Webster Industries

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Webster Industries: A Critical Analysis of Carter’s Process for Decision Making There are several weaknesses in the process that Carter used for decision making. Perhaps the most severe of them all was the lack of sight with respect to the strategy of the Webster Industries. The financials for the company clearly show that by October 1975 the company was probably recovering from the downturn. If that was indeed the case, Carter should requested an adjustment to the anchoring bias of 15% downsizing target and examined the list of criteria that Stevens’ laid out in the light of sustained growth.

Healthy growth requires people who are competent in their current job as well as people with potential. Consequently the group should have avoided using criteria such as lack of future potential in competent people or seniority for downsizing. Stevens’ suggestion for reviewing people’s potential and seniority, put in an anchoring bias that could well have been avoided. Stevens also thought that people with seniority might choose to retire which indicated a representativeness bias on his part, while his somewhat callous attitude towards fairness was concerning.

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These aspects were clearly incongruent with the original strategy laid out by Abe Webster and Webster Industries’ paternalistic culture. To align the organization with Webster’s strategy, Carter should have laid out the organization structure before he started the deliberations and then focused on filling them with the most suitable candidates. Carter’s approach for downsizing did not take into account the loss of morale that would result because of his actions. For example, Carter did not include his immediate report Brown in his discussions.

Given Carter’s previous conversation with Davis, Brown clearly had more experience than Stevens. For this reason, Carter should have approached Brown first with the proposal of demotion and asked him to join the team for reviewing the employees. Brown’s experience would have definitely been a value addition for the team. I was reminded of an experience in my own company where the Plant Manager at BP Texas City accepted a demotion to Operations Superintendent during a recent reorganization and helped in the evaluation process.

Simultaneously BP’s HR set up a massive redeployment process which ultimately allowed 83% employees laid off to get equivalent or better jobs and this kept the morale strong. Carter’s group should have involved Webster Industries HR in the process to take a similar approach especially since Clearwater was a “Webster company town”. Carter Racing and NASA examples discussed in the class taught us the value of the voice of dissension. While Stevens acts like the character of Tom from Carter Racing, Jack Bryant from Personnel Audit team would have been the voice of Paul.

Carter should have included him on the team and listened to his experiences while talking to the employees and their managers. After all, his “on-the-ground” experience and intuition gained through the audit process was more likely to reveal the real situation than PAS or the brief audit reports. Just as NASA, after the Challenger Disaster instituted a rule that a launch could be vetoed by anyone in the team, including Jack in the conversation would have served as an antidote to overconfidence bias that would otherwise creep in.

I am also reminded of an example we discussed in class of a mechanical engineer supervisor identifying more with other mechanical engineers in her group than software engineers. Similar confirmation as well as availability bias may be expected in this case. Since the furnishings manager was not present at the meeting held on Monday, one can expect the employees in that department to suffer disproportionately. In order to prevent this, Carter should have formed an all inclusive team, especially since the furnishings group was one of the low-performing group.

On a side note, Stevens had an excellent suggestion for reducing the head count by more than 43 and hire more competent people from sister departments into their group. However rather than focusing on identifying as many capable individuals to execute the organizational strategy, and then downsizing to meet the numbers, he suggested that they could hire 5 additional people by reducing their group by 48 people. I believe that by doing so he may have set up an anchoring bias. Carter could have used a method similar to the one that BP used in one of its reorganizations.

The entire organizational structure was laid out by the top management and managers were asked to apply for jobs. This allowed the management to pick the best candidates for the job while still keeping the employee morale relatively high. Carter and his group deliberated on using PAS and audit systems for gauging the performance and potential. The audit system was too abbreviated but if used along with timely inputs from Jack Bryant would certainly be useful since it was being used by almost the entire workforce and because there was a mechanism in place to share the feedback from the system with the employees.

On the other hand, the PAS system was used by only 40% of the people. Although rigorous (perhaps too much) and well designed in many ways, the PAS system was not structured to rank individuals. For example, Attachment 1 and 2 merely identified the core competencies of the person and highlighted areas for development. With an oversight from immediate supervisor as well as second level of supervisors, even when used as intended, it was a tool designed for advancing employees with potential rather than weeding out the low performers, especially since it was not used by mangers to have hard conversations with the employees.

Since salary raises were also linked to PAS ratings it was very likely that most managers doled out good ratings to their subordinates thereby corrupting the very use the system was designed for. Blindly using the results from PAS by itself would therefore result in confirmation bias since it would be like using the data that was generated by the Tom in Carter Racing case to suggest (incorrectly) that the gasket failure and temperature had no correlation.

Furthermore, since most employees did not receive honest feedback from PAS, it was unfair as well as demoralizing to use the results from PAS by itself for making downsizing decisions. Last but not the least, Carter, perhaps plagued by availability bias from his previous experiences with downsizing, gave too much control of the entire process to Stevens. Stevens’ anchoring had huge effect on the entire process which Carter could have avoided by (a) summoning more than one person on Sunday to ponder over the issue at hand (b) including a larger group for discussions on Monday.

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