Case 21 An Unexpected Budget Cut
Setting: Automobile Parts Manufacturer; Your Position: Systems Manager
You work for a company manufacturing auto parts for the replacement market that was bought out two years ago by a large competitor. The exhaust system group, which you head, is one of the few groups that was not deeply affected by the takeover. More than three quarters of the managerial ranks of the old firm have been eliminated as the parent company sought to eliminate duplicated functions and make the new company as lean as possible.
The eight engineers who report to you are bitter about what has happened to their associates in other departments but are grateful to you for your ability to protect their jobs from external pressures. Whatever actions you have taken with higher management seem to have been both effective and to have earned you the engineers' respect.
While they respect you, they do not exhibit a great deal of respect for one another. When you first took charge of the group three years ago, you were surprised at the amount of backbiting and friction in the group meetings. The situation has not changed appreciably since that time, and you must admit that it has made you more reluctant to call group meetings.
It came as a surprise to you when you were told that further cutbacks were necessitated by a decline in the replacement market and that your budget was being cut by 20 percent for next year. You do not know how this can be achieved and whether the cost saving can be effected without a reduction in personnel. However, you do know that thoughtless trimming of labor or equipment costs could have disastrous effects on your group's ability and motivation to carry out its important role. While they resent the impositions of these cuts, your direct reports undoubtedly have the knowledge necessary to make these judgments. On the other hand, they express the view that this is what "you are paid for." You have two weeks within which to draw up a plan.