Each case has one primary focus.

Each is also concernedas is

every managerial situation, managerial problem, and managerial decisionwith both the organization and the whole person. Each can be
read, discussed, and used for one main point and purpose; and each
can be read, discussed, and used to gain insight into the complexity of
institutions and of human behavior in institutions.
The cases all deal with real people in real situations and can be
used in discussion groups as well as for a topic for a paper. Most important, the cases can be used to help readers convert the information
and examples in the text into the real knowledge that one gains when
the discipline of management is put into practice.
Peter F. Drucker

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Foreword

Rigor and Relevance

The truth is that nobody can replace Peter. He was one of a kind.
Thats what makes a genius, that unique quality, the sui generis, the
kind of mastery that comes once in a while and makes us feel really
blessed. The beauty, for those of us who are trying to follow in his
footsteps, is that, as Isaac Newton once said, We dwarfs have the
good fortune of being able to stand on the shoulders of giants which

allows us to see further.

My relationship with Peter goes way back. I was rst introduced to
him by my main mentor, Douglas McGregor. He brought us together
when I had just got out of my PhD program at MIT, and we became
friends. In fact, when I rst moved out to Southern California in 1980,
Peter and his wife, Doris, were settled in Claremont. Shortly after I arrived in California, Peter called and invited me to have dinner. I spent
the afternoon by the pool and had dinner with the Druckers.
My relationship with Peter was always interesting because I felt I
was his brother. I felt he was my older brother by about two decades
or so . . . and I kept seeking his approval, which I never felt I got fully.
It was always so wonderful because, though he would try to do it politely, he was so straightforward. He would simply say, Uhmm . . .
but, Warren . . . you have it wrong. Peter always kept me on edge.

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Foreword

I want to frame this book, Management Cases, in terms of, Where

is business education? I think we are going through an incredibly interesting period of looking at what it means to be business educators,
especially at the MBA level. Lots of writing and controversy has been
going on. Most of it is not really related. Think about the success of
business education: it has grown 124 percent in the last ve years

alone. Of course, the growth doesnt mean everything. But, in 1959,

when MIT started its rst PhD program in business education, the
famous Ford Foundation Report was published, and it changed what
was going on in business schools. It changed business schools because
not only did the Ford Foundation write a report, it also provided a lot
of money to start business schools.
I have a long background in business education. There has always
been this tension between rigor and relevance. Every professional
school, whether its a law school, business school, or medical school,
deals with the tension between practitioners and researchersa tension that could be so creative and constructive.
It is an old issue. I remember when I was just beginning my
career, back in the late 1950s and early 1960s, there was (and still is)
a very famous professor of management at Harvard Business School
named Howard Raiffa who was also a mathematician and statistician. He was a very hot commodity at that time and received lots
of offers. His research area is in decision-making models, and he is
famous for the Raiffa Decision Model. One day, he received a very
attractive offer from Stanford and he went to the dean of Harvard
Business School and said, I got this great offer from Stanford and I
cant make up my mind. The dean, George Baker, replied, Howard,
why dont you apply one of your models to yourself? Howard responded, Yeah, but this is important! This tension between rigor
and relevance in academia is a very real problem, as this anecdote
illustrates.

Peters Management:

Tasks, Responsibilities, Practices achieved

rigor of management education while addressing the question of relevance. This newly edited version of Management Cases complements

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Foreword

xi

the new revision of the former management book in that it reinforces

relevance to rigor. In their revised form, these two great management
books, Management, Revised Edition, and Management Cases, resolve this
tension between rigor and relevance for students and executives of the
twenty-rst century.
Warren G. Bennis
Los Angeles, CA
February, 2008

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Part I

Managements

the

New Realities

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Case Number 1

Yuhan-Kimberlys
New Paradigm:
Respect for Human Dignity*

The human resource consulting company Hewitt Associates, sponsored by The Wall Street Journal Asia, ranked Yuhan-Kimberly among
the top ten companies on their list Best Employers in Asia in
2003. Mr. Seung-woo Son, the manager of public relations at YuhanKimberly, attributes the foundation for such success to the corporate
culture of Yuhan-Kimberly (Y-K).
The corporate culture of Y-K, in turn, is derived from the business
philosophy of the company founder, Dr. Il-han New. Its ve business
principles are respect for humans, customer satisfaction, social
responsibility, value creation, and innovation orientation.
This case traces the impact of Y-Ks rst principle, respect for
humans, upon company success. In few words, the rst principle

implies that Y-K does not consider employees as raw materials for
production (i.e., as a business cost), but considers employees as family
members who can all grow together.

* This case was prepared by Min S. Shin of the Peter F. Drucker and Masatoshi Ito Graduate
School of Management under the supervision of Professor Joseph A. Maciariello. Source material was provided by Mr. Kook-Hyun Moon, President and Chief Executive Ofcer of YuhanKimberly, Limited, January 2008.

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MANAGEMENTS NEW REALITIES

The four crew/two shift system and lifelong learning paradigm

at Y-K is a result of the application of the rst business principle. And
Y-K believes that this principle is directly related to its high productivity, as shown in gure 1.1.

Figure 1.1

Respect for humans pyramid

Most observers agree that the economic success of Y-K can be partially explained by its application of its foundation principle: respect
for humans.

Kook-Hyun Moon, the former CEO and president of Y-K, is emphatic in his belief that organizational restructurings and large layoffs
are old and unproductive practices . He argues that most leaders in the
current business environment do not understand that the new practice
of investing in employee development is the most benecial one that
an organization can adopt.

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Case Number 1

FOUR CREW/TWO SHIFT SYSTEM

One of the events that led to an application of Y-Ks respect for the
individual principle was its need to shut down some of its production
lines for more than six months during the Asian economic crisis of
the late 1990s (approximately 19971999).
Operating time at Y-Ks manufacturing plants was reduced by
more than 50 percent during this period. Organizational restructuring seemed to be Y-Ks only solution. But talk of restructuring created tension between labor and management.
Redundant employees comprised approximately 40 percent of
the total labor force. For most businesses, this excess-labor percentage
would mean a large number of layoffs. However, Mr. Moon came up
with an innovative solution to the problem.
Instead of a large layoff, Mr. Moon suggested a job-sharing system,

a system that came to be known as the four crew/two shift system.

The system could have led to even greater nancial difculties because its implementation actually increased its labor costs. However,
Mr. Moon believed that application of Y-Ks human principle and
the decision not to lay off Y-Ks employees would overcome increased
costs.
In the beginning, employees were opposed to the new system because they feared reduced wages as a result of decreased overtime pay.
However, employees started to accept the new system as the Asian
economic crisis worsened.
Under the system, a team works the day shift for four days, from
7:00 am to 7:00 pm and another team works the night shift for four
days, from 7:00 pm to 7:00 am. After four days, another set of two
teams takes over the two shifts and the previous two teams have four
days off (3 days of rest and 1 day of paid training).

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MANAGEMENTS NEW REALITIES

Figure 1.2

Mon Tue Wed Thu Fri Sat Sun Mon Tue Wed Thu Fri Sat Sun

Day Day Day Day

Night Night Night Night

Team A

Train Off Off Off

shift shift shift shift

shift shift shift shift

Day Day Day Day

Team B Off Off Off Train

shift shift

Night Night Night Night

Day Day Day Day

Off Off Off Train

shift shift shift shift

shift shift shift shift

Off Off

shift shift shift shift

Night Night Night Night

Team D Train Off Off Off

Night Night
Off Off Off Off

shift shift shift shift

Team C

Off Off

Day Day
Off Off Off Train
shift shift

Four crew/two shift system schedule

Figure 1.3

16 workday cycle

The four crew/two shift system started to show positive results

almost immediately. A dramatic leap in productivity was realized by
these employees, who now were able to take long enough rest periods
to achieve full recovery and then had enough time for continuous

training and education, all without Y-K ever having to halt production lines.
As a result of the system, scal revenue more than doubled, from

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Case Number 1

U.S. $332 million in 1996 to U.S. $704 million in 2003. Also, net
income increased sixfold, from U.S. $14.4 million to U.S. $90.4 million, during the same period. But, initially job sharing reduced individual working hours by 150 hours per year and individual salaries
and wages by 6 percent.

LIFELONG LEARNINGPARADIGM SHIFT

Y-K offered employees corporate-sponsored in-house educational opportunities in areas such as beginning and advanced computer skills,
foreign languages, and job-related skills. Y-K also encouraged employees to further their education outside the workplace and the company agreed to support 70 percent of the cost. The implementation of
the new system brought about a life-long learning paradigm among
employees. Mr. Moon strongly believes in the importance of continuous learning to transform manual workers into knowledge workers.
These workers in turn generate more ideas and are able to make more
decisions on their own.

In the year immediately following implementation of the system

and paradigm shift, the annual number of suggestions for improvements and innovations from workers increased by 1,200.
Beginning in the second year, the new paradigm resulted in higher
productivity and higher incentive pay for individual workers. As a
result, salaries and wages rose over what workers had been paid prior
to the inauguration of the system. With such impressive results this
innovative system was recognized as a success, because it not only
increased employment but also increased the productivity and knowledge base of workers.

QUESTIONS

What in human nature accounts for the success of the Y-K rotation system?

If the Y-K system is so productive and protable, why isnt it more widely

used? What would prevent such a system from being implemented in a com-

pany with which you are familiar?

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Part II

Business Performance

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