Case Analysis

Guys Ten Stage Framework

[Type the author name]

Table of Content
Introduction to the Case ......................................................................................................................... 1 Guys Ten Stage Decision Making Framework: Analysis ......................................................................... 1 Stage 1: Define the Problem ............................................................................................................... 1 Stage 2: Identify the Goal to Be Achieved ........................................................................................... 1 Stage 3: Specify All Dimensions of the Problem .................................................................................. 1 Stage 4: List All Possible Solutions to Each Dimension........................................................................ 2 Stage 5: Evaluate alternative solutions to each dimension regarding the likelihood of each to maximize the important values at stake............................................................................................. 2 Stage 6: Eliminate alternatives which are too costly, not feasible or maximize the wrong values when combined with solutions to other dimensions .......................................................................... 3 Stage 7: Rank the alternatives to each dimension according to which are most likely to maximize the most important values .................................................................................................................. 3 Stage 8: Select the alternatives to each dimension that is most likely to work in the context of the problem while maximizing the important values at stake .................................................................. 3 Stage 9: Combine the top ranking alternatives for each dimension of the problem in order to develop a solution to the problem as a whole .................................................................................... 3 Stage 10: Make a commitment to the choice and implement it......................................................... 3

Case Study: IBM and the End of an Era

Analysis using Guys Ten Stage Framework

Introduction to the Case

The case revolves around IBM, one of the most respected companies in America. With its employee friendly policies, contribution to social causes and ethical values it was one of the most admired companies and occupied number one position in the Fortunes list of Americas Most Admired Corporations for several years. But then its profits started plummeting and it had to lay off many of its employees. An organization known for its no lay off policy, IBM laid-off 2400 employees in March 1993. As a result, it lost its number one spot and slipped a much lower position in 1994. The question before us is whether IBM was ethical in laying off its employees who trusted the organization as it had never taken such an action in the past. This is what we would be focusing on and analysing using one of the frameworks for ethical decision making Guys Ten Stage Framework.

Guys Ten Stage Decision Making Framework: Analysis

Stage 1: Define the Problem
The core problem identified in this case is that IBM laid off its employees despite following a no lay off policy for years. This was done due to its plummeting profits. IBM as a firm needs to make profits to survive and so it laid off employees to reduce the cost when the profits were low. But on the other hand it had a no lay off policy and as a part of this promise to the society it has certain obligations. Providing employment to people and caring for them is one such obligation. Did it violate the psychological contract with its employees when it retrenched them? Moreover, was retrenchment the only option for IBM in the face of decreasing profits or it should have resorted to some other alternative? These are questions we need to further probe.

Stage 2: Identify the Goal to Be Achieved

The goal to be achieved is to mitigate or solve the problem of decreasing profits of IBM and at the same time protect the interests of its employees and stakeholders.

Stage 3: Specify All Dimensions of the Problem

Firm Dimension IBM is an organization with a deep commitment towards its shareholders and other stakeholders who are contributing to the company either monetarily or by enabling it to provide services. Hence, IBM has a commitment to enhance the return for all its stakeholders particularly the shareholders who provide resources to the firm in the form their hard earned money. So profit maximization is an important goal for the firm and for this it has to take the business realities into consideration and base its decisions on those ground realities. In the current case the profits of the firm were going down and hence in order to reduce personnel cost it laid off employees.

Employee Dimension Employees are the most important resource for any firm because they are the ones who drive the firm and act as the engine to drive the firms performance. In the current case there was a psychological contract between the employees and the firm that no one will be let go. Though not strictly legal, this was an implied term of contract. But the lay-off of employees violated this implied psychological contract. Moreover, they had to suffer the pain and agony and the trouble that an employee has to go through to find a new job. Social Dimension The social dimension to this issue is that a firm has certain commitments towards the society and the people who live in it viz. the firms employees and stakeholders. The social commitment of an organization towards society implies its commitment towards its people and if it harms people in any way (physical, mental, psychological) that amounts to harming the society. In the current case IBM, by retrenching people, had inflicted that harm on the society.

Stage 4: List All Possible Solutions to Each Dimension

IBM could have looked at other avenues for reducing cost and tried to make its products/services popular. It could have introduced a new product or tried to identify the root causes of the problem and tried to address those issues. One of the problems that were suggested was its over-reliance on mainframe. Yet another reason generally suggested is its inept top management which should ideally have looked at these causes and tried to rectify them. Instead of retrenching employees IBM could have reduced their wages to cut down on personnel costs. One of the oft-repeated reasons for IBMs failure is its inability to adapt to changing times and this again implicates its top leadership it reflects in the companys vision to foresee the future and mould the organization accordingly.

Stage 5: Evaluate alternative solutions to each dimension regarding the likelihood of each to maximize the important values at stake
Solution 1 Merits Introduction of new product, if successful, could have pushed its profits up enabling it to retain its employees. Root cause analysis would have thrown up the problems or causes for the poor performance and enabled IBM to identify the solutions. Employees would have at least retained their jobs. Demerits Failure of the new products could have pushed IBM deeper into the abyss of flagging profits. It might have been time consuming and hence not so feasible in the given situation.

Solution 2

Solution 3

The pay-cut might have irked the employees and so the stage had the potential to produce stiff resistance from the employees. This could have reduced the personnel cost The measure might not have been without retrenchment of employees. enough to pull the organization out of the rut. Change in the top management might have The change at the helm might have

put the right people at the top and they might have been able to see IBM through the tough times. Infusion of new ideas might have been the doctors order for IBM.

backfired if the successor was not competent enough. Change in leadership is entails finding the right replacement and is costly.

Stage 6: Eliminate alternatives which are too costly, not feasible or maximize the wrong values when combined with solutions to other dimensions
None of the solutions proposed above are too costly or not feasible or maximize the wrong values.

Stage 7: Rank the alternatives to each dimension according to which are most likely to maximize the most important values
The most important values in the current case are the welfare of the people and survival of the firm. Keeping these values in mind the solution 2 is the best followed by 1.

Stage 8: Select the alternatives to each dimension that is most likely to work in the context of the problem while maximizing the important values at stake
The two alternatives that we mentioned above in stage 7 are most likely to work and maximize the values that are important in this case.

Stage 9: Combine the top ranking alternatives for each dimension of the problem in order to develop a solution to the problem as a whole
The solution arrived at by combining the solutions 2 and 3 is that IBM should have reduced the wages of its employees instead of retrenching them and should have introduced new products and/or services that have proved profitable for the firm.

Stage 10: Make a commitment to the choice and implement it

Having arrived at the solution IBM should have committed to the solution and implemented it.