Ramesh Tuladhar is a manager of a production department in Sagar Groups, a firm that manufactures office equipment. After reading an article that stressed the benefits of participative management, Ramesh believes that these benefits could be realized in his department if the workers are allowed to participate in making some decisions that affect them. The workers are not unionized. Ramesh selected two decisions for his experiment in participative management.

The first decision involved vacation schedules. Each summer the workers were given two weeks- vacation, but no more than two workers can go on vacation at the same time. In prior years, Ramesh made this decision himself. He would first ask the workers to indicate their preference dates, and then he considered how the work would be affected if different people were out at the same time. It was important to plan a vacation schedule that would ensure adequate staffing for all the essential operations performed by the department. When more than two workers wanted the same time period, and they had similar skills, he usually gave preference to the worker with highest productivity.

The second decision involved production standards. Sales had been increasing steadily over the past few years, and the company recently installed some new equipment to increase productivity. The new equipment would allow Ramesh's department to produce more with the same number of workers. The company had a pay incentive system in which workers received a piece rate for each unit produced above the standard amount. Separate standards existed for each type of product, based on industrial engineering study conducted a few years earlier. Top management wanted to readjust the production standards to reflect the fact that the new equipment made it possible for the workers to earn without working any harder. The savings from higher