Rick Parr—Archer Daniels Midland (ADM) Company
Archer Daniels Midland (ADM) was ranked 59th on the 2007 Fortune 500 list.63 ADM is one of the largest agricultural processors in the world, with 27,600 employees globally. Because everything ADM does begins with agriculture, its partnership with the farming community is vital. Farmers are essential to the overall world economy, and that’s why ADM’s work is essential to them; ADM creates thousands of products from their crops, and serves hundreds of markets for their crops. Serving as a vital link between farmers and consumers, ADM takes crops and processes them to make food ingredients, animal feed ingredients, renewable fuels, and naturally derived alternatives to industrial chemicals. Four of its primary resources it gets from farmers to turn into products are: cocoa (all kinds of chocolate goodies), corn (food, ethanol fuel for your car, and alcohol), wheat (flower and food products), and oilseeds (soybean, canola, cottonseeds, sunflower seed, palm, and also biodiesel fuel for cars and trucks). As you know, with the high price of gasoline, people are looking for an alternative to fuel their motor vehicles. ADM is placing a big bet on the business of turning farm crops into fuel and chemicals. To lead this new strategic initiative into more profitable industrial products, in 2006 ADM broke company tradition by appointing a woman and energy-savvy outsider as its new CEO—-Patricia A. Woertz. She left her position as executive VP at Chevron Corporation seeking a CEO position. With annual revenues around $70 billion, ADM is the largest publicly traded U.S. company headed by a woman.64 Woertz increased her power by being appointed as chairman of the board of directors in 2007.65 She has been ranked 4th and 6th on Fortune’s list of “Most Powerful Women.”66 Although Woertz’s story in interesting, in this case we focus on a lower-level manager, Rick Parr.67 (Please note: ADM is an existing company. However, Rick Parr, Ed Carlton, and Jose Goizueta are not the names of actual managers at ADM; they are used to illustrate contingency leadership.) Rick Parr worked his way up to become the manager in a department making small parts. Parr’s job was to supervise the production of one part that is used as a component in other products. Running the machines to make the standard parts is not complicated, and his employees generally find the job to be boring with low pay. Parr closely supervised the employees to make sure they kept production on schedule. Parr believed that if he did not watch the employees closely and keep them informed of their output, they would slack off and miss production goals. Parr’s employees viewed him as an okay boss to work for, as he did take a personal interest in them, and employees were productive. Parr did discipline employees who did not meet standard productivity, and he ended up firing some workers. Ed Carlton, the manager of a larger department that designs instruments to customer specifications, retired and Parr was given a promotion to manage this department because he did a good job running his old department. Parr never did any design work himself nor supervised it. The designers are all engineers who are paid well and who were doing a good job according to their prior supervisor Carlton. As Parr observed workers in his usual manner, he realized that all of the designers did their work differently. So he closely observed their work and looked for good ideas that all his employees could follow. It wasn’t long before Parr was telling employees how to do a better job of designing the custom specifications. Things were not going too well, however, as employees told Parr that he did not know what he was talking about. Parr tried to rely on his authority, which worked while he was watching employees. However, once Parr left one employee to observe another, the workers went back to doing things their own way. Parr’s employees were complaining about his being a poor manager behind his back. The complaints about Parr being a poor manager got to his boss, Jose Goizueta. Goizueta also realized that performance in the design department had gone down since Parr took over as manager. Goizueta decided to call Parr into his office to discuss how things are going. GO TO THE INTERNET: To learn more about ADM, visit its Web site (http://www.admworld.com). Support your answers to the following questions with specific information from the case and text or with other information you get from the Web or other sources.
- Which leadership style would Fiedler say Rick Parr uses?
- Using Exhibit 5.3 on page 157, Fiedler’s contingency leadership model, what situation and leadership style are appropriate for the production department and for the custom design department?
- Why isn’t Parr doing an effective job in the design department?
- What would Fiedler and Kerr and Jermier recommend that Parr do to improve performance?
- Which of the two basic continuum leadership styles would Tannenbaum and Schmidt recommend for the manager of the design department?
- Which path-goal leadership style would House recommend for the manager of the design department?
CUMULATIVE CASE QUESTIONS
- Describe Parr’s personality based on the Big Five model of personality (Chapter 2). How does Parr’s personality influence his leadership style?
- How is Parr’s leadership style and behavior affecting employee needs and motivation (Chapter 3)?
- Which source and type of power does Parr use? Is Parr using the appropriate power? If not, which power should Parr use (Chapter 4)?
CAS E EX E R C IS E AN D RO LE -P LAY Preparation:
Put yourself in the role of Jose Goizueta. Which normative leadership style would you use with Parr during the meeting? How would you handle the meeting with Parr? What will you say to him? In-Class DA Meeting: Break into groups of four to six members, and discuss the three preparation questions. Role-Play: One person (representing themselves or a group) meets with Parr to role-play the meeting for the class to observe. The person does not identify which normative leadership style they are using. You can discuss the role-play, as discussed next. More than one role-play may also take place. Observer Role: As the rest of the class members watch the role-play, they should: (1) Identify the leadership style used by the person playing the role of Goizueta. (2) State if it is the appropriate leadership style for this situation. (3) Look for things that Goizueta does well, and not so well. For your suggested improvements, be sure to have alternative behaviors that are coaching. Discussion: After the first role-play, the class (1) votes for the leadership style used by the person role-playing Goizueta, (2) determines the appropriate leadership style, and (3) discusses good behavior and better behavior that could be used. If additional role-plays are used, skip step 2