Case Analysis 3

Jennings Automotive Case Facts
(Student Question Prompts are Located after Case Facts)
 

Alex Jennings took over his family’s auto supply business in 2012, after helping his father, who founded the business, run it for about 10 years. Based in Georgia, Jennings employs about 300 people, and distributes auto supplies (replacement mufflers, bulbs, engine parts, and so on) through two divisions, one that supplies service stations and repair shops, and a second that sells retail auto supplies through five “Jennings Automotive” auto supply stores.

Alex’s father, and now Alex, have always endeavored to keep Jennings organization chart as simple as possible. The company has a full-time controller, managers for each of the five stores, a manager who oversees the distribution division, and Alex Jennings executive assistant. Alex (along with his father, working part-time) handles marketing and sales.

Alex’s executive assistant administers the firm’s day-to-day human resource management tasks, but the company outsources most HR activities to others, including an employment agency that does its recruiting and screening, a benefits firm that administers its 401(k) plan, and a payroll service that handles its paychecks. Jennings human resource management systems consist almost entirely of standardized HR forms purchased from an HR supplies company. These include forms such as application and performance appraisal forms, as well as an “honesty” test Jennings uses to screen the staff that works in the five stores. The company performs informal salary surveys to see what other companies in the area are paying for similar positions and use these results for awarding annual merit increases (which in fact are more accurately cost-of-living adjustments).

Alex’s father took a fairly paternal approach to the business. He often walked around speaking with his employees, finding out what their problems were, and even helping them out with an occasional loan—for instance, when he discovered that one of their children was sick, or for part of a new home down payment. Alex, on the other hand, tends to be more abrupt, and does not enjoy the same warm relationship with the employees as did his father. Alex is not unfair or dictatorial. He’s just very focused on improving Jennings financial performance, and so all his decisions, including his HR-related decisions, generally come down to cutting costs. For example, his knee-jerk reaction is usually to offer fewer days off rather than more, fewer benefits rather than more, and to be less flexible when an employee needs, for instance, a few extra days off because a child is sick.

It’s therefore perhaps not surprising that over the past few years Jennings sales and profits have increased markedly, but that the firm has found itself increasingly enmeshed in HR/equal employment–type issues. Indeed, Alex now finds himself spending a day or two a week addressing HR problems. For example, Michael Morton, an employee at one of the stores, came to Alex’s executive assistant and told her he was “irate” about his recent firing and was probably going to sue. Michael’s store manager stated on his last performance appraisal that Michael did the technical aspects of his job well, but that he had “serious problems interacting with his coworkers.” He was continually arguing with them and complaining to the store manager about working conditions. The store manager had told Alex that he had to fire Michael because he was making “the whole place poisonous,” and that (although he felt sorry because he’d heard rumors that Michael suffered from some mental illness) he felt he had to go. Alex approved the dismissal.

Greg was another problem. Greg had worked for Jennings for 10 years, the last two as manager of one of the company’s five stores. Right after Alex Jennings took over, Greg told him he had to take a Family and Medical Leave Act medical leave to have hip surgery, and Alex approved the leave. When Greg returned from leave, Alex told him that his position had been eliminated. Alex Jennings had decided to close his store and open a new, larger store across from a shopping center about a mile away and had appointed a new manager in Greg’s absence. However, the company did give Greg a (nonmanagerial) position in the new store as a counter salesperson, at the same salary and with the same benefits as he had before. Even so, “This job is not similar to my old one,” Greg insisted. “It doesn’t have nearly as much prestige.” His contention is that the FMLA requires that the company bring him back in the same or equivalent position, and that this means a supervisory position – similar to what he had before he went on leave. Alex said no, and they seem to be heading toward litigation.

In another sign of the times at Jennings, the company’s controller, Anne, who had been with the company for about six years, went on pregnancy leave for 12 weeks in 2012 (also under the FMLA), and then received an additional three weeks’ leave under Jennings extended illness days program. Four weeks after she came back, she asked Alex Jennings if she could arrange to work fewer hours per week and spend about a day per week working out of her home. He refused, and about two months later fired her. Alex Jennings said, “I’m sorry, it’s not anything to do with your pregnancy-related requests, but we’ve got ample reasons to discharge you—your monthly budgets have been several days late, and we’ve got proof you may have forged documents.” She replied, “I don’t care what you say your reasons are; you’re really firing me because of my pregnancy, and that’s illegal.”

Alex felt he was on safe ground as far as defending the company for these actions, although he didn’t look forward to spending the time and money that he knew it would take to fight each. However, what he learned over lunch from a colleague undermined his confidence about another case that Alex had been sure would be a “slam dunk” for his company. Alex was explaining to his friend that one of Jennings truck maintenance service people had applied for a job driving one of Jennings distribution department trucks, and Alex had turned him down because the worker was deaf. Alex (whose wife has occasionally said of him, “No one has ever accused Alex of being politically correct”) was mentioning to his friend the apparent absurdity of a deaf person asking to be a truck delivery person. His friend, who happens to work for UPS, pointed out that the U.S. Court of Appeals for the Ninth Circuit had recently decided that UPS had violated the Americans with Disabilities Act by refusing to consider deaf workers for jobs driving the company’s smaller vehicles.

Although Alex’s father is semiretired, the sudden uptick in the frequency of such EEO-type issues troubled him, particularly after so many years of labor peace. However, he’s not sure what to do about it. Having handed over the reins of the company to his son, he was loath to inject himself back into the company’s operational decision making. On the other hand, he was afraid that in the short run these issues were going to drain a great deal of Alex’s time and resources, and that in the long run they might be a sign of things to come, with problems like these eventually overwhelming Jennings Automotive. He comes to you, who he knows consults in
human resource management, and asks you the following questions.
 

Five Graded Case Analysis Questions (Equally Weighted for Total Score)

Alex’s father has approached you and asked you to respond (in writing) to the following five questions:
Label and answer each question separately!

Question 1:
Given Jennings Automotive’s size, and anything else you know about it, should we reorganize the human resource management function? If so, why and how?

Question 2:
What, if anything, would you do to change and/or improve upon the current HR systems, forms, and practices that we now use? (Provide specific suggestions)

Question 3:
Do you think that the employee whom Alex fired for creating what the manager called a poisonous relationship has a legitimate claim against us, and if so, why and what should we do about it?

Question 4:
Is it true that we really had to put Greg back into an equivalent position, or was it adequate to just bring him back into a job at the same salary, bonuses, and benefits as he had before his leave?

Question 5:
Anne, the controller, is basically claiming that the company is retaliating against her for being pregnant, and that the fact that we raised performance issues was just a smokescreen. Do you think the EEOC and/or courts would agree with her, and, in any case, what should we do now?

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Jennings Automotive Case Facts

(Student Question Prompts are Located after Case Facts)

Alex Jennings took over his family’s auto supply business in 2012, after helping his
father, who founded the business, run it for about 10 years. Based in Georgia, Jennings
employs about 300 people, and distributes auto supplies (replacement mufflers, bulbs,
engine parts, and so on) through two divisions, one that supplies service stations and
repair shops, and a second that sells retail auto supplies through five “Jennings
Automotive” auto supply stores.

Alex’s father, and now Alex, have always endeavored to keep Jennings organization
chart as simple as possible. The company has a full-time controller, managers for each
of the five stores, a manager who oversees the distribution division, and Alex Jennings
executive assistant. Alex (along with his father, working part-time) handles marketing
and sales.

Alex’s executive assistant administers the firm’s day-to-day human resource
management tasks, but the company outsources most HR activities to others, including
an employment agency that does its recruiting and screening, a benefits firm that
administers its 401(k) plan, and a payroll service that handles its paychecks. Jennings
human resource management systems consist almost entirely of standardized HR
forms purchased from an HR supplies company. These include forms such as
application and performance appraisal forms, as well as an “honesty” test Jennings
uses to screen the staff that works in the five stores. The company performs informal
salary surveys to see what other companies in the area are paying for similar positions
and use these results for awarding annual merit increases (which in fact are more
accurately cost-of-living adjustments).

Alex’s father took a fairly paternal approach to the business. He often walked around
speaking with his employees, finding out what their problems were, and even helping
them out with an occasional loan—for instance, when he discovered that one of their
children was sick, or for part of a new home down payment. Alex, on the other hand,
tends to be more abrupt, and does not enjoy the same warm relationship with the
employees as did his father. Alex is not unfair or dictatorial. He’s just very focused on
improving Jennings financial performance, and so all his decisions, including his HR-
related decisions, generally come down to cutting costs. For example, his knee-jerk
reaction is usually to offer fewer days off rather than more, fewer benefits rather than
more, and to be less flexible when an employee needs, for instance, a few extra days
off because a child is sick.

It’s therefore perhaps not surprising that over the past few years Jennings sales and
profits have increased markedly, but that the firm has found itself increasingly
enmeshed in HR/equal employment–type issues. Indeed, Alex now finds himself
spending a day or two a week addressing HR problems. For example, Michael Morton,
an employee at one of the stores, came to Alex’s executive assistant and told her he
was “irate” about his recent firing and was probably going to sue. Michael’s store
manager stated on his last performance appraisal that Michael did the technical aspects

of his job well, but that he had “serious problems interacting with his coworkers.” He
was continually arguing with them and complaining to the store manager about working
conditions. The store manager had told Alex that he had to fire Michael because he was
making “the whole place poisonous,” and that (although he felt sorry because he’d
heard rumors that Michael suffered from some mental illness) he felt he had to go. Alex
approved the dismissal.

Greg was another problem. Greg had worked for Jennings for 10 years, the last two as
manager of one of the company’s five stores. Right after Alex Jennings took over, Greg
told him he had to take a Family and Medical Leave Act medical leave to have hip
surgery, and Alex approved the leave. When Greg returned from leave, Alex told him
that his position had been eliminated. Alex Jennings had decided to close his store and
open a new, larger store across from a shopping center about a mile away and had
appointed a new manager in Greg’s absence. However, the company did give Greg a
(nonmanagerial) position in the new store as a counter salesperson, at the same salary
and with the same benefits as he had before. Even so, “This job is not similar to my old
one,” Greg insisted. “It doesn’t have nearly as much prestige.” His contention is that the
FMLA requires that the company bring him back in the same or equivalent position, and
that this means a supervisory position – similar to what he had before he went on leave.
Alex said no, and they seem to be heading toward litigation.

In another sign of the times at Jennings, the company’s controller, Anne, who had been
with the company for about six years, went on pregnancy leave for 12 weeks in 2012
(also under the FMLA), and then received an additional three weeks’ leave under
Jennings extended illness days program. Four weeks after she came back, she asked
Alex Jennings if she could arrange to work fewer hours per week and spend about a
day per week working out of her home. He refused, and about two months later fired
her. Alex Jennings said, “I’m sorry, it’s not anything to do with your pregnancy-related
requests, but we’ve got ample reasons to discharge you—your monthly budgets have
been several days late, and we’ve got proof you may have forged documents.” She
replied, “I don’t care what you say your reasons are; you’re really firing me because of
my pregnancy, and that’s illegal.”

Alex felt he was on safe ground as far as defending the company for these actions,
although he didn’t look forward to spending the time and money that he knew it would
take to fight each. However, what he learned over lunch from a colleague undermined
his confidence about another case that Alex had been sure would be a “slam dunk” for
his company. Alex was explaining to his friend that one of Jennings truck maintenance
service people had applied for a job driving one of Jennings distribution department
trucks, and Alex had turned him down because the worker was deaf. Alex (whose wife
has occasionally said of him, “No one has ever accused Alex of being politically
correct”) was mentioning to his friend the apparent absurdity of a deaf person asking to
be a truck delivery person. His friend, who happens to work for UPS, pointed out that
the U.S. Court of Appeals for the Ninth Circuit had recently decided that UPS had
violated the Americans with Disabilities Act by refusing to consider deaf workers for jobs
driving the company’s smaller vehicles.

Although Alex’s father is semiretired, the sudden uptick in the frequency of such EEO-
type issues troubled him, particularly after so many years of labor peace. However, he’s
not sure what to do about it. Having handed over the reins of the company to his son,
he was loath to inject himself back into the company’s operational decision making. On
the other hand, he was afraid that in the short run these issues were going to drain a
great deal of Alex’s time and resources, and that in the long run they might be a sign of
things to come, with problems like these eventually overwhelming Jennings Automotive.
He comes to you, who he knows consults in
human resource management, and asks you the following questions.

Five Graded Case Analysis Questions (Equally Weighted for Total Score)

Alex’s father has approached you and asked you to respond (in writing) to the
following five questions:
Label and answer each question separately!

Question 1:

Given Jennings Automotive’s size, and anything else you know about it, should we

reorganize the human resource management function? If so, why and how?

Question 2:

What, if anything, would you do to change and/or improve upon the current HR

systems, forms, and practices that we now use? (Provide specific suggestions)

Question 3:

Do you think that the employee whom Alex fired for creating what the manager called a

poisonous relationship has a legitimate claim against us, and if so, why and what should

we do about it?

Question 4:

Is it true that we really had to put Greg back into an equivalent position, or was it

adequate to just bring him back into a job at the same salary, bonuses, and benefits as

he had before his leave?

Question 5:

Anne, the controller, is basically claiming that the company is retaliating against her for

being pregnant, and that the fact that we raised performance issues was just a

smokescreen. Do you think the EEOC and/or courts would agree with her, and, in any

case, what should we do now?