THE RIDER TIRE ACQUISITION

CASE ANALYSIS

Name: Jubal Benjamin

Student ID: 500000130

Course Code: MGMT2008

Course Title: Organizational Behavior

Tutor: Dr. Fitzmore Burns

Date Submitted: 11 November 2019

 TABLE OF CONTENTS

BACKGROUND ............................................................................................................................ 1

THE PROBLEM ............................................................................................................................ 3

ANALYSIS AND DISCUSSION OF ISSUES ........................................................................... 4

ALTERNATIVES........................................................................................................................... 9

OTHER RECOMMENDATIONS .............................................................................................. 13

CONCLUSION ............................................................................................................................ 14

REFERENCES ........................................................................................................................... 15
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BACKGROUND

The company of focus in the case is Rider Tire. Rider was a privately held

company located in Cadillac, northwest Michigan. It mainly produced specialty tires

used on practically anything from lawn mowers to dune buggies. Most of Rider’s

employees were obtained from the local population, and the company was respected for

its ability to compete with the corporate giants in the rubber industry. During the five

year period prior to Pierce’s starting with Rider, the company’s profits had steadily

declined to the point where they were just breaking even. Larry Rider, who was the

principal stockholder and chairman of the board, took over the presidency from Dave

Sumner upon reorganization of the company’s structure.

For over two years, Rider had been making plans to expand their facilities. This

was because 40 percent of the company’s sales were being generated at factories in

other firms, subcontracted for marketing under Rider’s name. However, the factories

only produced a 3 percent return on investment. Rider would have gotten a 12 percent

return if they had their own facilities to manufacture the tires. Potential expansion sites

were being sought in North Carolina, where the rates for labor and land were attractive.

These plans and the firm’s overall success were attributed to the abilities of an

individual named Garland Pierce.

Garland Pierce grew up in Cincinnati and earned his business degree while

residing at home. He started working as an industrial engineer in the Thomlinson

furniture factory, and moved up the ranks by promotion to production manager within

two years, and designation as vice-president of manufacturing. His outspoken manner

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and prompt rejection of poorly conceived ideas made him both respected and feared by

others. All managers who reported to Pierce were expected to share his management

philosophy and drive to succeed. Pierce had been with Thomlinson for ten years until he

met Dave Sumner, who was Rider’s president at the time. Sumner noticed Pierce’s

potential and persuaded him to join Rider as the vice president of manufacturing, at a

considerably higher salary than what he was earning at Thomlinson. After Sumner’s

dismissal from Rider, Pierce was made senior vice president of manufacturing and

elected as a member of the board. As vice president, Pierce’s authority was

unquestioned. In an attempt to revive Rider’s profitability, Pierce offered to purchase

Collington’s physical assets after turning down their previous merger. They approved

Pierce’s offer in anticipation, and the assets were transferred to Rider Tire.

Collington Tire was located in Trenton, New Jersey, and John F. Collington

founded the company in 1925. It was a family-type corporation prior to its sale to Rider.

Collington produced a diversified line of tires, but Wilton (John’s son), who was the

company president, decided to focus on making only military tires during the Vietnam

War. As the war intensified, the company saw substantial profits, but they also faced

problems such as increasing union demands and inefficient manufacturing facilities.

Due to the company’s underestimation of costs for curing and building equipment

required for making the tires, they lost money within a short period of time. Collington

made several attempts at mergers and an outright sale, but major companies turned

them down once they saw the worn-out facilities. Collington’s only hope was for Rider to

purchase their physical assets.

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THE PROBLEM

Was the leadership of Mr. Pierce effective enough to drive Rider Tire towards success?

Pierce’s style of leadership was autocratic. Autocratic leaders are known to make

decisions based on their own ideas and judgments, while rarely taking any advice from

followers. The management philosophy of Pierce caused him to make some bad

decisions when faced with challenges. Consequently, Rider Tire suffered significant

losses as well as other problems.

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ANALYSIS AND DISCUSSION OF ISSUES

Pierce’s autocratic style manifested when he failed to consider recommendations

for employee salaries from the union and John MacDonald’s proposal for expanding the

production workforce. Pierce decided to lower the wages for workers in an attempt to

maximize company profits for the upcoming periods. Upon making this decision, the

company became difficult to maintain and control. Workers were negatively affected,

because they were dissatisfied with their low pay and long work shifts. Most of them

walked off the job, leading to high turnover and absenteeism. Pierce clearly didn’t have

an understanding of employee motivation, and he believed that there were only three

things involved in managing people: telling them what to do, being certain they know

how to do their job, and following up on their progress.

McClelland’s theory of needs explains three driving motivators involved in a

person’s motivation. Based on this theory, it can be assumed that Pierce had a need for

achievement and a need for power. When Pierce became the vice president of

manufacturing, he carried the bulk of responsibility for ensuring that the Trenton plant

operated on a profitable basis. Pierce wanted other managers to adopt the same

philosophy he followed, along with his drive for success. He also took some risks when

making decisions, and this created a number of problems under his leadership.

Limited payments and benefits: Upon purchasing the physical assets of Collington

Tire, Pierce decided to re-negotiate a new contract with the union to lower employee

salaries and benefits, in an attempt to open the Trenton plant on a profitable basis. The

union approved Pierce’s proposal, despite being unhappy about the idea. Maintenance

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workers were dissatisfied with their pay, especially because qualified mechanics and

electricians who had similar jobs within Trenton were being paid 20 percent more.

Motivation is the process that accounts for an individual’s intensity, direction and

persistence towards achieving a goal. The expectancy theory assumes that effort,

performance and motivation are linked in someone’s motivation. Employees in an

organization are motivated once they believe that: 1) increased effort leads to better job

performance, 2) better job performance leads to organizational rewards, and 3) those

predicted rewards are valuable to them. (YourCoach, 2019). The workers were de-

motivated, because they believed that their contributions were greater than the cheap

payment they received. According to Herzberg’s two factor theory, pay is one of the

hygiene factors contributing to dissatisfaction. Motivation factors such as achievement

and recognition on the other hand, account for a person’s satisfaction.

High employee turnover: Employee turnover describes the number or percentage of

employees who leave the organization and need to be replaced. High employee

turnovers can be costly, time-consuming and detrimental to other peoples’ morale

(Moseley, 2009). From the total number of workers hired, only one in five continued to

work after their last six weeks on the job. Those that didn’t return said they quit because

of the low pay Pierce provided. During the second week of the Trenton plant’s startup,

workers had walked off the job to protest the working conditions. Herzberg’s two-factor

theory lists ‘working conditions’ as one hygiene factor that can cause dissatisfaction.

The equity theory explains why there was such a high turnover. It states that individuals

seek to maintain a balance between the level of input they bring to a job and the

outcome given as a result, in relation to the inputs and outcomes of other people. If a

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person believes that their inputs are greater than the outcomes, they become de-

motivated. For example, workers at Trenton plant discovered that persons who had

similar jobs in other industries were being paid 20 percent more than what they were

earning. Consequently, most of them left in search of higher paying jobs. Extrinsic

Motivation also explains this behavior, because consequential rewards and

punishments can influence a how a person behaves. If a valuable reward is tied to a

given task, individuals would be extrinsically motivated to complete that task. Pay is an

extrinsic reward, and if employees think that the pay is too low, they will get de-

motivated. Overworking can also influence an employee’s decision to leave the

organization and find work elsewhere. When production at Trenton declined, Pierce

wanted staff to work weekends and do double shifts. The workers were burnt-out and

felt mistreated for their efforts. Their relationship with the managers may have also

contributed to the high turnover rate. Pierce had promoted Dick Shiner to plant manager

after firing John MacDonald. Shiner was viewed as incompetent by the staff and was

generally distrusted by the production foremen, because he behaved inconsistently and

would pass on blames for low production to them. This affected job satisfaction of the

workers, because they didn’t trust Shiner’s authority and capability as a plant manager.

Equipment breakdowns: Following the departure of most of the maintenance workers,

plant equipment started to malfunction regularly. Pierce could not afford to meet the

standards of industry wages, arguing that production workers may also want to receive

a raise in salary. As a result, Rider experienced great difficulty in hiring new workers for

the maintenance department. Supervisors were stressed out and frustrated with the

breakdowns when they occurred, and instructed workers to resume their jobs if the

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machines would still work or make them move to a different task. These constant

breakdowns and task shifts prolonged the learning period of workers and caused their

productivity to decline.

Untrained workers: The manufacturing plant in Trenton had inadequate staff for

production to commence, so Pierce approached the experienced workers at Cadillac

offering them a transfer. After being turned down, he decided to transfer the younger

workers who were thought to be competent in their fields. Pierce felt that the

aggressiveness of these young workers would compensate for their lack of experience.

Self efficacy is the optimistic belief that you can successfully perform a task and

produce a favorable outcome. The originator of this theory, Albert Bandura, outlined four

sources of the efficacy belief: mastery experiences, observation of other people, verbal

persuasion and emotional/psychological states (Akhtar, 2008). The staffing of

inexperienced workers along with the high employee turnover rate at Trenton resulted in

untrained workers. The hiring process required both white and blue collar workers to

take standardized tests. Ten percent were successful in these tests, and low payments

only attracted minority groups from the central city. This negatively impacted the plant’s

productivity, since the inexperienced workers were left to train newly hired staff.

Poor management by department heads: After terminating plant manager, John

MacDonald, Pierce monitored the activities of Trenton plant for a few days each week

and discovered that the department heads were poorly scheduling their priorities. It is

believed that their lack of experience and training were contributing factors, along with

the limited managerial tools available. Whenever Pierce was helping a manager to

setup their priorities, they felt like their statuses were being undermined by him.

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Poor organizational structure: Organizational structure is defined as the way in which

job tasks are formally divided, grouped, and coordinated. The structure of an

organization will determine the type of relationships that form, the formality of those

relationships and the work outcomes of individuals (Robbins & Judge, 2017).

Organizational culture on the other hand, refers to a system of shared ideas and beliefs

held by members of an organization. An organization’s structure tends to reflect the

culture that is shared. Trenton plant’s organizational structure was centralized and had

a top-down authority approach. Pierce had tight controls on decision making, and the

department heads along with the workers weren’t involved. This type of culture was

ineffective in enhancing productivity and motivation.

Inefficient plant: Rider’s plant was not designed to enable a marginally adequate work

force to maintain shifts for five months after starting up. The employees were therefore

asked to do double shifts, then to work on weekends so that lost time could be made

up. Some refused, and the absenteeism rate increased by 10%.

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ALTERNATIVES

Do Nothing: This means making no changes to the policies, activities, leaders and

working conditions within Rider Tire. It would only allow current problems at Rider to

continue, leading to greater losses and inefficient production.

PROS: No costs or resources are required to implement this alternative.

CONS: The existing problems in Rider would continue or become worse over time

under the leadership of Mr. Pierce and plant manager, Dick Shiner. The continuation of

these problems will likely decrease productivity further and lead to more losses like

Rider’s net loss of $500,000 in the 1973 fiscal year.

Provide better payments and benefits: Workers who left their jobs complained that

the pay was too low for them. Pierce should increase the pay according to task

requirements and provide additional benefits (paid vacations, insurance, etc) if he

wishes to recruit more workers.

PROS: Offering benefits will attract and retain quality workers. They will have greater

job satisfaction and organizational commitment. Turnover rates can also be minimized

once more benefits are offered. The employees may even accept better benefits

instead of a higher salary, which could save the company from expenses.

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CONS: More administrative overhead expenses would have to be paid by the company

if they include more benefits. Any mistakes made in their benefit plans could also lead

to costly law-suits and regulatory fines.

Change the company’s structure: The centralized structure proved to be ineffective

for Trenton plant. Communication was limited, and the relationships between managers

and workers were compromised. Pierce should establish a more decentralized structure

which encourages decision making at various levels in the organization, and also set

guidelines for the company to follow.

PROS: When employees are given the opportunity to share their opinions, it can lead to

improved relationships with management. The employees would also have greater job

satisfaction, empowerment, and feel a sense of control.

CONS: Changing the structure of the company will require time and resources. Some

employees might be resistant to the change. This resistance may be caused by a lack

of knowledge about the upcoming changes or a fear of the unknown. Leaders should

expect some resistance to change no matter how beneficial it is to the organization.

Leadership training courses and programs: Pierce was an adept planner and

negotiator, but lacked key skills such as technical and human skills to effectively lead

the company. Shiner was considered unintelligent and incapable of managing the plant.

The young recruits who transferred over to Trenton plant were also inexperienced and

performed poorly in their positions. The Myers-Briggs test can help them to discover

their strengths and weaknesses, along with their individual personality types. After

taking this evaluation, they could fully utilize their strengths and work on improving their

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weaknesses to be more effective in their roles. The situational leadership theory states

that effective leadership depends on the readiness of followers. Once these leaders are

trained, they could choose the most appropriate leadership style based on how the

followers act. For example, if the followers are able but unwilling, leaders should use a

participative leadership style. The Fiedler contingency model says that leaders are

either task-oriented or relationship oriented. Once these individuals understand their

leadership style, they can match it to situations where the style would be most effective.

PROS: Trained leaders will be more adaptable and equipped to deal with external

changes. They would also be able to make better decisions, due to having higher

emotional intelligence.

CONS: Effective leadership programs can take time to implement and cost the

company a lot of expenses. Time and resources could also be wasted if the newly

trained leaders leave the company to work elsewhere.

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THE SOLUTION

To address the core problem, Mr. Pierce must change his style of leadership. He should

become a democratic leader. Many democratic leadership theories agree on a set of

core functions and elements, which includes: distributing responsibility among the

membership, empowering members, and aiding the group’s decision-making process.

In order to establish the democratic framework, certain aspects of the company need to

be focused on. First, the whole team should be engaged in terms of indentifying tasks

and other processes. Once everyone is made aware of these tasks, no time would have

to be spent figuring out which person will perform a specific task. Next, Mr. Pierce

should ensure that everyone understands how the decisions will be made in the group,

and set a timeline for decision-making. He should also invite opinions from the workers

to get necessary feedback. It is important that workers feel open to voice their opinions

at all times. Finally, a clear and well-established system is needed to reward creativity

and new ideas. The rewards could range from salary bonuses to an official recognition.

Once these requirements are met, the framework will be very effective.

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OTHER RECOMMENDATIONS

 Allocating payments according to task requirements and offering more employee

benefits.

 Having flexible work hours to curb overworking and fatigue.

 Offering leadership training courses and incentivizing exceptional job

performances.

 Making clear guidelines for everyone to follow.

 Adopting a decentralized organizational structure for communication to flow

freely between the various departments.

Implementing these solutions may last a minimum of five months and at most one year

before they are considered effective for the company. Once they are implemented,

Trenton plant will experience the growth and profitability it wishes to achieve.

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CONCLUSION

Rider Tire has a good chance of becoming profitable once more if the leaders learn

from their mistakes and take the given solutions into consideration. Once the training is

completed, they would be better equipped with the knowledge and skills to motivate

workers and maximize productivity.

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http://positivepsychology.org.uk/self-efficacy-definition-bandura-meaning/o

Cherry, K. (2011). An Overview of the Myers-Briggs Type Indicator. [online] Verywell

Mind. Available at: https://www.verywellmind.com/the-myers-briggs-type-indicator-2795583.b

Cherry, K. 2019. Autocratic Leadership: Characteristics, Pros, Cons. [Online]. [11

October 2019]. Available from: https://www.verywellmind.com/what-is-autocratic-

leadership-2795314

Chron.com. (2019). The Disadvantages of Change in an Organization. [online] Available

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resources/pro-and-cons-offering-employee-benefits.html [Accessed 3 Nov. 2019].

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Martin (2017). The Definite Guide to Leadership Development | Cleverism. [online]

Cleverism. Available at: https://www.cleverism.com/definite-guide-to-leadership-

development/ [Accessed 3 Nov. 2019].

Mindtools.com. (2009). Fiedler’s Contingency ModelMatching Leadership Style to a

Situation. [online] Available at: https://www.mindtools.com/pages/article/fiedler.htm.

Moseley, C. (2009). 5 causes of employee turnover (and how to prevent them). [online]

Jostle.me. Available at: https://blog.jostle.me/blog/5-causes-of-employee-turnover

[Accessed 13 Oct. 2019].

Robbins, S.P. & Judge, T.A., 2017. Organizational behavior, Harlow: Pearson

Education Limited.

Yourcoach.be. (2009). Vroom expectancy motivation theory | Employee motivation

theories | YourCoach Gent. [online] Available at:

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motivation-theory.php.

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