Edward Groove Has Been CEO Of United Technologies Corporation: Business Administration Assignment, UAEU, UAE

ASSIGNMENT 
Edward Groove has been CEO of United Technologies Corporation (UTC) for more than a decade. During that time he has received numerous accolades and awards for his performance as a CEO. Under his leadership, UTC, a $343 billion conglomerate whose operating units include manufacturers of elevators (Otis Elevator), aerospace products (including Pratt & Whitney jet engines and Sikorsky helicopters), air conditioning systems, and fire and security systems, has seen earnings grow at 10–14 percent annually—
impressive numbers for any company but particularly for a manufacturing enterprise. According to Groove, a key to United Technologies’ success has been sustained improvements in productivity and product quality.

The story goes back to the 1980s when Groove was running the international operations of Otis Elevator. There he encountered a Japanese engineer, Yuzuru Ito, who had been brought in to determine why a new elevator product was performing poorly. Groove was impressed with Ito’s methods for identifying quality problems and improving performance. When he was promoted to CEO, Groove realized that he had to lower the costs and improve the quality of UTC’s products. One of the first things he did was persuade Ito to work for him at UTC. Under Groove, Ito developed a program for improving product quality and productivity, known as the Achieving Competitive Excellence (ACE), which was subsequently rolled out across UTC. The ACE program has been one of the drivers of productivity improvements at UTC ever since.

Early in his tenure as CEO, Groove also radically reorganized UTC. He dramatically cut the size of the head office and decentralized decision-making to business divisions. He also directed his accounting staff to develop a new financial reporting system that would give him good information about how well each division was doing and make it easier to hold divisional general managers accountable for the performance of the units under them. He then gave them demanding goals for earnings and sales growth and pushed them to improve processes within their units by implementing the ACE program.
At the same time, Groove has always stressed that management is about more than goal setting and holding people accountable. Values are also important. Groove has insisted that UTC employees adhere to the highest ethical standards, that the company produces goods that have a minimal environmental impact, and that employee safety remains the top consideration in the workplace.

When asked what his greatest achievement as a manager has been, Groove refers to UTC’s worldwide employee scholarship program. Implemented in 1996 and considered the hallmark of UTC’s commitment to employee development, the program pays the entire cost of an employee’s college or graduate school education, allows employees to pursue any subject at an accredited school, provides paid study time, and awards UTC stock (up to $10,000 worth in the United States) for completing degrees. Explaining the program, Groove states, “One of the obligations that an employer is to give employees opportunities to better themselves.

And we feel it’s also very good business for us because it generates a better workforce that stays longer.” Groove states that one of his central tasks has been to build a management team that functions smoothly over the long term. “People come to rely upon each other,” he says, “You have to have the same trusting relationships. You know people; they know you. You can predict them; they can predict you. All of that kind of begins to work, and it accelerates over the tenure of a CEO. If you have people bouncing in and out every two to three years, that’s not good.” According to Sandy Weill, former chairman of Citicorp and a UTC board member, Groove has the right mix of toughness and sensitivity. “When somebody can’t do the job he’ll all try to help; but if that person is not going to make it work, that person won’t be on the job forever.” At the same time, Weill says, “He does a lot of things that employees respect him for. I think he is a very good manager. Even though Groove is demanding, he can also listen—he has a receive mode as well as a send mode.”

QUESTIONS:

1. What makes Edward Groove such a highly regarded manager?
2. How does Groove get things done through people?
3. What evidence can you see of Groove’s managerial functions.
4. Which managerial competencies does Groove seem to possess? How does this help is management style?
5. What managerial roles are prominent in this case?
6. What type of business organization did Groove Manage? What are the advantages and disadvantages Of this type of business?