The Simulation and Gaming Yearbook, Volume 4
Games and Simulations to Enhance Quality Learning
 

Edited by Danny Saunders, Fred Percival and Matti Vartiainen

SAGSET - The Society for Interactive Learning

KOGANPAGE

 

Yearbook Series Editor

 

Danny Saunders (University of Glamorgan)

Fred Percival (Napier University, Edinburgh)

Matti Vartiainen (Helsinki University of Technology, Finland)

 

Editorial Board

Dave Andrew

Roger Armstrong

David Crookall

Henry Ellington

Jim Freeman

Lewis Elton

Mike McDonagh

Robert Macredie

John Rolfe

Peter Saunders

Elizabeth Teather

Morry van Ments

Rex Walford

Peter Walsh

 

University of North London

University of Central Lancashire

Universit6 de Lille, France

The Robert Gordon University

LTMIST, Manchester

Department for Education and Employment

Napier University, Edinburgh

Brunel University

Cranfield University

Imperial College London

University of New England, Australia

Loughborough University

University of Cambridge

Pennywell School, Sunderland

 

 
Chapter 14
EXECUTIVE DECISION - exploring the
psychological contract
 
Hamilton Beazley and John Lobuts Jr
 

Introduction
Goals of the Simulation
Process
Discussion
         Psychological Contract
Interculturality
Variations
References
About the Authors
Appendix 1
Appendix 2

INTRODUCTION

EXECUTIVE DECISION is a role-play simulation that explores both the changing nature of the psychological contract between employer and employee and its ramifications for management; and the effects of five self-defeating psychological phenomena that managers commonly exhibit when making stressful decisions in small groups.

 

GOALS OF THE SIMULATION

 

· To make participants aware of the existence of a psychological contract between employer and employee and the way in which that contract is changing (and has changed) in the face of global competition.

· To make participants aware of the conflicting values and expectations of the psychological contract including fairness and responsibility, fiscal reality and social obligation, and concern for productivity and concern for employees. The game exposes the values that underlie major corporate decisions (however those decisions might be rationalized), and highlights the tension between conflicting obligations and definitions of the psychological contract.

· To force participants to examine their own interpretation of the psychological contract.

· To enable participants to experience one or more counterproductive psychological phenomena that commonly occur among managers making stressful decisions in small groups. These adjustive reactions include psychological safety, psychological deafness, psychological amputation, psychological deflection, and psychological deviance.

· To make participants aware of the trend toward victimization that characterizes both employers and employees as they reinterpret the psychological contract between them.

 

GROUP SIZE

An unlimited number of groups of six to seven participants each can compete. These groups can be directed simultaneously in the same room and then sent to different parts of the same room or to different rooms.

 

TIME REQUIRED

Approximately one hour is required (25 minutes for the game and 35 minutes for the

discussion).

 

MATERIALS

An EXECUTIVE DECISION game packet that includes the Hudson Valley Corporation Briefing Paper distributed to each participant and a complete set of instructions, comments, and transparencies to facilitate the play of the game.

 

PHYSICAL SETTING

One room which is large enough for individual groups of six to work without being influenced by the words or actions of other groups. Alternatively, one large room for discussion by all the participants and smaller rooms for individual groups to use during the problem-solving phase.

 

PROCESS

  I DISCUSSION

There are two basic parts to a discussion based on the Hudson Valley Corporation case - the psychological contract and psychological defenses.

The psychological contract

The first half of the discussion deals with the unwritten psychological contract between employers and employees. Edgar Schein originally postulated the existence of such a contract based on mutual expectations and obligations. In general, this discussion focuses on the nature of the psychological contract today and how it has changed in recent years. In particular, it should be noted how both the employer and employee have begun to play the role of victim. A victim, as the term is used herein, refers to someone who blames others for his or her problems rather than taking ability for them and working to solve them. Employers blame outside forces

 

During the course of the simulation, one or more of these defenses should have come into play within the groups:

 

· Psychological safety: going along with the majority decision even though you disagree with it.

· Psychological deafness: refusing to hear another side of the story; filtering out what is being said because you don't agree with it; being closed to arguments.

· Psychological amputation: being cut out of the discussion and ostracized from the group because of unpopular views.

· Psychological deflection: blaming others for the problem rather than accepting responsibility for your part in it and thereby trying to solve it.

· Psychological deviance: strident refusal to agree with the group; relishing an adversarial role at odds with the group (a 'devil's advocate' is a deviant role taken temporarily to achieve a specific purpose).

 

 

The set of transparencies and notes (see Appendix 2) will facilitate discussion.

The Hudson Valley Case is fictitious and has been constructed as a role-playing simulation to achieve certain pedagogic objectives. However, it is analogous to a recent case reported by the Washington Post involving an attempt by Tyson Foods Inc to acquire WLR Foods Inc of Broadway, Virginia in the Shenandoah Valley. A copy of the newspaper article is included in the experiential package and can be distributed to the participants to emphasize the real-life nature of the game.

 

INTERCULTURALITY

 

The nature of the psychological contract between employer and employee is largely dependent upon the individual culture because it reflects the values and expectations of that culture. Notions of fairness, responsibility and obligation are culturally derived. For example, the difference in employee and employer expectations regarding 'permanent' employment by a single firm in the USA and Japan is quite remarkable, at least traditionally. Even notions of what constitutes 'hard work' or appropriate vacation time stem from cultural forces.

When workers from different cultural backgrounds work for the same company, it is highly likely that they will hold different individual versions of the psychological contract. Furthermore, their versions may not mesh with the corporate version based on the dominant culture. The psychological contract, then, plays a central role in the management of diversity.

 

VARIATIONS

In one variation of the game, a participant is chosen in advance of the play of the game to act as a confederate of the presenter in each of-the groups. These 'plants' are given the Hudson Valley Corporation case to read in advance. The confederate is instructed to express no opinion on the case until the group has begun to develop a consensus. At that time, the plant takes a position which is opposite that of the group and continues to argue it until he or she either sways the group or brings it to a stalemate when time is called.

 

The functions of the plant are, first, to provoke the psychological defenses of the other members of the group and, second, to stimulate a more thorough discussion of conflicting perspectives on the responsibilities and obligations involved in the psychological contract.

 

REFERENCES
Aronson, E (I 988) The Social Animal, 5th ed, W H Freeman & Co, New York.
Schachter, Stanley (1962) 'Deviation, rejection, and communications', in D Cartwright and A. 
Schein, Edgar H (1965) Organizational Psychology, Foundations of Modem Psychology Series, Prentice-Hall, Englewood         Cliffs, New Jersey.
Zander (eds), Group Dynamics: Research and Theory, 2nd ed, Row, Peterson & Co, Zander (eds), Group Dynamics:        Research and Theory, 2nd ed, Row, Peterson & Co,  Evanston, IL.
ABOUT THE AUTHORS

 

Hamilton Beazley received his BA degree in psychology from Yale University and his MBA degree in accounting and finance from Southern Methodist University. He is a doctoral candidate in organizational behaviour and development at George Washington University and a doctoral teaching fellow. He is co-creator of Secret's Out, a television game show that aired on the BBC during the 1984-1987 seasons, and co-developer of Jaques-in-the-Box, a board game that explores the small group dynamics theories of Wilfred Bion and the management theories of Elliott Jacques. He is currently studying the role of the psychological contract and its effects on management.

 

John Lobuts Jr. received his BS degree from Fairmont State College, his Med and EdD from George Washington University. He is Professor of Management Science and has taught with the Behavioral Science faculty since 1970. His areas of academic interest are in group dynamics, organizational communications and conflict resolution. He has served as Director of Off-Campus Programs, Assistant Dean for Graduate Programs. In 1985, he returned to full-time teaching. He has published articles in the Journal of business Ethics, Journal of Creative Behaviour, Journal of business Education, and The Realtor. He has several chapters in books published in America and on the European continent, and he has delivered invited papers in China, Romania, The Netherlands, Germany, Scotland, France and Korea. He also serves as an Associate Editor for Simulation & Gaming.

 

Address for correspondence: Department of Management Science, School of Business and

Public Management, The George Washington University, Washington DC, 20052, USA .

 


APPENDIX I

 

Executive Decision - Hudson Valley Corporation briefing paper Hudson Valley Corporation is the largest employer in Hudson Valley, an ethnically diverse town of 150,000. Founded in 1946 by Edward Hudson Sr, the company grew during the post-war boom years into a large and highly profitable operation. Over the last ten years, however, its profitability has declined despite efforts by its founder to reverse the trend. For the past three years, the company has been in the red, with losses rapidly mounting. Edward Hudson Sr, Chairman of the Board, CEO and owner of 5 2 per cent of the stock, has refused to lay off any employees. His son, Edward Jr, who is Vice Chairman and controls 22 per cent of the stock is anxious to downsize or sell the company in order to preserve his substantial inheritance. Various employees of the company own 16 per cent of the stock. Hudson Valley Charities, Inc, a valleywide charitable organization, owns the remaining 10 per cent of the stock, its largest source of funds.

 

Amalgamated Industries, the Big City conglomerate, has made a final cash offer for Hudson Valley Corporation that will expire in three days. The employees responded to that offer with one of their own. The Hudsons have studied both offers and have prepared a list of the options they consider viable. However, they disagree so vehemently regarding these alternatives that they have asked the Executive Vice President to make a single recommendation from the list of seven they have provided Whatever recommendation she makes will alienate one or the other of the Hudsons.

 

'Mr Ed' Hudson is 76 and in poor health. 'Little Ed' is 46 and in the prime of life.

‘Mr Ed’ is Chairman of the Hudson Valley Bank, Chairman Emeritus of the United Way, Honorary Chairman of the Hudson Valley Hospital, and a member of the Board of Stewards of his church.

 

The Executive Vice President has been approached by Hudson Valley Corporation employees begging her not to recommend closing or selling the company to Amalgamated Industries. Townspeople by the hundreds, it seems, have reminded her of how crucial the company is to Hudson Valley. Closing Hudson Valley Corporation would, in the public mind, start a decline from which the Valley would never recover. It would be financially and psychologically devastating. Everyone in town is related to someone who works for 'the company', and they are all afraid. Some have hinted that a recent immigration of new families into the region has created a workforce that is not as well known and 'well liked' by the founding family. They believe that the Hudsons would be more willing to fire them for that reason; but there is no evidence to that effect.

 

In fact, the problem with Hudson Valley Corporation is that it has not responded well to die global market place, to rapid technological change, swift product innovations, or the need for more flexible management styles. Its production costs remain too high to be competitive in a global environment, its product designs are not quite .cutting edge, many of its manufacturing processes involve tedious repetitive labor, and product quality does not meet the improved world

standard. Little Ed blames the Japanese and the failure of the US government to force open Japanese markets and stop them from dumping,-- their products in the US. 'Mr Ed' keeps his own counsel, but it is clear that he is deeply disturbed by the business trends he is witnessing. In unguarded moments among old friends, he laments the passage of the good old days'. Time is running out for Hudson Valley Corporation.

Which recommendation should the Executive Vice President make to the Hudsons? As a member of her staff, you must resolve this question with the other staff members because the Executive Vice President wants a unanimous decision. Choose one of the following alternatives, and be prepared to discuss the reasons for your choice. No alternatives other than those below can be considered, and choices cannot be combined or otherwise modified.

 

 

 

1. Hire a new president and Chief 0perating Officer to report directly to Ed Hudson Jr and do not downsize.

2. Acquire Johnstown Corporation, a smaller but more profitable competitor in a neighboring state that uses the latest technology. Johnstown could only be bought at a premium, and the acquisition would strain Hudson Valley's financial resources.

3 . Lay off 10 per cent of the workforce to stem the losses and hope that a new marketing effort, a rising Yen, and a substantial increase in research and development expenditures will increase sales and return the company to profitability within the next three years.

4. Downsize the company by terminating 30 per cent of the workforce. According to the financial vice president, such a massive downsizing would return the company to break-even within a year. If a sales increase could be achieved, the company would return to profitability within the next three years.

5. Accept a buy-out offer from the employees with 40 per cent down and a IO year pay-out based on profitability. Total payment (if made) would amount to 25 per cent less than Amalgamated's cash offer on a discounted cash flow basis. If the employee proposal is not accepted within five days, the prime lender will permanently withdraw, and the employees will never be able to purchase the company.

6. Sell the company to Amalgamated Industries for cash. Amalgamated may or may not close the plant, although Amalgamated's past predatory behaviour indicates that it would do so if a brutal downsizing were not successful.

7. Break up the company, selling off its operating divisions and other assets which, individually, are worth more than the integrated company and 10 per cent to 25 per cent more than Amalgamated has agreed to pay in its final offer. Some of the divisions would be permanently closed, the remaining sold to competitors in other states. The dismantling process would take at least two years.


APPENDIX 2

 

1. Executive Decision

A role-play simulation.

 

Transparency packet with notes and comments.

 

COMMENTS

1. EXECUTIVE DECISION is a role play simulation in which you, as participants, will be asked to play the part of a staff member reporting to the Executive Vice President.

2. A simulation permits you to participate emotionally in the decision-making process. It

allows you to delve into other perspectives and to see decision-making in terms of values

and emotions rather than strictly as an intellectual or abstract exercise.

 

2. THE BRIEFING PAPER

 

Hudson Valley Corporation

 

COMMENTS

1 .You will be asked to read a briefing paper that describes the Hudson Valley Corporation. The briefing paper sets the context within which a decision has to be made and provides the relevant facts necessary for that decision.

2. After you have read the paper, you will be divided into small groups in which to make a decision.

 

3. THE CAST OF CHARACTERS'

 

Edward ‘Mr. Ed’ Hudson Sr.

Edward ‘Little Ed’ Hudson Jr.

Hudson Valley employees

Hudson Valley Corporation

Hudson Valley

Others you may identify

 

COMMENTS

 

The Hudson Valley case involves a 'cast of characters' who are a crucial part of the decision.

They are:1 .Edward Hudson Sr, the founder of Hudson Valley Corporation and its Chairman and CEO. Known as 'Mr Ed,' he is 76 years old.

2. Edward Hudson Jr, the founder's son. Known as 'Little Ed,' he is 46 years old.

3. Employees of the Hudson Valley Corporation, many of them long term.

4. Hudson Valley, an ethnically diverse town of 150,000.

5. Others whom you may identify.

 

4. THE ROLE

 

You are a member of the Executive Vice President’s staff charged with making a recommendation about the future of Hudson Valley Corporation.

 

COMMENTS

1 . Your role in the simulation is to play a member of the Executive Vice President's staff. You and your colleagues have been charged with analyzing Hudson Valley Corporation's situation as described in the briefing paper. You will make a recommendation to the Executive Vice President who, in turn, will make a recommendation to the Chairman of the Board.

 

 

5. A SINGLE RECOMMENDATION

 

Your group in its staff role must make a single recommendation from the list of seven provided.

 

 

COMMENTS

 

1. Your recommendations to the Executive Vice President must be one of the seven options listed in the briefing paper. No other recommendation can be considered, and none can be combined. The Chairman will consider only one of these seven as a way to reverse the deteriorating financial situation at Hudson Valley Corporation.

2. Your group's recommendation to the Executive Vice President must be unanimous. If your group cannot make a unanimous decision, it will have to report that it cannot reach a decision and suffer the consequences.

3. [Hand out briefing paper.] After you have read the briefing paper any questions you may have will be answered. [No other data is needed.] Then you will break up into groups to consider the alternatives and make a decision.

          4. [Participants read the paper, ask questions, break up into groups.]

          5. TIME LIMIT

You have 20 minutes to reach a unanimous decision

COMMENTS

  1. You and your group have only 20 minutes in which to reach your decision

2. One or more of the presenters may visit your group to ease drop on the decision-making process. As far as possible, please ignore them.

3. You may begin now.

 

7. YOUR GROUP'S DECISION

 

Which of the seven alternatives did your group choose?

 

 

COMMENTS

 

1. Did your group reach a unanimous decision?

2. Is there a 'right answer'?

3. On what does your answer depend?

[Possible reasons for your answers might include: your perspective, values, background, education, work experience, philosophy of life, religious views, etc.]

 

 

 

8 GROUP DECISIONS

 

Group Decision numbers

 

Group A

Group B

Group C

Group D

Group E

 

COMMENTS

 

1 . [Poll each group.] This list records the recommendations of the various groups.

2. [Summarize the findings on the transparency or chalk board. If a group could not reach a unanimous decision, record on the board the decision number of the majority followed by the number of participants favoring it in parentheses. Then record the decision numbers of the other group members and the number of participants supporting them.]

3. Now I will ask you to hold these decisions and the processes by which you reached them in abeyance for a few minutes. We will return to them later. In the meantime, there is another concept that we need to discuss.