Williamson and Oliver

Case Nr. 8 – Williamson and Oliver

1. Is Williamson and Oliver committing the “fallacy of hoping for A while rewarding B?

I don’t think that Williamson and Oliver is committing the fallacy of hoping for A while rewarding B, but if they fail to manage the new reward system fairly they could easily commit it.

The main goal of the new incentive plan is to improve the profitability of the firm and make the right decisions to keep the firm prosper over long-term. As the text describes, all PICs are inexperienced in their role of general managers, lack managerial skills, focus on short-term profits and have not made the psychological transition from a local firm to a local office of a national firm. In short, they are used to thinking as accountants and not as managers.

The company should expect PICs to rationally adjust to the rewarding system rather that expect them to change their management style by saying they should do it. Therefore, implementing the new system could help reduce these problems and force PICs to change their management style and focus on long-term planning.

Before implementing the new system, the company has to make sure that this system doesn’t espouse long term growth and profitability while rewarding short term results. It has to espouse and reward long term results; otherwise they would be committing the fallacy of hoping for A while rewarding B. Also, the company has to overview the overall system and performance factors and results periodically and make sure that the focus doesn’t continue being on short term results but long term results.

Finally, there has to be good communication within the company to avoid people working at cross purposes. This would happen when those who accept the rhetoric follow conflicting paths to those who didn’t mean it.

2. Can you expect PICs to worry a lot about factors not in the formal reward system?

PICs are considered general managers of an autonomous profit center. They are responsible for...