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Read Blackgold case A Preview the document: CASE A:

CASE A: Frankie “Between you and me, Ernest, my friend, I don’t think it will work. I have known the guy for 8 years. It is his, uh, lifestyle, you know. But hey, you make the call. It is your department. Just don’t come running to me later. . . when he screws up.” Raj Krishnamurthy stated, as he stole a glance at the next table. Ernest Cua was the Head of the Finance Department of Blackgold Oil Company. Blackgold was a wholesaler of bunker grade fuel based in San Francisco, California. Bunker grade fuel is used to power boilers for electric plants and ocean going vessels. Blackgold bought residual fuel, blended this with higher grade fuel to the specifications of its customers, and then delivered the oil by tankers or pipeline. Blackgold had facilities in major cities in the United States, and through joint-venture companies, in key port cities in Asia and Europe. Ernest moved to the San Francisco office after serving in a similar capacity with a Singapore. He had been in San Francisco 6 months, although he had visited and lived in the US on and off for the last decade. The Finance Department was responsible for managing all issues with respect to funding, e.g. credit lines, cash management, paying bills, collecting, etc. Raj Krishnamurthy was the company’s President and largest individual stockholder. Raj grew up in India and after obtaining his graduate degree, migrated to Houston, Texas. After working in sales and marketing for a large oil company, he started Blackgold with a partner. He later moved the headquarters to San Francisco ten years ago, when his partner sold out to Japanese trading company. Ernest and Raj were having their monthly lunch meeting in the trendy One Market Street. They used these lunches to go over various issues affecting the Finance Department. Ernest had been advised by colleagues and had observed after a few months with Blackgold in San Francisco that Raj had an informal management style. Major decisions would be made after a flurry of emails and phone calls or over lunch meetings as the one they were having. Raj did not like formal presentations or management meetings. He stated he would rather have his managers selling or blending oil than attending meetings. Ernest had also come to learn that Raj had strong stereotypes of people, some of which were consistent with his having been in the oil business for decades and others because of his having grown up south Asian. Ernest had just raised the issue of Frankie Alvarez. Frankie handled the issuance of all invoices for the Finance Department. Frankie had asked to see Ernest a few days earlier to bring up a personal problem. His boyfriend was about to kick him out of the San Francisco apartment that they had been sharing for a number of years. This meant that he would have to look for a new place and rents in San Francisco averaged close to $2000 a month; his budget for rent would surely double. He needed more money. He stated that he would prefer to stay with Blackgold, was willing to take on more responsibilities, but needed help in resolving his financial situation. Otherwise he would have to look elsewhere. Ernest thought that Frankie could be assigned to the vacant cash manager position, in addition to a supervisory role over a less senior person who would take over invoicing. The previous cash manager had just resigned, and Ernest felt that this resignation was beneficial because he thought that person was not competent to handle the technical aspects of cash management. While Frankie had not done that work before, Ernest was willing to give him a try and wanted Raj’s opinion and of course, approval. “You know what he is, right.” Raj continued, half asking, half suggesting, and keeping his voice down in the busy restaurant. Ernest looked at Raj with unease, embarrassed that his boss would be so politically incorrect in a public place. And he was not surprised with what he was about to add. “He will work hard for a while, then he will start calling in sick on Mondays, like he used to. It is his partying over the weekend. They party and drink a lot. Besides I think Hispanics are generally lazy. But, again, it is your call. If he calls in sick and you find yourself short handed . . . don’t run to me.” After they finished their lunch, Ernest returned to the office a bit perplexed. He knew that Frankie had been doing the invoicing job 7 of the 9 years he had been with the company. Blackgold’s invoices ranged in value from four to eight figures. These were usually due in three days, and Finance relied on funds that came in to cover their daily requirements. The documentation and work needed to issue a $2,000 invoice was similar to what was needed for a $10,000,000 invoice, and there were days when there was a $10,000,000 invoice to issue. Ernest had come to rely on Frankie to move these invoices out, and believed that Frankie was effective at what he did. Ernest acknowledged that Frankie could be moody and temperamental on occasion. It was not unusual for Frankie to raise his voice or throw people out of his cubicle for no apparent reason, only to calm down later. Ernest initially thought that Frankie was disorganized, because his work area as always a mess: papers, folders, etc. spilled over into the hallway around his work area. But he did get his work done. Ernest eventually learned how to work with and manage Frankie. Frankie did not need a lot of supervision, and preferred it not to be closely supervised; one discussed a problem or what needed to be accomplished with him, let him know under what deadlines he had to work, and allowed him room to work. He thought Frankie was an asset to the company. Ernest had no back-up for Frankie. Ernest was also aware that while some people in the company appreciated Frankie, others merely tolerated him. Part of why he was tolerated was that he helped people in the San Francisco office on a variety of tasks, e.g. fixing problems people had with their computers, activating someone’s mobile phone’s roaming account quickly, finding the last seat in a flight to Europe, etc. He had lots of friends due to his affiliation with the LGBTQ community. Frankie was sincere, Ernest thought, in wanting to stay with the company. He was not merely bargaining for a higher pay. Blackgold’s salary policy was stringent with respect to basic pay, i.e. barely enough to keep one’s head above water, very little increases unless one was promoted, but generous when it came to bonuses. These bonuses were given based on individual and department performance and the company’s profits. One could expect to earn about a fourth of his/her annual income through these bonus plans. Ernest decided to drop by Marla van der Hind’s office. Marla handled accounts payable. Marla’s family emigrated from the Philippines to the United States when she was a little girl; she grew up in San Francisco, was married, and had been with the company for 15 years. She knew most of the people in the company well and some of the staff, like Frankie, treated her as a confidante. “Frankie’s situation is real. He will not have a place to stay in a couple of months and you know how difficult it is to find affordable rent in the city. He might be able to find cheaper places in the East Bay, but he will have a longer commute and... well, he will not have a life if he lives out of the city.” Ernest asked Marla what she thought of Raj’s comments on Frankie’s work habits. “Raj has to be corrected on that issue. Frankie was rowdy when he was younger. But that was some years back. I think Frankie is older now and more mature. Tell me, since he started reporting to you, how often has Frankie not reported for work, without giving you prior notification?” Ernest admitted that he could only remember once. Marla then added, “Well, in the year before you arrived, Frankie may have done it once that I can remember. You know what it is. Helga (Blackgold’s controller) hates him because of her experience supervising him in his early years here. But that German could never take heat from underlings. Unfortunately for Frankie, she has Raj’s ear. Every misstep and she makes sure he hears of it.” Marla took an incoming call, placed it on hold, and continued. “Frankie should really be recognized for the other stuff he does, you know, with the airlines, the phone company, etc. Raj is too cheap to hire secretaries; we only have one receptionist to handle clerical work in addition to working the front desk and handling incoming calls; Frankie is really doing Raj, the company a favor.” “I would give him a break, if I were you. By the way, Frankie and a lot of us here have not had increases. You know the company policy; survive on your fixed salary, use the bonus to cover what you can not afford with your basic pay, vacations, etc. Frankie can easily find a better paying job, but he likes it here. Work here has its ups and downs, but it is manageable. Here he can be himself; he is in an office on Market Street that brings him status, and he can see his friends for lunch, after work, etc.” Ernest left as she picked up the waiting call. As Ernest returned to his office, Frankie came to inform him that he had an opportunity to close on an apartment. He did not need to be promoted right away, but needed assurance that something could be done in order that he could determine if he could afford to pay the new rent. Ernest asked Frankie to see him the next afternoon.

Consider: what is the problem or dilemma facing Ernest? What are his alternatives and what should he consider in evaluating these alternatives? What would you recommend?Discuss why two people with similar abilities may have very different expectancies for performing at a high level. Then if you were the supervisor of these people how would you address their motivational issues? Managers who verbally criticize their subordinates, put them down in front of their coworkers, or use the threat of job loss to influence behavior are exercising coercive power. Some employees subject to coercive power believe that using it is unethical. What are the ethical implications (if any) of the use of coercive power?

Answer 1

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1. The issue with Ernest is that he is isolated . His seniors and his coworkers do not consider him to be a part of the group. He should try to have more conversations not only with his peers but also with his seniors . This is a practical issue in initial phases of a new role it is always like that . He has to become acceptable as a colleague first so that his coworkers and his seniors starts sharing informations with him . Once he becomes a part of the group then he can obviously innovate and try to bring new businesses or new ways of working .If his efforts of becoming a part of the group do not work out then there is something wrong in the organization and he should confront the top man in the group on this issue . If on confronting the top man the matter is not resolved then he should look for a ob change.

2. If the situations goes on like this it may happen that Ernest become completely isolated and he himself become demotivated and have negative energies flowing through him .Catastrphical situation can be expected and he can develop health issues also on account of heigtened anxiety and stress.

3. He could have anticipated these problems in the oragnizations by going through the reviews of various people who have worked in this organization. He could have also asked for references of the people who have worked in his position and could have asked them about their reasons of leaving the organization.

4. He can look for a simillar role only because he hardly had time to prosper in his new role. But he should make a thorough referal check before accepting any new assignment so that he again do not make the same mistake.