Book: Supervisory Management 9th Edition Authors: Mosley/ Mosley/ Pietri CASE 15-1 When the Transfer Backfires Jane Smith abruptly Rose and stormed out of the office of Robert Trent, the director of purchasing at a major Eastern University. As she made her hasty exit, Trent wondered what had gone wrong with the seemingly perfect play- one that would have read his Department of a "problem" employee. How could his well-constructed plan, using the University's formal transfer system, have failed so miserably, leaving him with an even more unmanageable situations It had all begun in January, when Trent decided something must be done about Smith's performance and attitude. The process was made a little more awkward by the University's not having a formal employee performance-appraisal policy and program. Each department was left with the right to develop and conduct its own employee appraisals. This meant each department could choose whether or not to appraise an employee, as well as choose the format and procedure to be used. In January, Trent decided to conduct an appraisal of Smith. After writing down some weaknesses in her performance and attitude, he called her in to discuss them. He cited the various weaknesses to her, but, admittedly, most were highly subjective in nature. In only a few instances did he give specific and objective references and did not give Smith a copy of his findings. During the appraisal interview, he hinted possibly that she didn't "fit in" and she " probably would be much happier in some other place." In any event, he was satisfied he begun the process for eventually ridding the department of her. He reasoned, if all else failed, this pressure would ultimately force her to quit. At the time, he hardly noticed she was strangely quiet through the whole meeting. As time went by, Smith's attitude and performance did not improve. In March, Trent was elated to learn an opening existed in another department and Smith was interested in transferring. The University's formal transfer policy required Trent to complete the Employee Transfer Evaluation Form- which he gladly did. As a matter of fact, he traded Smith mostly "outstanding" on the performance in attitude factors. He was so pleased at having the opportunity to use the transfer system he called the other department manager and spoke glowingly of Smith's abilities and performance. Although he had been the purchasing director for only 8 months, having been recruited from another College, he even pointed with pride to the Smiths five years of experience. In April, much to Trent's dismay, it was announced Smith lost the transfer opportunity to a better qualified candidate. Robert Trent was shocked when Smith's transfer was turned down. To further complicate matters, Trent realized he would have to face Smith in May when it was time to discuss annual pay raises, that included both merit-pay considerations and a cost-of-living adjustment. This would be even more difficult because Smith's performance and attitude has not improved since the January appraisal. If anything, they were worse. Trent just finished the May meeting with Smith by telling her the bad news: based on both performance an attitude, she should not be recommended for a cost-of-living or Merit pay increase for the new year beginning July 1st. Smith, armed with the transfer evaluation forms ( completed and given to her in March), threatened to use all internal and external systems for organizational justice due her. As Trent pondered this dilemma, he fully recognized Smith's unique status within the university's community. She was the wife of a distinguished, tenured professor of business, and this situation provided additional pressure. As if this were not enough, he had to contend with the office social process pivoting around a weekly coffee group greatly influenced by Smith. It was not unusual for the former director of purchasing ( who retired after 25 years of service) to attend these gatherings. Of course, Smith kept this group fully apprised of her continuing troubles with" this new, young purchasing director who is hardly dry behind the ears." Case Questions 1. What are the facts Trent must consider now? 2. What Avenues are now open to Trent? What does this case say to you about the need for supervisors to act morally? 3. Do you believe some supervisors are untruthful or recommendations are concerned? Explain. 4. What three functions are salaries meant to perform? 5. To what extent should employee appraisals be used in salary adjustments? Explain.

Question 1. AOL bought customers from CD Now for $60 per customer. CD Now’s annual retention rate was 60 percent, and customers generated $15 of profit per year. Assuming an annual discount rate of 12 percent, evaluate AOL’s purchase of CD Now customers. Question 2. It costs Ameritrade $203 to acquire a customer. Ameritrade earned $200 per year from a customer and had an annual retention rate of 95 percent. Assuming cash flows are discounted at 12 percent, estimate the value of a customer and the net of acquisition costs. Question 3. Assume the annual retention rate for a cell phone subscriber is 70 percent and the customer generates $300 per year in profit. Assuming an annual discount rate of 8 percent, compute the value of a customer. Question 4. Each year Capital Two retains 75 percent of its customers, and the annual discount is 5 percent. What annual retention rate doubles the value of a customer? Question 5. Assume a customer has been with a company for 10 years and has made purchases at times .2, 1.2, .8, and 3. Estimate the probability the customer is still alive. Put all the answers in one Excel file that includes five worksheets (one worksheet for one question). Label the worksheets properly.