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In a highly competitive environment such as the computer and technology industry, the structure of an organization needs to balance the benefits of a free and creative workforce all the while employing rigid guidelines to ensure cost control and efficiency.  Apple Computer tried to accomplish this grey area of management when they restructured the organization in 1992.  While some of the techniques they implemented looked promising, others appeared as if they were not going to solve their current problems.

To facilitate creativity in generating new and unique products, Scully will “articulate a far-sighted vision very broadly, at a 50,000 foot level” and leave the lower level managers and workers to fill in the blanks.  While it is important for Scully to allow the engineers freedom in generating ideas for new products, he may be allowing them too much freedom.  Without providing the lower level workers certain specifications and milestones, they will surely overshoot their budget and miss deadlines.  To ensure that these milestones are met, Scully should provide them with a semi-rigid guideline for the development, yet still allowing wiggle room for creativity that will distinguish their products in the market.  The freedom that is allowed for creativity at Apple also has the potential for abuse.  The current structure is lacking boundary controls that define what behaviors will be tolerated and which behaviors are prohibited.  These controls should be carefully chosen by upper management and designed to  facilitate creativity and boost employee morale, yet keep the worker’s behavior professional and goal oriented.

Recently, upper management has received negative feedback in surveys from the company’s employees.  We feel that the upper management at Apple is too inexperienced and that it should be comprised of workers promoted from within the company.  The average senior manager has only been with the company for 5.5 years, when many of the lower level employees have been with the company for double that amount of time.  This may be leading to the decrease in employee morale, thus resulting in them losing the drive they need to keep Apple innovative and profitable.  Apples employees are adequately educated and know the products as well, if not better, than most of management, and may potentially lead to the subordinates undermining any recommendations made by their seniors.

Compensation and bonuses are a main incentive for exceptional performance and motivation at Apple.  While the goals and measures that the bonuses are based upon are aligned with Apples long term goals, we feel that lower level employee’s bonuses are based on goals that they are not responsible for attaining.  For instance, a line worker certainly does not have great control over the company’s market share, just as a marketer has no influence over any product flaws that engineering may have missed. Each division should have their own independent measures to determine bonuses.  These measures should only consist of goals that they have direct control over.  If an employee’s bonus is dependent on a goal that their job affects, it gives them incentive to excel at their respective duties in the organization.  Senior management’s compensation on the other hand, should be based on all of ACPI’s, as they are responsible for the success of the organization as a whole.

Apple’s new strategy calls for an increase in productivity, which often can mean an increase in speed.  Though it was said that “Apple remained a very pleasant place to work: its offices were bright, modern, high-tech buildings.  The atmosphere was still casual, reflecting the California lifestyle of many of the employees.  And the company’s historically strong, individualistic culture was reinforced by Apple’s own technology.”  It seemed that even though people still enjoyed the environment, they did not necessarily still love the work.  One manager said “people were being pushed to the limits; long hours and limited resources were leading to ‘burnouts.'”

The issue here is that to increase productivity the correct way means an increase in efficiency.  Most people agreed that the new system had not fundamentally reengineered anything; they were simply having employees work harder with fewer resources.  Apple was used to an informal style and not used to employees feeling overworked.  Apple’s people management seemed to be letting its “people” down.  A 1992 Survey suggested that the vast majority of employees perceived that the company did not invest in its workforce and that executive management was not concerned about their future.  It also suggested that most employees believed that Apple’s best people had been passed over for a promotion.

Apple was supposed to be a place that people longed to work for.  Now it has become a place where employees are unhappy and with the rapid growth new employees were often promoted with little time to develop appropriate management skills.

John Sculley often emphasized the importance of leadership.  Shortly after he announced his long term view of the organization in a companywide meeting, he released his public view of management: “Capable leadership is essential to Apple’s immediate and long-term success. Thoughtful planning and execution of executive capabilities will be a strategic edge for Apple as we move forward.”  With all the new management positions due to the rapid growth, this “capable leadership” began to be questioned.  We have learned that there are many ways in which managers can positively affect organizational culture.  The way that employees were currently being hired did not seem to use these techniques.  Part of the reason that the managers were lacking the proper skills could be because they were not hired based on their “value or belief” in the new strategy.  If the practices are going to be consistent throughout an organization it must promote people whose values are consistent with the company’s culture.  In order to fix this problem and ensure the successful management of Apple, the manager in charge of getting managers ready for their job sat down with each general manager and created a list of core competencies needed for that division.  These would align with the new strategy for the most part; however there was a new focus.  The new focus was one that had never been used before, customer focus.

It is interesting that in the middle of implementing this new strategy that seemed to be centered on higher productivity, lower prices and product development they would stress the importance of customer focus to all their general managers.  This, though not exactly a poor decision, is inconsistent with the other ways that the company went about executing this “new strategy.”  Until this point it had been about increasing productivity with longer hours, rapid growth and successful promotions.  After the 1992 survey that showed no improvement in the previous year, it is easy to see that a change was needed.  Customer focus seemed to be that change.  The reason this inconsistent change was needed was because Apple managers did not believe they had the time to allow the original plan to work.  A quality manager was quoted saying “We can’t wait three to ten years to get results.  We won’t be alive if we wait that long.”

As a group, our consulting firm has provided you with several solutions to these ongoing problems at Apple.  Our solutions relate to four problem areas at the firm; compensation, promotion, communication, and creativity.

Make compensation and bonuses in line with attainable goals.

A line worker’s bonus needs to be attributed to the job he is performing and the goals which go along with that job.  The Senior V.P. Secretary is getting his bonus because the R&D team has spent 80 hours a week all year cranking out new ideas and products.  It doesn’t seem fair that the rewards are not in line with the work done to achieve them.

  • Operational level divisions bonuses based on performance,