CASE STUDY:

The Velma Company designs and manufactures high-tech communications equipment. The firm is a world-class supplier, and its three largest customers are Fortune 50 firms. Velma also has major clients in China and the European Union. Over the last five years the company’s sales have tripled, and the biggest challenge it faces is hiring and retaining state-of-the-art people. In particular, there are two groups that are critical to the company’s success. One is the design people who are responsible for developing new products that are more efficient and price competitive than those currently on the market. The other is the manufacturing people who build the equipment.

In an effort to attract and keep outstanding design people, Velma has a very attractive benefit package. All of their health insurance premiums and medical expenses are covered (no copay or deductibles). The company contributes 10 percent of their annual income toward a retirement program, and these funds are vested within 24 months. So a new design person who is earning $75,000 annually will have $7,500 put into a retirement fund by the company, and the individual can make additional personal contributions. Each year all designers are given 100 shares of stock (the current sales price is $22) and an option to buy another 100 shares (the current stock price is $25 and this option is good for 10 years or as long as the person works for the firm, whichever comes first).

The manufacturing people are on a pay-for performance plan. Each individual is paid $7 for each unit he or she produces, and the average worker can turn out three units an hour. There is weekend work for anyone who wants it, but the rate per unit does not change. Each year, the company gives manufacturing workers 50 shares of stock with an option to buy 25 more shares. The company also gives all of the manufacturing people free health insurance and covers all medical expenses.

Another benefit is that everyone in the company is eligible for five personal days a year, and the company will pay for any unused days. Velma also has a large day care facility that is free for all employees, and there is a state-of-the-art wellness center located on the premises.

Last year the company’s turnover was 9 percent, and the firm would like to reduce it by 50 percent this year. One proposed strategy is to strengthen the benefits package even more and make it so attractive that no one will want to, or could afford to, leave. Some top managers privately are concerned that the firm is already doing way too much for these employees and are troubled by the fact that exit interviews with designers who left in the last year indicated that many of them were unaware of the benefits they were receiving. For example, most of the designers who have gone elsewhere reported that they were attracted to the stock offered them, yet they did not exercise the options to buy additional shares of Velma stock because they were not sure what the financial benefits were to them. The manufacturing people who left reported that $7 per unit was acceptable, although a higher rate would have resulted in their remaining with the firm. The manufacturing people also liked the stock that the company gave them, but were somewhat confused about the options they held.

Both groups—designers and manufacturing personnel—seemed pleased with the contribution that the company made to their retirement program, but most of them did not put any additional personal contributions into their retirement fund. When asked why, the majority of them were unaware that this could be done on a before-tax basis, thus temporarily shielding the contributions from taxes and making it easier to build a nest egg for the future. Finally, all of those who left said that they liked the child care benefit, although most of them did not have young children so they did not use it, and they thought the wellness center was also a good idea but they were so busy working that they admitted to never using the facilities.

1. Situation
In this section of the case analysis, you will focus on identifying situational aspects that have led to the situation being reported in the case. You are to explain the situation in Organizational Behavior (OB) terms. These aspects should include relevant context, people-related, and organizational factors that have contributed to the current situation. Please note that the focus of this is to highlight the OB related issues; however, it is understood that other management-related issues may also contribute to the situation. This section MUST explain the situation using terminology and related material from the book Organizational Behavior: an evidence-based approach, 13th Edition by authors Fred Luthans, Brett Luthans, and Kyle Luthans. Remember to cite the book appropriately.
2. Problem
The situational profile leads to the identification of the major problem in the case. In a case, there may be several problems; however, there is likely only one MAIN problem. All the other factors that appear to be problems are symptoms of the main problem. In this section, you will identify the ONE main problem and explain why it represents that main OB problem in this case. The problem MUST be stated in OB terms. Include specific examples from the case, and external sources to support your position. Be clear in your statement of the problem.
3. Case Questions
Identify the specific questions that must be addressed in order to solve the central problem identified. Think of what you would need to know in order to make a decision on how to solve the problem you have identified. Please note that these questions MUST be related to the problem that you have identified and you must explain why an answer to each question is necessary to solve the problem. What information do you have to know to solve the problem? Questions unrelated to solving the problem or those that are general and not specific to your problem will not meet these criteria. Consider internal and external factors that may have influenced the current situation, whether mentioned in the case or not. Think about the functional information required in order to accurately address the central problem. List each question and explain individually why each question is pivotal to solving the identified problem. Be clear and specific in your answers.
4. Alternative “Solutions” (3)
Present three separate and independent courses of action that could be enacted to solve the problem. For EACH alternative, be sure to explain the course of action, the organizational actors and resources required to complete, the benefits and risks of said action, and how/why the action could potentially solve the problem. Each action MUST solve the specific problem identified, and be independent of the others. Make your case with the support of peer-reviewed sources. Number each alternative solution as 4a, 4b, 4c, etc.

5. Recommend
Identify and recommend the ONE solution out of those identified in item 4 above that is most tenable. You may not offer a combination of the alternatives; only ONE of the alternatives can be selected. Provide evidence to argue in favor of the chosen solution, explaining why this solution is the most tenable compared to the others, and is most appropriate to solve the problem identified. Assume you are presenting your idea to the organizational decision-makers; you want and need their agreement and support. Present a persuasive argument as to why this solution is the best solution for the problem. OB language must be used. Thoroughly support your position using peer-reviewed sources.
6. Prediction
Briefly predict and paint a picture of what the situation looks like AFTER implementation of your recommended solution. How would the situation as outlined in your response to number one (above) change? How does the organizational experience change for the actors involved? Please note this is not a conclusion; it is a prediction of what the outcome will be and how the situation will be different after your recommendation is implemented
Please ensure that it includes the appropriate number and types of citations and references, presented in the appropriate format (APA 7th edition). A minimum of FOUR external SCHOLARLY sources is required. ALL of these sources must be from peer-reviewed scholarly journals.