Frank was not happy with his meeting with Jim Rudnik. Jim had worked in Frank’s MachineShop for over four years. During all that time Frank had counselled and trained the younger Rudnik leading up to the day, four months earlier, when Frank appointed Rudnik as his shop manager. There was a very important reason for this move. Not only was Frank con vinced that he needed a good management team to help him build his company, but he wasalso convinced that the process of (a) calling on customers, (b) getting a backlog of orders, followed by (c) weeks in the shop getting the orders produced, then going out to call on customers again was counterproductive. One day, Frank believed, his company would be the biggest and best in the city.
But now, just when his plans were starting to coalesce, Rudnik asked Frank to let him re–sign in two months so that he could start his own machine shop. Frank admired Jim for hiscandour and determination. But he couldn’t hide his disappointment and anger. It was onlythree years ago that his plans had been set back for the first time by losing another good employee. Now it seemed he had to start again.
History
During the cold war of the 1950s and into the 1970s many young people escaped from Soviet-dominated, East European countries and made their way into the West. In Frank’s case he had applied to the U.S., Australian and Canadian embassies for new immigrant status and was rewarded with a Canadian entry visa. For a number of years he worked as a lathe and machine tool operator until starting his own small business in Toronto, Ontario.
The machine shop was old and most of the equipment was old or run down. However, using his training and innovativeness, Frank soon had the operation running on a first-rate basis. One of his first contracts from General Motors was a job that turned into an ongoing,long-term contract for spacer rods in trailer assemblies. While it would be the case that in thefuture Frank’s company would derive most of its business from many such contracts, his pre–sent operation needed consistent, hard-driving sales activity to keep the shop busy and to grow.
Company Operations
The machine shop was organized into four operations:
Drill press, punch press—one operator
Bending and welding—one operator’
Lathes and N.C.—two operators
Tool making grinders and mill—one operator’
In addition to four skilled operators there were three apprentice helpers and a shop jan itor. Frank’s wife ran the office, handled the accounting function and answered the phone.
The shop foreman was responsible for production control, scheduling the work through each operation, purchasing the materials for each job, training programs and shop morale.
It was now a year after Rudnik’s departure. Frank knew that he could increase the com pany’s sales level over the million dollar level if he could spend more of his time in the field dealing with customers. His problem was trying to keep a shop foreman in place for thelong term while he went after sales and began to execute his master plan for growth. Recentlyhe had read in theWall Street Journal about a technique referred to as the “golden handcuffs” technique.
A number of versions of the “golden handcuffs” theory were discussed in the article. Thesimplest method was to promise equity to an employee after they had performed for someperiod of time, usually one to three years. In larger corporations the equity took the form ofshare purchase options or warrants, which could be exercised following board approval. In smaller companies it was the promise of a partnership of varying degrees after some pe riod of time. There was no particular formula for the arrangement. It was always, however,the owner or management’s position to maximize performance requirements and minimize the payout of equity participation.
Questions
1. Frank was very happy with his new foreman. But he still was not sure that if he could per suade him to stay that he would remain with the company any more than two to three years. How could he make him a part of the long-term plan, which was to create and op erate a multi-million-dollar corporation?
no more than 500 words.
APA style
No plagiarism