Running Head: AL DUNLAP AT SUNBEAM 1

Case Analysis on

Al Dunlap at Sunbeam

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Date
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Al Dunlap at Sunbeam

“Stakeholders! Every time….is the stakeholder”: Explorative analysis

Mostly, the people who work in market-driven economy would agree that companies

generate profitability to economy. I agree with the statement because organizations have to

perform corporate social responsibilities for society and community where they are doing

businesses. The perspective of Dunlap’s advocate the shareholder values because he recognized

shareholders as “shareholder’s savior”. He believes that stakeholder is tools for business owners

and sees profitability concerns over responsibility for shareholders. Moreover, Dunlap believes

that the accomplishments of an organization can be measured by economic profit, dividends, and

share price but not determined by goodwill or reputation [ CITATION Yit17 \l 1033 ]. The

stakeholders can be employees, creditors, government, and suppliers and they are means to

maximization of shareholder’s wealth. The convincing point of Dunlap articulated that

stakeholders and society are served by development of economic rationale [ CITATION Joy15 \l

1033 ].

Evaluation of Dunlap’s compensation packages and behavioral motivation

The first compensation package is Dunlap 1996-1997 which was designed to improve

organization market value as well as stock prices in the short term. This compensation package

consists of salary 507,054 but with no bonuses and ultimately crosses over 16 million stock

options. The second compensation was to double the salary to about 1 million as well as

increased stock options. However, it was excessive and unnecessary because his performance

was already reached to huge amount of stocks. Thus, it is considered additional cash salary to the

executives. The main purpose of these compensation plans is to make quick and tough decisions
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and resulted to increase shareholder’s value. Secondly, these compensation plans create

differentiation between better and poorer performers and give financial incentives to better

performer to change the behavior and performances as well. The company employees and

culture were not suitable or interested in this model it created negative values and encourage the

behavior of sacrificed employees to increase stock price [ CITATION Emm17 \l 1033 ].

Controversies of Al Dunlap create at Scott Paper and Sunbeam

There were various controversies that surrounded Dunlap previous job. First of all,

Dunlap has rejected the consideration of multiple stakeholders in a view of corporate

governance. Secondly, his high-level pay creates inequality among other staff members which

made him recruitment controversial. In addition, his relationship with media was shaky or

unstable that can harm to organization's reputation and considered controversial. Moreover, his

aggressive managerial style was not suitable for other employees and creates conflicting attitudes

for other employees. At both Sunbeam and Scott, his compensation was directed or linked to

performance of stock. At that time, the decision to hire Dunlap was right because he had

established track record of rescuing companies and his aggressive ways of doing business

transform organizational values in a better way [ CITATION Ros14 \l 1033 ].

Turn around at Sunbeam by giving more time and space

If the board gave him more support and time, there might be radical changes occurred.

Because when Dunlap was at Scott's paper, he fired 35% of employees as well as 71% of

corporate staff which ultimately raises the stock prices of the company. Due to his past success,

the sunbeam can take many advantages but his performance did not caliber to organization at
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high level. He was hired to turn around the sunbeam in 1996 but fired after two months and

when he has hired the stock price all-time high at $53 but fell to $16 when he was fired.

Right decision to fire due to controversies

At last, it was the right decision to fire Dunlap because he was already controversial CEO

and may slump further long-term viability of an organization. Furthermore, he was cannibalizing

his own operations and workforce which ultimately reduces sales revenue and volume of specific

product portfolio [ CITATION Ros14 \l 1033 ]. The future sales were short term solutions for the

company but it increases bottom line for the company.

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References

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International Journal of Scientific and Research Publications, 4(9).

Ekwoaba, J. O., Ikeije, U. .., & Ufoma, N. (2015). THE IMPACT OF RECRUITMENT AND

SELECTION CRITERIA ON ORGANIZATIONAL PERFORMANCE. Global Journal

of Human Resource Management, 22-33.

Emmanuel, O. (2017). Understanding Organisational Culture and Organisational Performance:

Are They Two Sides of the Same Coin? Journal of Management Research, 9(1).

Goshu, Y. Y., & Kitaw, D. (2017). Performance measurement and its recent challenge: A

literature review. International Journal of Business Performance Management, 18(4).