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Chapter 11 ■ Strategies for change

was known to have, strong views about individuals and often discussed them at length
with other senior colleagues: it seemed that he liked to get general confirmation of the
views that he felt unable to confirm with the individual. Consequently, he formed views
of people which he did not share with them. In conversation with these people he gave
the impression that he did not trust them; they then felt unable to approach him to dis-
cuss this because he always avoided such discussion.
All this became very clear to the finance director. It must also be said that the manag-
ing director had a wealth of contacts and experience in the industry and had generated,
mostly by his own efforts, much of the business growth from the late 1970s. He was widely
respected in the industry. The consultants were making it clear to him that changes were
needed within the production department. They were reporting very low productivity, ris-
ing costs and poor motivation of employees. They were now proposing a package of
changes to deal with these problems. However, the consultants had indicated that their
greatest concern was the views of shop-floor and clerical employees. There was a general
rejection that the problems were anything to do with them. If problems existed this was
entirely a consequence of poor management. They felt that any change of programme
would have to be managed participatively. While management performance needed
improving, many of the changes that the consultants wished to introduce would have a
direct bearing on shop-floor employees. Their acceptance was going to be important if
change was to be implemented quickly.
The ‘vicious circle’ was now complete. Unless management style could be changed
no one could possibly expect other changes to be handled participatively. The company
needed to work on management style, managerial effectiveness, management team
working, management systems and structures and changes to manufacturing organiza-
tion. The finance director and the managing director were beginning to realize that
some fundamental changes were needed.
As a first stage it was agreed that the finance director would develop a system of per-
formance appraisal for senior managers, working with his other board-level colleagues.
He and the production director were beginning at last to make inroads into the quality
problems. Return rates and rework costs were falling and improvements in information
were providing production managers with better control over production schedules and
progress. By working together improvements were being delivered, as a result of which
the self-confidence of production managers began to improve. A more open and sys-

tematic approach to performance appraisal seemed to be leading to some more honest
discussion of performance and problems. Slowly but surely a less defensive approach
was being adopted.
Once improvements began the finance director was able to convince the managing
director that he and the production director, supported by the consultants, should now
carry out changes within manufacturing. A key and highly contentious problem was the
bonus system; it was outdated. Direct employees were paid a productivity bonus repre-
senting, on average, 60 per cent of gross pay. The link between productivity improvement
and bonus payment was unclear. Moreover, the bonus in the industrial product group had
risen more slowly than that in the process section.
A strategy for change
As a first stage the finance and production directors met with union representatives to
discuss these problems. The representatives firmly rejected the idea that the bonus sys-
tem itself needed changing, although they did hope that the disparities in bonus could

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