Uploaded by Jeanelle Lauguico

Henderson Printing Company

company strategy is to be the most up-to-dat€ and advanced suppiier or
and techniques.
Although Susan has given a lot of thought to her business, one ti::::
really given much thought to is horv to compensate her employees. Sit'tc= ,:-,:
really knolv much about compensation, she teuds to feel that the safest thir::
to just do rvhat her competitors are doing.
Henderson Printing is a snrall- to mediun-r-sized manufacturer of account books, lecigt:..
and various t1,pes ofrecord books used in business. Located in Ha]ifhx, the company has
annual sales of abou t $12 million, mostly in the Atlantic provinces.
The orvner, George Henderson, is a {irm believer in nraking a high-quality product
that rvill stand up to many years of use. He uses oniy high-grade paper, cover stock, and
binding materials. Of course, this has led to high production costs and higir prices. He
also believes in a high level of customer serice and is rvilling to make the products to
customers' specifications rvhenever they so request. Horveter, resetting the equipment
fbr relatively short production runs of customized products takes considerable extra
time and, of course, also drives up costs.
The firm employs about 80 people , most of rvl.rom rvork in production. Tl-re firm has
a ferv supervisors to ovelsee production, but their responsibilities are not clearly spelled
out, so the supervisors often contradict one another. There is no system for scheduling
production; in f-act, there are ferv systems of any kind. Whenever there is a problem,
everyone knorvs that you have to go to George if you expect a definite answer.
The company also has several salespeople *,ho travel throughout the Atlantic
region; rnost of them are relatives of George or his rvife. Tl.re company has one bookkeeper to keep records and issue the paycheques, and several office employees to handle
routine administrative chores. The firm has no specialists in accounting, marketing,
human resources, or production; George handles these areas himseli although he has
no real training and little interest in any of them except production. He focuses most of
l-ris attention on ensuring prodr"rct quality and on dealing rvith the countless problems
that everyone brings to hirn every day. He has often been heard to exclaim, in his usual
good-natured rvay, ''Wh1, am I the only one rvho can make decisions around this place?"
as he deals s.ith each of these problems.
When George rvas growing up, both l.ris parents (his father rvas a printer and his
lrother was a seamstress in a garment factory) had to rvork hard in order to scratch out a
living for their farnily. In those days, employers who shorved little consideration fbr their
e mployees rvere the norm, and George resolved that things rvould be different i[he ever
became an employer. Toda1,, George tries hard to be a benevolent employer. Although
he feels the organization cannot alfbrd any formal employee benefits, he often keeps
sick ivorkers on payroll for a considerable time, especially if he knorvs the rvorker has a
family to support. George is rvell liked by n-rost employees, who have shorvn little interest in unionization during the feiv approaches made by union organizers.
George has no fbrmal system for pay and tends to make ali pay decisions on the
spur of the moment, so almost everybody has a different pay rate. He has never Botten
around to giving annual raises, so any employee rvho rvants a raise has to approach him.
He gives raises to rnost people ivho approach him, but the amount depends on his mood
at the time and on horv rvell he knorvs the employee. For example, if the firm has just
lost a major customer, raises are lorver, and if the firm has just booked a large order, they
if he knows the **plcr-ee has a ria:ily to support, or if
the employee's spouse has been laid ofi or it the ernptrayee ha,. added a new member
to the family.
George believes that a good emplo-ver should recognize rl're conmibutions made by
employees during the ,vear. So every Christmas, it protrts allorr. he gives merit bonuses
to employees, which he says are based on their c*nrdbudon: to the tirm. One day in
early December, he sits down with his emplor.ee lisr i* aiphab<acsl order, and pencils
in an amount next to each name.
are higher. They are also higher
Everybody gets something, but the amounts rarr gr*atl-v. If he can associate a face
with the name (which is difficult sometimes, because aex'emplol-ees seem to rum over a
lot), he tends to give larger bonuses. And if he can rerriernber something such as a cheerful atutude, the bonuses are higher still. But if he remer"iti:ers eri-;-oll€ coruplaining about
that employee for some reason or another (he usualIv can't recaii the exact reasons), the
employee gets a smaller bonus. Not suqprisingl-v. long;er-term ernptroy"ees tend to receive
much higher bonuses than new employees. He has nodced this tendenry, but assumes
that if an employee has been with the firm longe4 that penon nnust be more productive, so this is fair. He personally distributes the ba*us chequ:s +* rhe last working day
before Christmas.
Since he has just tumd 50, George is planning {o retire rB th€ next year or two
and turn the business over to his daughter, Georgene Hendenon. who is just finishing
her commerce degree at Dalhousie University. Ironicallr. it t'as on the day of his 60th
birthday that his bookkeeper informed him that there q'asnot rl:augh a'!one,v in the bank
account to meet payroll.
is early Februarl,. Late last ),ear, the firrn you rvork tc:. -1,i,,-l:r-l:c.:ui:; Corporation,
acquired the rights to a new type of golf club, inrenttc i::' -: :::ii=ci machinist wlto
had been a lifelong golfer until his untimely demise (it rur:ri c,-:: ri':;t goliing during a
lightning storm is not such a great idea). The machinist lirc:,-.ju::ri onh'a feu'sets of
the clubs, but their super-iority over existing clubs u'as So eri]r.-'-:]t'.d th"rt u'ord of his
invention had spread far and rvide. Fortunately fbr him troi 1:r. :':;:r. actualll'), he had
patented the design of these clubs, so nobod.v could copv rrer:r.
Mr,rlti-Products Corporation has numerous divisions. eaci: oroducing different
products in the sportir-rg goods field. Tire compan)r hirs ner-er prociuced goliequiprnent
of any kind, ar-rd plans to set up a separate division to produc: .rrd clistribute the new
clubs. You found out yesterday that 1,su have been selected to ireari the nerv division.
Corporate management rvill pror.ide you ivith ali the financiai re sources 1'ou need to get
the division going and will also help you staff the division s-itl: experienced managers
from the parent corporation. Because of tlieir confidence in 1'ou. nranagemellt has given
you complete freedom to organize and operate the division irs \-ou see fit. as long as you
attain the {lnancial goals that have been set for the division,
Your first task is to design the organization structure. But r-ou recognize that before
doing so, you need to understand some key aspects about the organization and its con-
text. Market research suggests that the demand for your product rvill be strong and
stable. This demand rvill not be very price-sensitive, since golf-ers rvho rvant your product
rvill generally be rvilling to pa1, 1v|121 it takes to get it. Therefore, it rvill be relatively easy
for you to secure distributors. In fact, one distributor is rvilling to agree to a four-year
sales contract for your equipment, ivith a fixed volume and a fixed price. This distributor
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