Principles and Practice of Management

Principles and Practice of Management Case (20 Marks) There were six major banks in the city. All of them were affected in various degrees by a cost squeeze prevalent in the banking industry. Two of the banks laid off several hundred employees. Ajax Trust released 250 people, including 60 officers. Benson Bank released 600 employees, including 90 officers. Rumors permeated the industry and many employees were worried about their jobs. The Cortland Trust, the fourth largest bank in the city, announced the release of 700 employees, 200 of whom were officers. Now the rumors became really heavy. The Hawthorne Trust Company, second largest in the city, had no intention of releasing any employees.

Even in the deep depression of the 1930s, no employee had ever been released because of poor business. The senior management of Hawthorne simply planned to let a no- hiring rule and normal attrition handle the problem. They were a conservative group and felt that any announcement of their decision might appear to be flamboyant in the banking community, so no mention was made to the press or to the employees of the bank. It was felt the employees would understand the bank’s tradition of no releases due to business conditions, which wasn’t a stated policy but had a long history. Over the next several weeks, many supervisors reported poor morale, jittery employees, and a drop in productivity. All of this was traced to retrenchments in competitor banks and the ever-present worry that Hawthorne would be next.

Answer the following question. Q1. Comment on senior management’s decision not to announce their decision to either employees or the press. Q2. Should they have told employees? Explain. Q3. Was too much emphasis placed on traditional behavior? Justify. Q4. If you were employed as a supervisor at Hawthorne Trust, what would you do to cope with the problem?