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Case 14-2

Williamson and Oliver

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

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

3.       Can the “soft” future oriented performance areas be sufficiently quantified to permit inclusion in the reward system?

4.       Given the management task at hand, how would you structure the set of measurements for an office of WO? (What measures and what weights across the set of measures?) Would your answer vary across offices?

5.       Given your understanding of the industry situation, WO’s position within the industry, and Ted Johnson’s sense of mission for WO, is the new incentive plan a positive or negative factor in the management?

Answer :

1. 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. 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...