Case Study in Organizational Analysis: Student Retention and Employee Turnover

Sadly enough, power abuse is an integral part of everyday reality. Because of the power abuse in PepsiCo, the company has come up with a solution based on whistle-blowing. Opening a company hotline, however, meant facing a serious moral dilemma. Organizational and industrial psychology offers a perfect framework for dealing with emerging conflicts and solving the problems that involve both organizational and human factors. Although the key problem triggering the change in the company’s policy has dissolved, the threat of employees’ manipulating the hotline to influence the HRM choices appears. It can be expected that the employees might start abusing the hotline services. Applying the Five Tenets of the I/O Psychology to the case study in question, i.e., the problem that PepsiCo has faced recently, one can evaluate the undertaken measures and learn an important lesson concerning the difficulties that a company policy based on whistleblowing can trigger.

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Introduction: Case Study. Background, Participants and Key Facts

Solving problems within a specific organization is not easy. There are two elements known to provide impeccable clockwork of any organization; known as the industrial and the organizational aspects, they help coordinate both the production process and the process of knowledge sharing between the employees, therefore, making sure that the organizational culture allows a well-balanced approach and presupposes the policy of openness and knowledge sharing. Unfortunately, not all organizations make efficient use of the Industrial and Organizational Psychology theory, which often shows.

One of the most recent examples, a case of whistle-blowing in PepsiCo should be mentioned. After conducting an evaluation of the quality of organizational culture at PepsiCo, it has been noticed that the employees often complain about their managers’ unethical behavior. To solve the problem, it was suggested to introduce a Speak-Up! hotline. As a result, “Executive perceptions increased a dramatic +13 percentage points” (Church, Gallus, Desroires, & Waclawski, 2007, 162). Given the fact that the production values in PepsiCo were very high at the moment when the problem started brewing, it can be considered that efficient organization management depends on its organizational element as much as the industrial one; however, because of the necessity to make a compromise between the two, it is necessary to draw the line between the corporate values and the corporate morals.

Organizational Analysis of the Case: What Seems to be the Problem

As it has been stated above, the issue concerns the PepsiCo Organization and the I/O psychology dilemma that the company has recently faced. Before going into details concerning the PepsiCo problem, it is necessary to state the key complexity concerning the case in point. Although the solution offered by the company did address the initial problem (the unfair actions of the managerial), the given solution (a whistle-blowing hotline) could be viewed as going against the company’s principles of high morals, openness, and equality in the relationships between its members. Therefore, the initial problem (injustice of the managerial) was resolved, yet another issue, an admittedly important one appeared. Besides the threat of false accusations, the hotline presupposes complete anonymity and, hence, no responsibilities for telling on the offender. Hence, the hotline can be considered a challenge to corporate morals and the company’s organizational culture.

To be more exact, at a certain point, the employees in PepsiCo felt that their rights have been violated long enough, and they filed a complaint. In response, the PepsiCo created Speak-Up! hotline, which allowed informing the company directors when the employees feel that “someone has violated an organization’s Code of Conduct” (Church, Gallus, Desroires, & Waclawski, 2007, 161). The given strategy can be viewed as a successful solution to an issue concerning the organizational aspect of the company. The people who worked on the solution, however, did not take into account that the company can possibly face the threat of hotline abuse, which, in its turn, could adversely affect PepsiCo. The given case is an exact example of how mishandling organizational issues can affect the company’s productivity and, therefore, create issues in the industrial field.

Identifiable symptoms, key issues, facts, strengths and weaknesses: discussion

To start with, it is necessary to identify the key symptoms of managers’ abuse of their power over the employees. According to the case study, the key symptoms showing that the employees were suffering from the oppressive management could be observed; however, it seemed that to address the problem, the board of directors had very few choices. After the company had been offered the Speak-Up! program as the possible strategy for regulating the relationships between the employees and the managerial, notable improvements could be observed (Church, Gallus, Desroires, & Waclawski, 2007).

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Therefore, the obvious strength of the decision that has been made is the fact that the employees have finally been provided with the opportunity to speak for themselves. Another strength of the Speak-Up! is that it allows for improving not only the relationships between employees and managers but also the production process since no more personal conflicts stand in the way. There is, however, a tangible weakness that can ruin the entire triumph. According to the case study, the hotline itself is not a solution, but the means to come up with one. Apart from introducing a hotline, PepsiCo also needs efficient measures from the board of directors, who have been quite reluctant to take action. Hence the basic weakness of the strategy comes.

The fundamental tenets of the industrial/organizational theory and the case study: where the two cross

Though the problem described above concerns the issues related to the employees and, therefore, must belong to the Tenet Three (Organizational Behavior), it also has a lot to do with the communication problems (the employees’ inability to communicate their problems to the authority) and leadership issues (the abuse of power), which means that it should be viewed from both perspectives. Once the leadership strategy is analyzed, its flaws and negative effects will come into the open, which will provide an opportunity for changing it for the better.

The Applied Approaches and Their Evaluation: A Cross-Disciplinary Approach

As it has been mentioned above, the issue concerning the lack of transparency within PepsiCo, as well as the fact that the company managers abuse their authority has been addressed by the company board of directors and the specialists in Industrial and Organizational Psychology. The approach that to latter preferred to the rest of the possible methods can be described as the triangulation process (Bjørkelo, Einarsen, & Matthiesen, 2010). Since the situation with the managerial abusing their powers involved objective judgments from both managers and employees, the former obviously denying their fault and the latter clearly being vengeful and trying to exaggerate the scale of the abuse, it was required to conduct a study to obtain objective information and choose the appropriate course of actions. As the study shows, the I/O specialists did major research, utilizing all possible methods and choosing different sources of information in order to avoid subjective judgment. For instance, it is rather impressive that PepsiCo I/O specialists did research concerning the solutions that other companies have for similar problems, as well as the forms of whistle-blowing traditionally used in such companies (Church, Gallus, Desroires, & Waclawski, 2007, 160). According to the research results, the existing forms of whistle-blowing include e-mailing to the appointed authority anonymously.

Methods and measuring: concerning the quantitative stages of the analysis

Weirdly enough, the given research does not feature many quantitative data; perhaps, because of the focus on the complexity of the conflict and the ambiguity that occurred as a result of basing the solution on whistle-blowing, the case study does not feature many numbers; instead, it provides ample discussions of the director’s choice. However, the study does feature certain statistical data; for example, Church, Gallus, Desroires, and Waclawski specify that by 2004, the hotline was available to employees all over the world, featuring an interface with 150 languages. In addition, the research says that by 2006, the hotline had become 9% more popular among the members of the company, whereas executive perceptions “increased by a dramatic 13%” (Church, Gallus, Desroires, & Waclawski, 2007, 162).

Effectiveness of previously used methods: where the problem might be lurking

Though the case study does not actually specify the approach undertaken by PepsiCo previously, it can be suggested that it failed, since the employees started complaining about the leadership style of the managerial. Judging by the fact that the managers were abusing their power, it can be assumed that the chosen leadership style could be described as laissez-faire. To be more exact, the company leaders clearly delegated a great chunk of responsibilities to the managers, therefore, giving them considerable authority to choose the ways of coordinating the work of the staff and shaping organizational behavior, which triggered a change in the corporate values.

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The study methods and their peculiarities: motivation in the workplace

In the course of the research, preference was given to the qualitative research method. The choice was predetermined by two key reasons. First, the employees would have definitely refused to provide their ideas concerning the current leadership style, fearing that it would result in their being fired. Second, stating the exact number of conflicts would have required verifying the information by asking numerous witnesses about the accidents, which would have been biased due to the personal interest of the employees. With the help of qualitative research, however, the specifics of manager-employee relationships could be evaluated easier. Anyway, the chosen methods can be referred to as the principles of the Tenet Five, since the latter presupposes the consideration of research methods and interventions.

A Procedure for Implementing Changes in the Organization: A Step-by-Step Instruction

Like any other organizational change, the introduction of the Speak-Up! hotline required making several important changes. In the light of the threat that the company faces, it is important to make sure that the employees should not abuse the provided hotline. The aforementioned objective can be reached with the help of reinforcing the corporate values and upgrading the company’s moral standards.

The actions to be taken by the company management

In the light of the fact that the company faces major threats at present, i.e., the abuse of the hotline and the undesirable changes in the company cultural values, a two-fold plan must be developed, i.e. aiming at retaining the current corporate values and at the same time at making the use of Speak-Up! as clear as possible. Therefore, the following course of actions must be undertaken:

  1. Preventing slander:
  • Careful evaluation of the information;
  • The analysis of previous similar incidents (if any);
  • Consideration of the evidence from witnesses (if any).
  1. Reinforcing corporate values:
  • Checking that the leader’s behavior corresponds with the required system of values;
  • Making sure that every employee has familiarized him-herself with the corporate values;
  • Encouraging the model behavior by providing the model employees financial inducements and moral encouragements.

Time, cost and other internal/external constraints

Like any other service, the provided hotline has been, no doubt, rather costly for PepsiCo; therefore, the key expenditures are going to be related to the Speak-Up! services and its representatives. Since it usually takes time to deliver the problem or describe a conflict among the company staff, it can be expected that the use of the hotline is going to make much money from the company. However, it is worth keeping in mind that defending in a case filed against the company management as a result of another infringement of employees’ rights might be much more financially devastating for the PepsiCo organization rather than paying phone bills.

The intervention strategy and the group behavior

The chosen intervention strategy can be described as the intervention aimed at fighting for the rights of individuals (Bond, Flaxman, & Bunce, 2011). Again, the given issue can be related to the Tenet Five, as the latter considers the key approaches undertaken in the organizational settings to improve relationships between the personnel as well as the production process.

Developing a Contingency Plan: When Flexibility is Worth Its Weight in Gold

Judging by the fact that PepsiCo might be facing a very serious threat of losing control over its employees, one might assume that the company can also lose a considerable amount of its annual revenues. Because of the previously established link between the two elements of any company, i.e., the industrial and the organizational aspect, and a close link between the two, it can be assumed that the regression of the standards for the organizational behavior will echo in the industrial progress. Once the moral values standard in the organization drops, the employees are highly likely to consider their job as a mundane routine and focus on the conflicts in the interpersonal relationships rather than on the production process, which will definitely lead to industrial regress. That being said, it is clear that a contingency plan must be developed for PepsiCo to undertake the appropriate course of action.

To start with, it is necessary to provide instructions on the cases when the hotline must be used. The given step does not presuppose that the initiatives of the people whose rights as employees have been infringed are going to be restricted in any way; on the contrary, the given step will guarantee that the employees will be able to recognize the instances when their rights are being stepped on and, thus, take the necessary measures.

The second stage in the contingency plan presupposes the case when the employees actually abuse the hotline and use it as a means to spread slander and persuade the company managers to make wrong choices concerning human resource management and other related issues. For the cases of slander to be avoided, it will be reasonable to suggest that some of the members of the board of directors should experience the specifics of the office environment by spending several days among the staff. Thus, it will be possible to evaluate the situation objectively and pass an unbiased judgment concerning the managers’ treatment of the employees.

Needless to say, having the personnel at the hotline as the third party in the given situation is rather undesirable, yet unavoidable, for enabling a representative of the company staff is fraught with serious consequences. To prevent the possible cooperation between the personnel of the hotline and either the managerial or the employees, it is necessary that the chosen hotline company should be proven completely trustworthy and honest. Should any suspicions arise, however, it will be required to stop the hotline activity and shift to the methods that will not demand the presence of the third party, e.g., sending anonymous e-mails to the head of PepsiCo, etc.

The suggested approach and the organizational culture

As it has been mentioned above, the given approach enhances the development and, which is even more important, the enhancement of organizational culture. Related closely to tenet Three, i.e., Organizational behavior, it can also belong to Tenet Two (Organizational Development), since it presupposes the improvement of the existing standards and the employees’ personal growth.

Plan Evaluation: Checking the Strategy for the Possible Flaws

Like any other plan, the suggested one definitely has its flaws, and detecting them will help make the plan work faster and more efficiently. To start with, the plan presupposes rather fast changes, and it will be important to help the employees adapt to the given changes as soon as possible (Marr, 2007). Secondly, the plan presupposes checking the employees for their honesty, which will certainly be insulting to most of them. Therefore, it will be required to provide vast explanations concerning the reasons for the changes.

The suggested course of actions and the target groups

It would be rather naive to expect the entire staff to reconsider their priorities and follow the established model of organizational behavior. Conflicts happen in the course of communication within any group; moreover, sometimes conflicts are even required for moral and professional growth. Hence, it will be necessary to avoid creating the impression that the company authorities force the promoted moral values on the staff.

Methods of evaluation and productive behavior

Quite obviously, the key method of evaluating the efficiency of the Speak-Up! hotline and the corresponding measures undertaken in pursuit of a better organizational behavior and improved corporate values are going to incorporate the qualitative and quantitative methods. The former will come in the form of questionnaires and opinion polls (anonymous ones, if the employees wish so), while the latter will presuppose counting the complaints received via hotline.

Recommendations on the Current Issues: What Needs to Be Resolved Immediately

Even though the basic problem that the PepsiCo organization faced not so long ago has finally been eliminated, there are still certain issues that have to be dealt with. Primarily, the basic problems concern he outcomes of the offered plan, the probable conclusion concerning the inefficiency of the company’s hotline and the possibilities of the employees’ rights infringement despite the existence of the whistle-blowing practice. It is important to realize that the choice made by the company is very controversial. On the one hand, it encourages clarity and transparency in organization by introducing a hotline with the help of which any problem can be communicated; on the other hand, the fact that the hotline presupposes complete anonymity makes the given solution contradict the above-mentioned principle and, therefore creates a very biased situation.

In the given situation, it will be a good idea to use the moral dilemma as a pretext for re-stating the company’s moral principles and for introducing such organizational values as trustworthiness, clarity, honesty and fair and objective judgment into the company’s set of organizational principles. Although the given process might take a considerable amount of time and be only partially accepted among the employees (Yang, 2009), while some even might decline the given principles, it is still bound to have an effect on the organizational behavior of both employees and managerial.

Another important issue that demands an immediate solution is stressing the rules for hotline use. Because of the threat of hotline abuse and its utilization as a tool for creating conflicts between the managerial and specific employees and, which is even worse, slander, the PepsiCo leaders must emphasize that the hotline must be used only in the case when there is no other way to solve the conflict but to ask for the help from the supreme authority. Of course, one has to understand that the given measures will not eliminate the possibility of slander; however, they are highly likely to reduce it. Still, it is important that the information acquired via the hotline must be filtered and verified carefully not to pass hasty judgments.

The possible consequences of not following the recommendations: anticipating a disaster

There is no need to stress the necessity to follow the guidelines described above; once the employees understand that they can use hotline for their own benefit and, thus, manipulate the decisions made by the company’s board of directors, they will doubtlessly start abusing the hotline, in fact, ruling the company and making HRM decisions instead of the appointed staff. Naturally, it must be admitted that the aforementioned state of affairs is the worst-case scenario and that the results might actually be less drastic. Nevertheless, taking extra risks with such an important issue as the organizational behavior is quite undesirable.

Alternatively, the PepsiCo might disable the employees to use the Speak-Up! hotline for the sake of keeping the company as far away from the slander threats as possible. The given solution, however, can lead to even worse results than the previously described solution. After experiencing complexities with the board of directors for abusing their authority, the company managerial is highly likely to have personal grudge against the staff. It can be assumed that, once the hotline is no longer in existence, the managerial will impose even harsher punishment on the employees as soon as there will be no opportunity for the latter to complain anonymously about a specific case of managers’ power abuse.

Conclusion: On the Verge of a Great Organizational Change

Although the solution that the PepsiCo came up with to handle the problem of injustice in the organizational setting might seem efficient, it still raises a number of moral issues, starting from the questionable ethics of whistle-blowing to the possible abuse of the corporate hotmail and probable instances of slander appearing in the future. The case in point is a graphic example of how the confused organizational psychology stands in the way of the company’s industrial growth and further development. While the industrial aspect in the PepsiCo seemed to be up the notch, the quality of communication between the managerial and the employees became worse, which triggered a rapid decline of the production values. Even though the problem has been solved, the controversial solution has spawned another moral dilemma, which is why the current state of affairs concerning PepsiCo industrial processes leaves much to be desired.

Reference List

Bjørkelo, B., Einarsen, S., & Matthiesen, S. B. (2010). Predicting proactive behavior at work: Exploring the role of personality as an antecedent of whistleblowing behavior. Journal of Occupational & Organizational Psychology, 83(2), 371–394.

Bond, F., Flaxman, P. E., & Bunce, D. (2011). The influence of psychological flexibility on work redesign: Mediated moderation of a work reorganization intervention. Journal of Applied Psychology, 93(3), 645–654.

Church, A. H., Gallus, J. A., Desroires, E. I., & Waclawski, J. (2007). Speak up all you whistle-blowers: An OD perspective on the impact of employee hotlines on organizational culture. Organization Development Journal, 25(4), 159–167.

Marr, J. A. (2007). Globalizing the OD function – meeting global and regional needs. Organization Development Journal, 25(4), 145–149.

Yang, S. (2009). Still feeling proud to be working for your employer? Longitudinal changes in white collar employees’ morale in a time of organizational restructuring. Sociological Spectrum, 29(5), 572–597.

Case Study in Organizational Analysis: Student Retention and Employee Turnover
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