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    03 Task Performance 1

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    Gersie Tolentino
    Richard Liebhaber, the CTO of MCI Communications Corp., decided in 1991 to relocate the company's 4,000-employee Systems Engineering division from Washington D.C. to Colorado Springs believing the scenic location would inspire workers. However, numerous key executives and over half of the division's minority employees rejected or soon left the move due to Colorado Springs' isolation and lack of diversity. The relocation isolated engineers from headquarters and cost over $200 million, far more than anticipated, with few expected savings materializing. While rank-and-file employees were retained by generous relocation packages, there was less enthusiasm among senior managers and the diversity of the workforce was cut almost in half.

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    03 Task Performance 1

    Uploaded by

    Gersie Tolentino
    681 views2 pages
    Richard Liebhaber, the CTO of MCI Communications Corp., decided in 1991 to relocate the company's 4,000-employee Systems Engineering division from Washington D.C. to Colorado Springs believing the scenic location would inspire workers. However, numerous key executives and over half of the division's minority employees rejected or soon left the move due to Colorado Springs' isolation and lack of diversity. The relocation isolated engineers from headquarters and cost over $200 million, far more than anticipated, with few expected savings materializing. While rank-and-file employees were retained by generous relocation packages, there was less enthusiasm among senior managers and the diversity of the workforce was cut almost in half.

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    03 Task Performance 1 (1)

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    Richard Liebhaber, the CTO of MCI Communications Corp., decided in 1991 to relocate the company's 4,000-employee Systems Engineering division from Washington D.C. to Colorado Springs believing the scenic location would inspire workers. However, numerous key executives and over half of the division's minority employees rejected or soon left the move due to Colorado Springs' isolation and lack of diversity. The relocation isolated engineers from headquarters and cost over $200 million, far more than anticipated, with few expected savings materializing. While rank-and-file employees were retained by generous relocation packages, there was less enthusiasm among senior managers and the diversity of the workforce was cut almost in half.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    681 views2 pages

    03 Task Performance 1

    Uploaded by

    Gersie Tolentino
    Richard Liebhaber, the CTO of MCI Communications Corp., decided in 1991 to relocate the company's 4,000-employee Systems Engineering division from Washington D.C. to Colorado Springs believing the scenic location would inspire workers. However, numerous key executives and over half of the division's minority employees rejected or soon left the move due to Colorado Springs' isolation and lack of diversity. The relocation isolated engineers from headquarters and cost over $200 million, far more than anticipated, with few expected savings materializing. While rank-and-file employees were retained by generous relocation packages, there was less enthusiasm among senior managers and the diversity of the workforce was cut almost in half.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
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    of 2

    BM1902

    Names ____________________________________________________ Section __________________


    Date____________

    ACTIVITY
    Innovative MCI Unit Finds Culture Shock in Colorado Springs
    Convinced that a spectacular setting of a new location for his business would inspire his workers, Richard
    Liebhaber figured “build it, and they will come.” In 1991, the chief technology officer of MCI
    Communications Corp. decided to relocate MCI’s brain trust—the 4,000-employee Systems Engineering
    division that created numerous breakthrough products—from MCI’s Washington, D.C., headquarters to
    Colorado Springs. An avid skier, he believed the mountains, low crime rate, healthy climate, and rock-
    bottom real-estate prices would be “a magnet for the best and brightest” computer software engineers.
    He rejected warnings from at least half a dozen senior executives that Colorado Springs’ isolated and
    politically conservative setting would actually repel the extensive, ethnically diverse engineers MCI hoped
    to attract. Mr. Liebhaber argued that new hires would jump at the chance to live in ski country, while
    veterans would stay longer, reducing MCI’s more than 15% annual turnover rate in Washington. The
    move, he contended, would also save money by cutting MCI’s facilities, labor, and recruiting costs.
    Besides, four other high-tech companies—including Digital Equipment Corp. and Apple Computer Inc.—
    had recently moved there. “One of the things that gave me more comfort was the fact that these other
    guys had selected Colorado Springs,” Mr. Liebhaber says. He was mistaken. While many rank-and files MCI
    employees were retained by generous relocation packages, after making the move, numerous key
    executives and engineers, and hundreds of the divisions 51% minority population, said no, or fled
    Colorado Springs soon after relocating.

    “It was like living in a loaf of Wonder Bread,” says James Finucane MCI’s top engineer until he took a job
    with a competitor back east in 1994. “There’s no culture, no diversity, no research university, no vitality or
    resiliency to the job market.” The move isolated MCI’s engineers from top management and marketing
    colleagues at headquarters, undermining the spontaneous collaborations that had generated some of the
    company’s most innovative products. Meanwhile, the professionals Mr. Liebhaber hoped to recruit more
    engineers, pushing the move’s total cost to about $200 million or 10 billion pesos—far more than MCI
    officials anticipated. “Most of the savings we had hoped for never materialized,” says Leroy Pingho, a
    senior executive who oversaw the relocation.

    When the move was announced, many rank-and-file workers were enthusiastic. MCI’s relocation policy
    paid for every expense imaginable. Costing an average of $100,000 or five (5) million pesos per employee,
    it included up to six (6) months of temporary housing and living expenses, private-school tuition for
    workers’ children and a full month’s pay for miscellaneous expenses. And there were exceptional housing
    bargains. Thousands of workers—far more than Mr. Liebhaber expected—took advantage of the offer,
    undercutting his plans to recruit lower cost employees in Colorado. But there was far less enthusiasm
    among senior managers. James Zucco, Mr. Ditchfield’s successor and the head of Systems Engineering,
    stayed behind and eventually left to join AT&T Corp. Also staying put was Gary Wiesenborn, the division’s
    No. 2 executive, who later moved to Bell Atlantic Corp. Mr. Pingho, who oversaw the division’s financial
    planning and budgeting, declined to move and quit in 1993. There was also significant fallout among the
    division’s minority population. Although MCI declines to provide specific numbers, it confirms there was
    a reduction. According to former employees who had access to Equal Employment Opportunity
    Commission data, there were roughly 1,300 African-Americans on Systems Engineering’s staff and a
    combined 700 Asians and Hispanics before the relocation. Since the relocation, minority representation
    has been cut almost in half, to about 600 African-Americans and a combined 500 Asians and Hispanics. “It
    was a disaster for diversity,” Mr. Ditchfield says. But MCI officials say that despite the reduction, its
    Colorado division is still more ethnically diverse than other local companies.

    03 Activity 3 *Property of STI


    Page 1 of 2
    BM1902
    Names ____________________________________________________ Section __________________
    Date____________

    Use the suggested outline below in answering the case study following the correct formats.
    Font Calibri
    Font size 12
    Margins 1”
    Line spacing Double space

    I. Background
    a. It must include a brief summary of the case study.
    II. Statement of the Problem
    a. What is/are the available location planning option/s for MCI Communications Corp.?
    b. What is/are the risk/s associated in the location decision of MCI Communications Corp.?
    c. What is/are the consideration/s of MCI Communications Corp. in choosing a business
    location, based on the general procedure for making location decisions?
    d. How will MCI Communications Corp. avoid its organizational problem by choosing a
    different option for location planning?
    III. Areas of Consideration
    a. It must include details and facts from the case, which support the answers to the first,
    second, and third question under the statement of the problem.
    IV. Alternative Courses of Action
    a. It must contain at least two (2) courses of action, which answer the fourth question under
    the statement of the problem. It must also present the advantages and disadvantages of
    each course of action.
    V. Recommendation
    a. It must present the best course of action among the presented alternatives.
    VI. Management Lessons Learned
    a. It must discuss the personal learnings or takeaways from the case study.

    Rubric for grading:


    CRITERIA PERFORMANCE INDICATORS POINTS
    Wrote a concise summary of the case, the areas of
    Executive Summary consideration presented, and the alternatives proposed for 20
    the case
    Adhered to the correct outline and content was organized in
    Organization of Ideas 20
    a clear and logical manner
    Provided necessary research and analysis in support of the
    Analysis 20
    statement of the problem
    Proposed a well-thought and well-researched solution to the
    Recommendation 40
    case study
    TOTAL 100

    Reference:
    Stevenson, W. (2012). Operations management (11th ed.). New York: McGraw-Hill Education.

    03 Activity 3 *Property of STI


    Page 2 of 2

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