privately held corporation
Donnelly Mirrors, a small company employing about 750 workers, manufactures
practically all of the rear-view mirrors for all of the automobiles produced in
America. Even though, it is a privately held corporation, it has developed a
participative management style where the workers are actively and genuinely
involved in the government of the company. This may be one of the reasons why the
company has been enjoying continuous success over the years. The participative
system started in 1952 and initially, the employees simply participated in cost saving
efforts and they shared those savings among themselves and with the company. The
cost savings resulted from efficient use of labor, materials and machines. Employees
were assured that they would not lose jobs because of introduction of technologically
advanced machinery or change in production methods. The resulted in reduced
resistance for change on the part of employees. The employees became so involved in
cost reduction efforts and activities that they started to volunteer various ways of
improving operational efficiency including selection of equipment and machines.
Various problem solving groups were formed for various operational areas and in
order to achieve efficient coordination amount all the groups and activities, a linking-
pin organizational structure was adopted, whereby, members of various groups made
decisions relative to their own tasks and these decisions are presented to the next
higher level of management for consideration.
There are no time clocks and even though workers get paid on a salary basis, their
working times are not closely watched or scrutinized. There is sufficient group
cohesion so that the workers do not take undue advantage of these relaxed rules. If a
members is late or absent for a good reason, other workers in the group will cover his
work. If some one misses work frequently, he becomes answerable to other group
members. The group selects it own leader and together the members set their own
production goals within the general framework of the objectives of the organization
and are responsible for meeting such goals. The company has formed a committee
comprised of representatives both from employees as well as management and the
committee handles all personnel matters such as pay policies, fringe benefits and
employee grievances. Since the workers are represented in this committee, all
decisions made by this committee are easily accepted by all. Pay scales are also
recommended to the management by this committee and these are consistent with the
industry practices. As per pay policies, the company is guaranteed a return of 5.2% on
its investment and the balance of the profits is shared with the employees. If a 5.2%
return is not achieved in a given year, the deficit is compensated from the earning of
the following year before any additional bonuses are given to the employees. Because
of its reputation for employee treatment, it attracts a la rge number of applicants for
jobs, but because the turnover rate is very low, the company can select the best from
this pool of applicant. The company is like a close knit family and enjoys a reputation
for productivity, quality and employee loyalty and dedication.
1. Does the success of the company reflect a general statement that profit sharing and
employee involvement in company affairs is highly motivating for employing?
Explain you reasons is detail.
2. How do you think that the group dynamics is at work in this organization? How
are the group integrated with the organization goals?