Part I Instructions: Read the Case Study "Are Top Executives Paid Too Much? and answer the questions at the end of the case study. Make certain to clearly identify your answers to each question and be complete in your responses.

Are top executives paid too much?

A study of CEO compensation revealed that CEO bonuses rose considerablyfrom 20 percent to 30 percenteven at companies whose revenues or profits dropped or those that reported significant employee layoffs. Such high pay for CEOs at underperforming companies, as well as CEO compensation at companies with stellar results, has raised many questions from investors and others. The highest gap in pay was in 2000. CEO pay at the largest U.S. firms was 376 times higher than that of average workers. The gap has shrunk to only 271 times higher in 2016, but that is still a lot higher than the 59-to-1 ratio in 1989. The Securities and Exchange Commission (SEC) now requires public companies to disclose full details of executive compensation, including salaries, bonuses, pensions, benefits, stock options, and severance and retirement packages. Even some CEOs question the high levels of CEO pay. Edgar Woolard, Jr., former CEO and chairman of DuPont, thinks so. "CEO pay is driven today primarily by outside consultant surveys," he says. Companies all want their CEOs to be in the top half, and preferably the top quarter, of all CEOs. This leads to annual increases. He also criticizes the enormous severance packages that company boards give to CEOs that fail. For example, Carly Fiorina of Hewlett-Packard received $20 million when she was fired.

1. Are CEOs entitled to increases in compensation when their company's financial situation worsens, because their job becomes more challenging? Why or why not?
2. If they fail, are they entitled to huge severance packages for their efforts? Why or why not?
3. Should companies be required to divulge all details of compensation for their highest top managers, and what effect is such disclosure likely to have on executive pay?

Part II Instructions: Read the Case Study "Managing An Extreme Makeover" and submit your answers to the three questions at the end of the case study. Make certain to clearly identify your answers to each question and be complete in your answers.

Managing an Extreme Makeover

During a tour of a Toyota Corolla assembly plant located near their headquarters in Bangalore, India, executives of Wipro Ltd. hit on a revolutionary ideawhy not apply Toyota's successful manufacturing techniques to managing their software development and clients' back-office operations business?

"Toyota preaches continuous improvement, respect for employees, learning, and embracing change," says T. K. Kurien, 45, former head of Wipro's 13,600-person business-process outsourcing unit. "What we do is apply people, technology, and processes to solve a business problem."

Among the problems spotted early on by Kurien? Cubicles. They're normal for programmers but interrupt the flow for business-process employees. Deciding to position people side by side at long tables assembly-line style "was a roaring disaster," admits Kurien. "The factory idea concerned people." So based on feedback from his middle managers, Kurien arranged classes to explain his concepts and how they would ultimately make life easier for employees.

Wipro also adopted Toyota'skaizensystem of soliciting employee suggestions. Priya, who has worked for Wipro for years, submitted severalkaizenand was delighted when her bosses responded promptly to her suggestions. "Even though it's something small, it feels good. You're being considered," she says. Empowerment in the workplace washed over into her private life. As the first woman in her family to attend college, she told her parents they may arrange her marriage only to a man who will not interfere with her career.

Kurien and his managers work hard at boosting employee morale, offering rewardspens, caps, or shirtsto employees who submit suggestions tokaizenboxes. And each week, a top-performing employee receives a cake. Murthy, an accountant who hopes to be Wipro's chief financial officer someday, spearheaded an effort to cut government import approval times from 30 to 15 days. He got a cake with his name written on it in honey. "I was surprised management knew what I was doing," he says. "Now I want to do more projects."

With multibillions in revenues, thousands of employees, and a U.S.-traded stock that advanced 230 percent in a two-year period, Wipro is a star of India's burgeoning information technology industry. The company's paperwork processing operations bear a clear resemblance to a Toyota plant. Two shifts of young people line long rows of tables. At the start of each shift, team leaders discuss the day's goals and divide up tasks. And just like in a Toyota factory, electronic displays mounted on the walls shift from green to red if things get bogged down.

This obsession with management efficiency has helped India become the back-office operation for hundreds of Western companies, resulting in the transfer of many thousands of jobs offshore. "If the Indians get this right, in addition to their low labor rates, they can become deadly competition," says Jeffrey K. Liker, a business professor at the University of Michigan and author of The Toyota Way, a book about Toyota's lean manufacturing techniques. If Kurien's management initiatives succeed, experts may soon be extolling the Wipro way.

Critical Thinking Questions

1. What type of manager is T. K. Kurien? How would you characterize his leadership style?

2. What managerial role does T. K. Kurien assume in his approach to attaining his division's goal of improved customer service?

3. What management skill sets does he exhibit?