Thecase study is about TriVac Industries Limited, which is a Canadianmanufacturer of centralized vacuum systems. The company wasexperiencing cash flow problems due to an increasing demand for itsproducts and expansion of the production facilities. To solve theirmoney problems, the company’s founder and majority shareholder metwith Rohrtech’s GMB, a Germany based corporation’s management todiscuss the firm’s willingness to become a major shareholder ofTriVac Industries in exchange for an infusion of cash. The deal’sterm stated that Rohrtech was the major shareholder but Heinrichwould remain the president of TriVac. One of Rohrtech executiveswould be chairperson of the Board of directors and Rohrtech wouldappoint two other board members. However, Heinrich was onlyinterested in collaborating with the German company for their moneyand was not happy with their involvement in the firm’s internalaffairs. The strained relationship worked well for two years until anew CEO was appointed for Rohrtech. He believed that Rohrtech was notbenefiting fully from the deal and thought that TriVac should sharetheir innovative technology with Rohrtech. This angered Heinrich tothe point that he denied Rohrtech representatives access to theindustry plant and began legal proceedings to regain control of thecompany. One of the terms of the deal was that any party who possesshalf of the company’s shares could force the others to sell theirshares to the major shareholder. Heinrich owned 29% of the shares,Rohrtech had 36%, Tex Weston TriVac’s VC of sales and marketingpossessed 15% and TriVac’s management, as well as the employeescontrolled the rest. Heinrich lost his battle for control when Westonsold his shares to Rohrtech. The Board of directors dominated byRohrtech fired Heinrich and appointed Weston as the new president.Rohrtech created a new COO position and appointed Kurt Devine, anoutsider Devine would be responsible for the day-to-day activitiesand liaison with the head office. However, he was not received welland was treated coldly, especially by Tom O’Grady, the VC offinance and administration. O’Grady and Weston presented theirconcerns to the Board of directors Devine was removed and O’Gradywas named as the acting COO. In a meeting where Devine presented areport of a special assignment, Weston confronted him on why he hadnot submitted his resignation. However, Devine replied that he didnot have to resign since he had not been given an opportunity to dohis work. The next day, Westonpresented Devine with a terminationletter signed by the Chairman of TriVac Industries.
(a).DidRohrtech’s Board Use The Rational Decision-Making Paradigm at TheEnd of the Case When it Decided to Replace Devine With O’Grady asCOO?Support Your Answer With Facts from the Case and a ThoroughKnowledge of the Rational Decision-Making Paradigm.
Rationalpresentation of decisions entails an individual using analysis,facts, and systematic process to make a choice (Walter, Kellermanns,&Lechner, 2012). The rational decision making model involves sixsteps that guide individuals through the procedure of findingsolutions to problems. The six steps include identifying the problem,choosing the decision process, developing alternatives, selecting thebest alternative, implementing plans, and monitoring of the plans’effectiveness. During the problem identification process, individualsshould use logical analysis the board of directors did not take timeto identify the real setback but instead used a testimony by O’Grady,an executive whose sole goal was to undermine Devine’s work. Theperformance issue presented by Weston was not valid since Devine wasprovided with incomplete information and he could not workeffectually. Therefore, it is clear that the board of directors didnot identify the problem, which was the fact that the top managementwas not working cohesively. The board of directors was not aware ofthe perceptual limitations (Walter, Kellermanns, &Lechner, 2012).The board of directors did not interpret the information presented tothem about Devine’s performance besides, it did not developalternative courses of actions available. The board of directors didnot develop substitute courses of action such as hearing Devine’sside of the story or discussing with employees’ representatives tovalidate the allegations against Devine. The board of directorsfailed to evaluate alternatives by not assessing the acceptability ofthe decision to replace Devine with O’Grady. The case study doesnot mention what the evaluation of the decision made by the board ofdirectors reveals.
(B).Do You Believe that Devine Committed an Escalation of Commitment to aLosing Course of Action? Be Sure to Give Reasons that Show YourUnderstanding of this Concept.
Anescalation of commitment is the inclination by an individual to makebad decisions or allocate time and resourcescontinuously to a failingcourse of action. The main reasons for escalation of commitment areself-justification, prospect theory effects, and closing costs. Inthis case, Devine committed an escalation of commitment due toself-justification. Managers are mostly motivated to correct pastmistakes and attempt to rationalize their decisions or defendthemselves against people who seem to have misjudged them. Internalself-justification makes an individual want to restore balancebetween the results of his actions and a self-concept of rationaldecision-making. External justification causes a person want to lookrational to stakeholders. Kurt Devine felt the need to justifyhimself to O’Grady whom he felt judged him wrong. Devine attemptedseverally to develop rapport between him, O’Grady, and Weston butfailed. He even said that they did not have to like him they justhad to work together. Devine channeled a lot of time trying to builda good relationship when he knew that they would never like him dueto their loyalty to Heinrich. Weston even made it clear during ameeting they had previously that he would not have hired him. Devineknew the things O’Grady said about him to other employees andactions he committed to undermine him but still wanted to lookrational to the board of directors yet he would have reported theissues (an example of external justification). Kurt Devine also had arecord of building bridges between warring factions and managingconflicts he tried to create a rapport with O’Grady since hewanted to prove his previous successes.
IdentifyOne Factor From Within Three of the Following Four Components of theTeam Effectiveness Model That Contributed to the Failure of theTrivac’s New Senior Management Team After Devine Joined theCompany.The Components of the Model Are: (1) Organizational andTeam Environment, (2) Team Design, (3) Team States and (4) TeamProcesses.
Teameffectiveness is the ability of a group to achieve goals orobjectives provided by the organization or authority. A team composesof a mix of characteristics among people in a group, which consistsof a unit of two or more individuals who interact interdependently toachieve a goal. The component chosen is the team process and thefactor is its cohesiveness. Team cohesiveness is the extent to whichworkers want to contribute to a group’s capacity to work as afunctioning unit. Cohesion develops out of interpersonal andteam-level attraction through cooperation and as a fostered sense ofbelonging. The top management of TriVac failed due to lack ofcohesiveness. When Kurt Devine joined the company, the top managementteam loyal to Heinrich felt like their German counterparts wanted toundermine their independence. However, that was the real intention ofRohrtech GMB since they felt like all the top managers were loyal toHeinrich. Devine came into the company with an open mind and waswilling to get along with other managers who were to help him run thefirm’s daily activities. Tom O’Grady, the vice president offinance and administration was second in command after Devine and hewas supposed to report to him on administrative activities. O’Gradyhated Devine and took every opportunity to undermine him and end hiscareer. As stated earlier, cohesion is achieved out of interpersonalrelationships through cooperation the two senior officials at TriVacclacked an interpersonal relationship. O’Grady also incited othermanagers and employees to hate Devine and refused to volunteerinformation to him therefore, the team lacked the motivation to worktogether towards the company’s goals. The capacity of a team to becohesive is also determined by the sense of belonging the team feltlike one of the most important members of their group did not belongin the company hence, leading to the lack of motivation. Teamcohesiveness also involves the motivation of members to remain partof the lineup driven by interactions and feedback. The vice presidentof sales rarely communicated with Devine yet he was among the membersof the top management while Weston, the company’s president rarelyconversed with him unless Devine approached him first. Devine lackedthe motivation to remain a member of the team since he felt like somemanagers were avoiding him.
UseExpectancy Theory of Motivation to Explain Why O’Grady wasReluctant to Help Devine Succeed. Be Sure to Show Your Understandingof the Entire Theory and Its Key Components.
TheExpectancy motivation theory states that an employee’s inspirationdepends on how much he/she needs to be rewarded (Cho & Perry,2012). Victor Vroom who is the theorist noted that people haddifferent needs and they would only work hard if they believed thatthere was a favorable correlation between efforts and performance.The good performance would produce a desirable reward, which wouldfulfill an important need. The desire to fulfill the need is intenseenough to make the effort worth it. Victor Vroom’s theory derivesits basis from three beliefs, that is, valence, expectancy, andinstrumentality. Valence refers to the emotional attachments peoplehold towards the rewards. An employee has to have the need forextrinsic and intrinsic rewards (Cho &Perry 2012). Expectancyrefers to the expectation that increased effort will result to betterperformance an example is an employee who thinks that if he/sheworked hard his/her appraisal would improve. Instrumentality refersto the belief employees have of promise fulfillment by the managers.An employee’s belief about on expectancy, valence, andinstrumentality combine to create a motivation that makes the workerperform in a way that fulfills his/her goals. The theory stresses onthe fact that an employee can decide whether to work or not to,depending on what he/she expects to get out of the effort (Cho &Perry, 2012). Contrary to Maslow’s theory of need, which emphasizeson the relationship between internal needs and the effort that anindividual applies to fulfill them, Vroom addresses effort (resultingfrom motivation), performance, and outcomes separately. According tothe case study, Tom O’Grady was in charge of the daily operationsbefore Devine was appointed. O’Grady decided to behave in a waythat he thought would attain a goal he wanted. He wanted to regainfull control of the company from Rohrtech he consciously decided toundermine Devine’s work to achieve his desired results. O’Gradywas reluctant to help Devine because doing so would not contribute tohim achieving his goal of regaining control of the company. O’Gradyincreased efforts to undermine Devine’s work (expectancy) with thehope that he will regain control of the company (instrumentality).Taking control was of utmost importance to O’Grady due to hisloyalty to Heinrich and him assuming power upon Devine’stermination (valence).
Insummation, the paper established that TriVac’s issues mostlystemmed from the merger with Rohrtech. Heinrich was not happy withthe fact that Rohrtech’s representatives were involved with theinternal affairs of the company. Hiring Kurt Devine, an outsider tofill the position of COO only escalated the existing problems. Byousting Kurt Devine from the COO position and immediately reinstatingTom O’Grady, the board of directors failed to follow the rationaldecision making process. Kurt Devine, the COO committed an escalationof commitment by channeling time and resources to build a goodrapport with Weston and O’Grady yet they had shown animositytowards him. The top management of TriVac failed since it lacked teamcohesion Devine depended on O’Grady for information on thecompany’s daily activities but since they lacked an interpersonalrelationship, working together was impossible. The theory ofexpectancy states that an employee’s level of commitment depends onthe reward he/she expects to receive. O’Grady’s main objectivewas to regain full control of the company and TriVac to maintain itsindependence. Therefore, he sabotaged Devine’s work and put in lesscommitment to his duty (reporting to the COO) to achieve his goal.
Cho,Y. J., & Perry, J. L. (2012).Intrinsic motivation and employeeattitudes: Role of managerial trustworthiness, goal directedness, andextrinsic reward expectancy.Reviewof Public Personnel Administration,32(4),382-406.
Walter,J., Kellermanns, F. W., &Lechner, C. (2012).Decision makingwithin and between organizations: Rationality, politics, and allianceperformance.Journalof Management,38(5),1582-1610.