Bandag Automotive, Essay Example

Bandag Automotive is a family owned business who leadership recently passed from the company’s founder to his son, Jim Bandag. Bandag Automotive sells auto supplies to service stations and repair shops in addition to direct distribution through company’s five own auto supply stores. Even though Jim shares his father’s supply of keeping the organizational chart as simple as possible, he greatly differs from his father in his leadership style.

Jim’s father led the company with a relationship-oriented leadership style in which the focus is also on building close personal bonds with the subordinates. He would often interact with his employees and inquire about their personal lives. When possible, he would go beyond his professional responsibilities to help his subordinates with their personal issues. Jim, on the other hand leads with task-oriented leadership style in which the focus is on getting the job done (MindTools). Both leadership styles have benefits as well as shortcomings as Bandag Automotive’s own history shows.

Bandag Automotive’s profitability has increased during Jim’s tenure because Jim tries to keep costs low, is not as generous in compensation and benefits as his father was, and is entirely focused on employees’ performance. Even though the company’s profitability has increased, the new leadership style has also led to lower employees’ morale, lower interaction between leadership and employees, high employee turnover rate, and increased legal costs due to employees’ lawsuits. During Jim’s father tenure, the company’s profitability was lower than present but Jim’s father enjoyed high level of employee loyalty. The employees were satisfied and stayed with the company for long time. The company hardly faced any employee lawsuit and there was high level of communication and trust between the leadership and the followers.

The company has almost entirely outsourced the activities usually performed by a human resource department including screening, recruiting, payroll and benefits administration. The human resource department monitors the compensation policies of the competitors to shape its own compensation policies. Unlike his dad, Jim takes cost-based approach to issues related to HR and his priority is always to choose the course of action with the minimum costs irrespective of its short term or long term consequences. In retrospect, Jim makes all HR related decisions by himself, mostly on gut feeling and without proper research into their potential legal implications.

Bandag Automotive is now faced with numerous potential lawsuits by the employees who each claim employment discrimination. The first potential lawsuit may be filed by Henry Jacques whom Jim fired for contributing towards a ‘poisonous’ work environment. Another lawsuit may be initiated by Gavin who was a manager at one of the five stores and whose position was eliminated during a medical leave. Even though Jim hired back Gavin and promised him same compensation package and benefits, Gavin also wants same or similar job responsibilities he held before taking a medical leave. The third lawsuit may be filed by Miriam who believes she has been discriminated due to her pregnancy. The company may also face a fourth lawsuit from a deaf employee whose application for a position as a distribution department driver was turned down due to his deafness.

Bandag Automotive is now faced with several key issues related to its management style, operations, and organizational structure. Jim must carefully analyze the organization as well as the current situation. This may help him determine what leadership style may be best suited, how communication should flow, whether current organization structure be retained or modified, whether HR activities should be outsourced or managed in-house, what could be done to avoid lawsuits or increasing the probability of win, how management-employees relationship should be shaped, and what actions could be taken to improve the profitability and long-term future of the company.

Bandag Automotive now has 300 employees and operates five company-owned stores, each with its own manager. Bandag’s current HR department only carries out basic tasks and even if the outsourced tasks are included, the company still doesn’t perform certain HR functions such as staying up-to-date with employment laws. The fact that Jim often has to intervene in matters related to HR means that the HR department is either understaffed or doesn’t have HR experts who could deal with more complex HR issues. Jim should bring all HR functions in-house. This is because 300 employees are not a small number and the recent gap between the management and the employees demonstrate poor flow of communication as well as misunderstandings. Thus, the organization should make efforts to be more involved in employees’ affairs. Outsiders cannot understand the company’s culture as well as employees concerns as well as insiders. In addition, the threat of lawsuits and the decisions by management also demonstrate that the company has poor understanding of labor laws. Thus, the company needs a dedicated HR manager as well as a staff that doesn’t focus on anything except HR affairs.

Jim should also implement performance-based compensation plans so that employees’ benefits are aligned with the company’s performance. Even though the company’s performance has been improving, employees’ morale is down because they think the company is benefitting at their expense and doesn’t care about their welfare. Jim should also invite employees to provide feedback and suggestions as to how HR functions could be improved and what may be its shortcomings. This will help the management understand where their perceptions of reality may be different from the subordinates and what company policies motivate or demoralize employees.

As far as Henry Jaques’ claim is concerned, the prospects of company’s success would be dependent upon numerous factors. The company will have to prove that it has been a company’s stated policy to evaluate employees on both technical and non-technical aspects of job performance and employees are aware of that. Since Henry didn’t meet the expected performance, the company had a legitimate reason to fire him. If the company issued prior warnings to Henry and kept a record of all warnings, it will also strength Bandag’s case. Similarly, the company will also have to prove that Henry’s concerns regarding work environment were not reasonable and the company didn’t violate the requirements of Occupational Safety and Health Act (Legal Information Institute) in any manner. But if Henry can prove the inconsistency in the company’s employee termination practices and the fact that his concerns were legitimate, Bandag’s case will become weaker. Henry can also improve his chances if he was not issued any prior warning. Since he received impressive performance appraisal, it means that Bandag probably has not historically evaluated its employees on non-technical aspects and Jim’s focus on job performance makes it very likely. Given the fact that Bandag doesn’t even have a proper HR department, Henry’s chances look good unless the company can demonstrate convincingly that Henry’s behavior violated employment terms in some manner.

Gavin is eligible for rights under the Family and Medical Leave Act (FMLA) (United States Department of Labor) since he meets all the requirements such as working for the employer for at least a year and at least 1,250 hours over the past 12 months. In addition, Bandag has 300 employees which is over the minimum criteria of 50 employees within 75 miles. According to FMLA, an employee has the right to return to the position held prior to the leave, or to a position that is virtually identical (University of Washington). Even though Gavin’s compensation award didn’t change but his responsibilities did significantly change and his new position most probably violates FMLA requirements. In his previous position, Gavin was in a supervisory position and managed other employees. In addition, he also possessed management-level decision making powers at the store but in his new position he doesn’t have any management or supervision authority and is merely a salesperson. Title doesn’t matter under FMLA as long as the nature of the job is same or quite similar and in this case, Gavin’s job has significantly changed.

Bandag may have a stronger case against Miriam if the company can convincingly prove the courts. First of all, Miriam utilized all 12 weeks of allowed leave under FMLA and also 3 weeks allowed under Bandag’s extended illness days program. If Bandag could prove that Miriam’s working from home could have significantly impaired her ability to do her job properly and also present strong evidence that Miriam’s performance suffered and she engaged in unethical behavior such as forging documents, it has a strong case. But if Miriam demonstrates that she could do her job equally well from home, the court may require Bandag to accommodate her needs if it didn’t put undue burden on the company. But Miriam’s mere allegation that she was discriminated due to her pregnancy would not be sufficient for her to win the case. From the details in the case, it seems Bandag has stronger case against Miriam as opposed to other employees.

As far as the deaf employee is concerned, he should be given a chance to demonstrate that he will be capable of handing the job responsibilities with reasonable accommodations. Refusing him an opportunity to be even considered for the job could get Bandag in legal trouble as UPS case demonstrates. But if the deaf employee fails to meet the job requirements or Bandag could demonstrate in the court that there was another applicant with better performance and qualifications, Bandag will have reasonable probability of success.

It is clear that Bandag Automotive is facing a crisis in terms of management-employee relations and employees’ morale is down. First of all, Bandag should create a proper HR department and carry out all HR-related tasks in-house. Lack of in-house HR capabilities are also a distraction for the management which has to invest significant time in dealing with HR issues instead of focusing on strategic issues. Bandag Automotive should also hire an experienced HR manager who is knowledgeable about labor laws and other regulations that affect HR issues. Jim should also create more open communication channels with his subordinates and explain to them why he might have adopted a different approach and what external factors such as more intensive competition might have influenced them. If his subordinates understand the rationale behind Jim’s decisions, they would be more likely to support him. Jim may also introduce performance-based award system so employees have an incentive to show better performance and their interests are aligned with the growth and profitability of the company.

References

Legal Information Institute. (n.d.). Workplace Safety. Retrieved April 13, 2012, from http://www.law.cornell.edu/wex/workplace_safety

MindTools. (n.d.). Leadership Styles. Retrieved April 13, 2012, from http://www.mindtools.com/pages/article/newLDR_84.htm

United States Department of Labor. (n.d.). Family & Medical Leave. Retrieved April 13, 2012, from http://www.dol.gov/dol/topic/benefits-leave/fmla.htm

University of Washington. (n.d.). Family and Medical Leave Act. Retrieved April 13, 2012, from http://www.washington.edu/admin/hr/polproc/leave/fmla.html