John Stevens, plant manager of the Fairlee Plant of Martindale Corporation, called together the 25 employees of Department B and told them that production standards established several years previously were now too low in view of the recent installation of automated equipment. He gave the workers an opportunity to discuss the mitigating circumstances and to decide among themselves, as a group, what their standards should be. Stevens, on leaving the room, believed they would doubtlessly establish much higher standards than he himself would have dared propose.
After an hour of discussion, the group summoned Stevens and notified him that, contrary to his opinion, their group decision was that the standards were already too high, and because they had been given the authority to establish their own standards, they were making a reduction of 10%. These standards, Stevens knew, were far too low to provide a fair profit on the owner's investment. Yet it was clear that his refusal to accept the group decision would be disastrous.
Required:
(1) Identify the errors made by Stevens.
(2) Suggest a course of action to be taken by Stevens.