Jersey Dairies, Inc. faced increasing competition thatthreatened its dominant market share in the Pacific Northwest.Senior management at the 300-employee dairy food processing companydecided that the best way to maintain or increase market share wasto take the plunge into a quality management (QM) program. Jerseyhired consultants to educate management and employees about the QMprocess, and sent several managers to QM seminars. A steering teamof managers and a few employees visited other QM companiesthroughout North America.
To strengthen the company’s QM focus, Jersey president Tina Stavroscreated a new position called vice-president of quality, and hiredJames Alder into that position. Alder, who previously worked as aQM consultant at a major consulting firm, was enthusiastic aboutimplementing a complete QM program. One of Alder’s firstaccomplishments was convincing management to give every employee inthe organization several days of training in quality measurement(e.g., Pareto diagrams), structured problem solving, and related QMpractices. Jersey’s largely unskilled workforce had difficultylearning this material, so the training took longer than expectedand another round was required one year later.
Alder worked with production managers to form continuousimprovement (CI) teams—groups of employees who looked for ways tocut costs, time, and space throughout the work process. AlthoughAlder was enthusiastic about CI teams, most supervisors andemployees were reluctant to get involved.
Supervisors complained that the CI teams were “asking too manyquestions” about activities in their department. Less thanone-quarter of the production areas formed CI teams becauseemployees thought QM was a fancy way for management to speed up thework. This view was reinforced by some of management’s subsequentactions, such as setting higher production targets and requiringemployees to complete the tasks of those who were absent fromwork.
To gain more support for QM, Jersey president Tina Stavros spokeregularly to employees and supervisors about how QM was theiranswer to beating the competition and saving jobs. Although thesetalks took her away from other duties, she wanted every employee toknow that their primary objective was to improve customer serviceand production efficiency in the company. To encourage moreinvolvement in the CI teams, Stavros and Alder warned employeesthat they must support the QM program to save their jobs. Tofurther emphasize this message, the company placed large signsthroughout the company’s production facilities that said, “Our JobsDepend on Satisfied Customers” and “Quality Management: OurCompetitive Advantage.”
Alder and Stavros agreed that Jersey’s suppliers must have a strongcommitment toward the QM philosophy, so Jersey’s purchasing managerwas told to get suppliers “on board” or find alternative sources.Unfortunately, the purchasing manager preferred a more collegialand passive involvement with suppliers, so he was replaced a fewmonths later.
The new purchasing manager informed suppliers that they shouldbegin a QM program immediately because Jersey would negotiate forlower prices in the next contracts and would evaluate their bidspartly based on their QM programs. Twenty months after JerseyDairies began its QM journey, Tina Stavros accepted a lucrative joboffer from a large food products company in the Midwest. JerseyDairies promoted its vice-president of finance, Thomas Cheun, tothe president’s job.
The board of directors was concerned about Jersey’s falling profitsover the previous couple of years and wanted Cheun to strengthenthe bottom line. Although some CI teams did find cost savings,these were mostly offset by higher expenses. The company had nearlytripled its training
budget and had significantly higher paid-time-off costs asemployees took these courses. A considerable sum was spent oncustomer surveys and focus groups. Employee turnover was higher,mainly due to dissatisfaction with the QM program. Just beforeStavros left the company, she received word that several employeeshad contacted the Commercial Food Workers Union about organizingJersey’s nonunion production workforce.
A group of suppliers asked for a confidential meeting in which theytold Cheun to reconsider the QM demands on them. They complainedthat their long-term relationships with Jersey were being damagedand that other dairies were being more realistic about price,quality, and delivery requirements. Two major suppliers bluntlystated that they might decide to end their contracts with Jerseyrather than agree to Jersey’s demands.
Almost two years after Jersey Dairies began QM, Thomas Cheunannounced that James Alder was leaving Jersey Dairies, that theposition of vice-president of quality would no longer exist, andthat the company would end several QM initiatives begun over theprevious two years. Instead, Jersey Dairies, Inc. would use bettermarketing strategies and introduce new technologies to improve itscompetitive position in the marketplace.
Discussion Questions
1. What perspective of organizational effectiveness did TinaStavros and James Alder attempt to apply in this case?
2. Describe how specific elements of that perspective related totheir interventions.
3. Explain what went wrong in this case, using one or moreof the other perspectives of organizationaleffectiveness.