Precision Instrument Case Study

1. What are the different sources of Precision Instruments’ problems? After much success and high profits in their former location, Precision Instruments decided to move into a new, more luxurious location. Harold, who had committed the most capital during Precision’s startup, had developed excellent relationships with the workers, and always was a source of encouragement to them, retired. All of this, combined with the new building’s expenses and a downturn in the economy, led to an immediate slowdown in production. Management was overly optimistic and turned a blind eye to economic conditions.

The increased size of the company made it necessary to increase staff, and Precision hired 50 new hires mostly to develop highly specialized products they thought they could not afford in the old building. After the new hires, Precision purchased and implemented a computer aided design-computer aided manufacturing system (CAD-CAM) that was not liked or accepted by production staff. This system did not achieve the desired results, was expensive to install and operated and was difficult to operate. At the same time, Precision was slapped with a patent infringement lawsuit and laid out over one million dollars in legal fees.

This in turn led to the auditors issuing an unqualified audit opinion for the 1991 financial statements. Management became untrustworthy by production staff, and production staff looked upon management as living in a glass tower, disconnected and not involved with production. The lower production in the new building worsened over time and led to higher scrap rates and increased absenteeism. Finished products per hour decreased well below company goals. Inferior materials resulted in a slow down in order delivery. Moral was low as there were not pay grades, and raises were only granted paid for high performance.

Production staff wanted to unionize in an effort to alleviate the pay structure. 2. Identify and describe the different performance management systems. According to Susan Heathfield, in her article Performance Management, performance management is a management process for ensuring employees are focusing their work efforts in ways that contribute to achieving the agency’s mission. It consists of three phases: (a) setting expectations for employee performance, (b) maintaining a dialogue between supervisor and employee to keep performance on track, and (c) measuring actual performance relative to performance expectations.

Initially, Jim, Don and Harold created their own positions according to who could perform each assignment the best of their abilities. Compensation and recognitions was set up as a profit sharing where employees received 50% of all operating income after operating income reached 18% of net sales. There are no salary grades in place or recognition programs for production staff other than a pay for performance program that only rewarded high producers. The pay for performance plan was not negotiated, only enforced. The case has no mention of orientation, education or training programs.

Only after production losses occurred was there any opportunity for feedback from production staff indicating a lack of communication between management and staff. Company goals are unclear and unobtainable leaving productions staff resentful of management. Precision offered no promotional or career development opportunities. 3. How and when would you intervene? According to Ford, Heisler and McCreary’s article, Leading Change with the 5-P Model, to bring about successful change, change leader must consider and effectively address five components, purpose, priorities, people, process and proof.

To be effective change managers Precision Instruments, management must step in and articulate a vision. My intervention would begin immediately and include initiating agendas that are results oriented, and effectively communicate Precision’s vision of being a successful organization that sustains rapid growth. I would persuade others to commit to this new vision, be pioneers, and cast challenging new visions (Nanus, 1992). If Precision Instruments wants positive changes to occur, they should encourage people to learn and support the learning process instead of simply tolerating it.

Precision needs to cultivate a culture of learning, as a culture of learning promotes a continuous loop of reflection, measurement, feedback, and action. It rewards people for learning as well as for achieving results and the organization is rewarded as well by achieving its goals as a prosperous, growth oriented company. Goals need to be expressed in terms that both community and business people understand, such as “return on investment. ” Power and authority belong to all partners, not just a few.

Precision’s leaders must realize that everyone brings some value to the change process, and they must encourage broad participation (Aspen Institute Roundtable on Community Change, 1997). When Precision’s leaders truly believe that their prime goal is the welfare of their followers, they will get results (O’Toole, 1995). According to Warner Burke, in his work, Organization Change, Theory and Practice, there is considerable evidence, despite the beliefs of many senior managers, that participative management is more likely than most other approaches to lead to higher unit and organization performance.


Aspen Institute Roundtable on Community Change. (1997) Voices from the field: Learning from the early work of comprehensive community initiatives. New York: Author. Burke, W. W. (2002). Organization change: Theory and practice. Sage Publishers Heathfield, S. Performance Management, retrieved June 29, 2008 from http://humanresources. about. com/od/glossaryp/g/perform_mgmt. htm Nanus, B. (1992). Visionary Leadership: Creating a Compelling Sense of Direction for Your Organization. San Francisco: Jossey-Bass. O'Toole, J (1996). Leading Change, The Argument for Values-Based Leadership. New York, NY: Random House.