had been completely sorted out, a
process that he believed would take another month. Don found this unacceptable. If we're not All
Black captain had been contracted to attend the launch and market the new model on a road show
that would travel to New Zealand and Australia's main cities. He would not be available at the time

3. Jason was prepared to release X-MH. At a heated staff meeting some of the senior staff backed
Don, some agreed with Jason. Don had urged all of his department to attend the meeting, to
present a united front and convey an image of power.
Heather Berkowitz had arrived halfway through the meeting and with a mouthful of muffin
proclaimed that there was no rush to get out the "new toy". The company had plenty of other
issues to which it could devote its energy. She said she had met the head of information
technology of a chain of fast-food restaurants who wanted to revitalize its website. She maintained
she needed three extra staff to get this up and running. She exited the meeting five minutes later.
Don was fuming at the interruption and demanded that Gil should stick to the original launch date
of the X-MH. Gil calmly replied that he understood Don's frustration but that more consultation was
necessary. He said that it would be discussed by the parties concerned during the week and the
final decision would be made at the following Tuesday's staff meeting.
Don spent the rest of the day lobbying other members of the senior staff. He offered Dorothy the
use of his beach cottage if she backed him and promised to support her on the acquisition of
expensive new accounting software. She just laughed and said that she was convinced the senior
management team would improve the new software. She also informed Don that a member of her
staff had seen one of his sales representatives entering a strip joint the previous week at a time
when the sales force and been engaged in a staff meeting.
Other problems had arisen in recent months. Ramesh Patel, the newly recruited head of e-
business applications had, with help from a personal contact, developed a software program that
would help hotels and restaurants source products and services over the internet. It was beginning
to generate useful revenue. His contact had now billed to X-Streme for $25,000 in consultancy
fees and development costs. Remesh claimed that his contact had old him a favor and that no
mention of money had ever been made. X-Streme had referred the matter to its legal counsel.
Les Kong, the research and development manager (hardware) and complained to Gil that he could
no longer work under Jason Palu. While he considered him a very pleasant man, and a very
capable production manager, he could no longer tolerate a strict control style. "You can't do
creative work on command!" was is his lament. He loved his job and had spent hours over several
weekends developing and refining a new product.
There was considerable resentment from Jason and Don about the resources that had been
invested in the software division, partly because they did not see the need for the company to
diversify and partly because they claimed that money was being diverted from their departments to
find the new ventures. Ramesh claimed that "a good e-business starts at home - we should open
up all our procurement via the Internet." His suggestion did not go down well Jason and Don.
Gil had been pondering the structure of X-Streme for some time. The old functional structure no
longer seemed appropriate. "Silo" mentality and departmental interests seemed to predominate
and turf wars took place. The company has grown to 64 staff in New Zealand and 8 in Australia.
The ongoing development of new hardware and the introduction of the software side of the
business had made management somewhat complicated. He missed the old days when he knew
every member of staff. The informal decision-making that was characteristic of the business might
have to give way to more formal processes. Yet he did not want to lose the creativity that
underpinned it success. Despite the open invitations to attend the management meetings many

4. staff complained that they never knew what was going on. He expected all senior managers to
keep their departmental staff informed of developments. Some had done this admirably while
others had virtually ignored his wishes.
A human resources manager, Alkina Bennelong, had been equal appointed a month previously
and reported to Denise Commons. She had been reviewing the company's loosely worded job
descriptions and person specifications and the recruitment and selection systems and had
suggested more professional but more elaborate approaches. She had also suggested the
introduction of a performance management system, including feedback from peers, direct reports,
and outsiders, such as suppliers and customers. "Over my dead body!" was the retort from Don
Head. "How can you allow subordinates to tell you how to do your job?" queried Jason Palu.
"Can't see what all the fuss is all about," said Heather Berkowitz. "Everybody keeps telling me
what to do anyway, even though they don't understand the first thing about my job! But it doesn't
worry me."
Assuming the problem is the company's struggles with organizational effectiveness, use
FOUR theories from the IN-CLASS list explaining WHY.