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1996 EEOC reviews the lawsuit against Texaco.
Nov 4, 1996 The New York Times goes to press with a story of Texaco’s alleged racial
discrimination slurs.
Part B
Nov 4, 1996 The New York Times story breaks nationally.
Nov 4, 1996 Texaco issues an initial press release concerning the apparent racial slurs. It states
“if these allegations are true, they represent an outrageous violation of the
company’s core values and principles. Any such conduct is deplorable and will
never be tolerated by Texaco.”
Nov 4, 1996 A letter is sent to employees of Texaco from the Chairman & CEO, Peter Bijur,
explaining the allegations against the company and outlining the actions the
company will take to remedy the situation.
Nov 4, 1996 A message goes from Peter Bijur, Chairman & CEO of Texaco Inc. to all
employees via satellite broadcast.
Nov 6, 1996 Chairman & CEO, Peter Bijur makes a statement to the press.
Nov 12, 1996 Chairman & CEO, Peter Bijur offers remarks following meetings with leaders in
the African-American community.
Nov 15, 1996 Texaco announces a settlement in class action lawsuit.
Dec 18, 1996 Texaco announces a comprehensive plan to ensure fairness and economic
opportunity for employees and business partners.
Discussion Questions
Part A
1. What are the critical issues surrounding the newly released tapes?
2. How should Peter Bijur and Texaco respond to the allegations?
3. How should the company respond to the publicity?
4. Should the employees be addressed separately from the general public?
5. How can Texaco mend fences with minority employees and customers?
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6. What would be an effective corporate strategy in dealing with encouraging diversity in
the workplace?
Part B
1. How would you rate the effectiveness of Texaco’s response to the allegations of racial
discrimination?
2. Did Texaco’s response address the core problems and issues surrounding racial
discrimination and prejudice at the company?
3. If you were Peter Bijur, what would you have done differently?
4. What kinds of company policies can effect long-term change in diversity in a corporate
culture such as Texaco?
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DENNY’S RESTAURANTS: CREATING A DIVERSE CORPORATE CULTURE (A & B)
This teaching note was prepared by Bronwyn Clee under the direction of James S. O’Rourke
(Eugene D. Fanning Center for Business Communication; Mendoza College of Business;
University of Notre Dame).
Purpose of the Case Study
1. To help students understand how important effective communication is both internally
and publicly.
2. To give students an appreciation for the importance of continuing effective
communication, particularly during crisis management.
3. To help students understand how writing and speaking, and the management messages
they carry, are the products of a process that begins with critical thinking.
4. To provide students with some understanding of the ethical implications of professional
communication, particularly where legal issues are involved.
Identifying the Business Problem
Denny’s, at the time of this case, was the largest, best-known family restaurant chain in
the United States. Yet, at the same time, the company was on the brink of destruction and
facing a series of lawsuits.
As the newly appointed CEO of Flagstar Companies, Jim Adamson faced two critical
issues: lackluster financial performance and well publicized incidents of racism within
the organization. The primary issues that Adamson must attend to are improving
financial performance and changing the pervasive racist culture that allowed these
documented incidents of discrimination to occur.
Forecasting the Most Desirable Outcomes
1. A successful strategy to address racial discrimination issues within the company is
developed.
2. Address financial performance issues and bring debt under control.
Identifying the Critical Issues
Corporate culture
No corporate standards are in place to educate employees in dealing with diversity
issues.
Discrimination policies and disciplinary actions are not being effectively communicated
or enforced.
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No action taken on behalf of management to address the lack of diversity within the
organization.
Key external factors
Unwanted press attention, including interviews with disgruntled employees and angry
customers has already prompted a class action lawsuit.
Close scrutiny by special interest groups, including the NAACP.
Stakeholder perspectives include
Customers
Employees
Management
Suppliers/Vendors
Internal Stakeholders Solutions
Investors
Civil Liberty Organizations
List Possible Solutions to the Problem
1. Address internal (rules and regulations) and external (the public perception,
organizations, the media) issues.
2. Meet with the special interest groups first to quell anger and resentment brought about
by discrimination. This will avoid tensions escalating between the company and the Civil
Rights groups who control significant power in terms of public perception. The goal is to
develop an awareness that the company is sincere in attempting to correct the situation
and acknowledge part wrong doing by the company.
3. Based upon the advice of his legal counsel, Adamson may want to mention his personal
background as a way to establish credibility with these groups. He must make it clear
that the “Denny’s of the past” ceased to exist with the resignation of Richardson. This
meeting will serve to calm the situation and buy some time to get the requisite policies
and procedures in place so that the company can take its campaign public.
4. Develop internal policies and procedures shortly after the initial meetings with the Civil
Liberty Organizations; base these policies on information and advice from the meetings.
The company will need to advertise and apologize publicly. As the new CEO, Adamson
will need to demonstrate that he has begun to take appropriate and swift measures to
rectify Denny’s past behavior toward African-American (and other minority) customers.
The communication will be much more powerful if Adamson can speak of these new
regulations in the past tense, as opposed to, “we are in the process of adopting.”
5. Finally, with the assistance of appropriate legal counsel, and after the meeting(s) with the
special interest groups and adoption of new policy, Adamson will be ready to address
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the nation through Denny’s new advertising campaign. By this time, he will have
negotiated support from the Civil Rights Organizations and made progress toward the
implementation of radical changes to Denny’s formal policies and procedures. Both will
be necessary so that he can deliver a powerful statement to the American public.
The message will be most meaningful if delivered by Adamson, the pioneer of this new
initiative. Based on the advice of legal counsel, a brief clip on his personal history could
be particularly effective in winning the trust of the general public and in Denny’s
commitment to do the right thing with respect to its reputation as the “poster child for
racism.”
Explaining How to Communicate the Solution
Internally Adamson and Petty should hold regional meetings with all franchise owners
and local store managers to personally deliver Denny’s new stance on discrimination.
The message will be coming from the two company leaders giving it high priority in
terms of importance and implementation. Meetings should be held immediately after
Adamson and Petty have met with special interest groups, legal counsel, and drafted
formal policies and procedures with respect to racist behavior.
Externally, the communication needs to be delivered to the mass market and the general
population. This is best done through a television advertising campaign in the form of an
apology to Denny’s customers as well as a statement that Denny’s is implementing the
promise of zero tolerance toward racist behavior. The advertisement should be sincere, to
the point, and demonstrate the course of action the company has taken and is taking.
Depending on how well the meetings with the special interest groups go it may also be
possible to mention the relationship with the Civil Rights groups or invite organization
leaders to appear in the advertisement. While the latter seems an unlikely scenario given
the fact of the case, it should not be dismissed altogether.
Teaching the Case
One Week Prior
Distribute the case at least on lesson before you intend to discuss it in class. Tell the students that
you intend to focus on several matters during the discussion, including:
The importance of effective communication both internally and publicly
The importance of continuing effective communication, particularly during crisis
management
How management messages influence the outcome of a scenario
The ethical implications of professional communication, particularly where legal issues
are involved
First 30 Minutes of Class
Spend the first 5 to 10 minutes of the class session briefly recapping the fact of the case. Then for
the next 20 minutes, have the students identify the following:
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The critical issues involved in the organization’s decision
The stakeholders in this case and their separate interests; review the pertinent
assumptions made by each of the stakeholder groups
The decision option available to the organization
Use the Questions for Discussion at the end of this teaching note to aid student discussion, if
needed.
Some points for discussion may include:
Transforming the Company’s Culture
Develop a standard set of guidelines that clearly state how issues of diversity should be
handled and how violations of these standards will be dealt with. A special taskforce
within the Human Resources Department should be set up to communicate these policies
and procedures to all company executives, franchise owners, and restaurant managers.
Managers would then be responsible for communicating the new policies to all
employees. Every employee would also receive a written copy of these guidelines.
Set up an ongoing diversity-training program to keep every current employee aware of
the importance of diversity issues. All new employees would also have to complete at
least one diversity training class during a company orientation.
Develop a new set of standards to promote more hiring of minority candidates. This may
include attending specialized recruiting functions that cater to minorities or placing
advertisements in publications targeting minorities.
Investors should be made fully aware of Denny’s turnaround strategy. Furthermore, due
to its majority ownership, KKR should be consulted about major initiatives including all
public statements including television spots.
Communicating the New Message
Denny’s must act quickly to communicate a message to its customers as well as the
general public. This message should let the public know that Denny’s apologizes for its
inappropriate actions, recognizes the problems within its organization, and is committed
to correcting these problems. Under the advice of the public relations firm, Adamson
should communicate the message in a short television spot.
Because of their ability to draw media attention and influence the public’s perception, the
Denny’s crisis team must be prepared to deal with special interest groups such as the
NAACP. A message stating what Denny’s is doing to transform its culture including
making the company more racially diversified should be communicated directly to these
types of organizations. In addition, it will be important for Denny’s to develop a positive
rapport with a key representative from each of the major special interest groups in order
to further develop an open line of communication.
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Involving Minorities
Part of Denny’s turnaround plan should also include a new initiative designed to attract
more minority suppliers. Denny’s executives should reach out to minority suppliers in
face-to-face meetings to emphasize their commitment to building strong relationships
with minority suppliers. Similar to the automotive industry, Denny’s should also set
targets for what percentage of its supplier business should come from minority suppliers.
For example, a reasonable objective may be to set a target of having 20% of supplies come
from minority suppliers within two years.
Summarize Students’ Responses
Ask students for their communication plan. What would they have done if they had been
in the organization’s shoes?
At this point in the lesson, hand out Part B of the Denny’s case. Allow students time to
read and consider this section.
Issues to consider include:
Strategic Communication Objectives. What are the organization’s strategic business
objectives and how can we link them directly to our communication objectives?
Audience Analysis. Who are we most concerned about reaching? Why do we want to
communicate with them? What outcome do we hope for when we reach them?
Message Construction. What do we want to say to each of these audiences? Will our
messages differ from one set of stakeholders to another? How simple or complex should
the message be?
Medium Selection. How should we try to reach these stakeholders? Should we consider
electronic means? How about print means? Should we telemediate our message through
the press? Should we try to communicate directly with one or more of the stakeholder
groups?
Measurement of Outcomes. How will we know if we have succeeded? What criteria should
we use to determine success? If we are not successful, what should we consider changing
first: medium, message, audience, or objective?
Last 5 Minutes of Class
Conclude the discussion
The key to this case, as with nearly all other management communication cases, is to let
students speak freely, but guide their comments toward the problem facing Denny’s
Restaurants and the explosive situation faced in the case.
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Timetable of Events
Part A
1961 Jerry Richardson buys the first Hardee’s franchise in Spartanburg, South Carolina.
1969 Franchise changes name to Spartan Food Systems and goes public.
1979 Company is taken over by TransWorld Coporation. Richardson stays on to run the food
service division.
1986 TransWorld spins off non-food related investments and is renamed TW Services.
1987 TW Services purchases Denny’s and El Pollo Loco Restaurants. Richardson becomes
president of the food service company.
1989 Company takes on a huge debt as a result of a hostile takeover by the private equity firm
of Gollust, Tierney, & Oliver.
1990 Richardson engages the consulting firm Synetics to help develop a strategic plan.
Synetics identifies a lack of diversity within the organization, Richardson makes light of
this.
1992 Kholberg, Kravis, Roberts & Co (KKR) invest $300 million in the company to restructure
debt; Richardson begins talking with local NAACP members to find ways to respond to
the challenge of diversifying the company.
1993 Company is renamed Flagstar Companies. Discrimination incident resulting in a lawsuit
occurs in Annapolis, Maryland.
1994 Richardson relinquishes his position as CEO.
1995 Denny’s has paid $54 million to 294,000 customers and their lawyers. Adamson takes
over as CEO of the company.
Part B
1995 Adamson reinforces a re-education initiative in November by promising, “If you
discriminate, I’m going to fire you.” Nine out of twelve top managers chose to leave the
company.
1996 Adamson receives the 1996 CEO of the Year Award from the NAACP for his work at
Flagstar.
1998 Positive results continue with a CBS 60 Minutes story, Fortune magazine ranks Denny’s
among the top ten companies for minorities in the U.S. Flagstar renamed to Advantica.
2000 Advantica rated No. 1 in Fortune Magazine’s top companies for minorities in the U.S.
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Discussion Questions
Part A
1. As Jim Adamson, what would your communication approach be in this sensitive
situation?
2. List key issues for Jim Adamson to address at this point.
3. How does a company categorize discrimination in order to create an effective corporate
policy for diversity in the workplace?
4. How can Adamson and Flagstar Companies effect change and sustain that change in the
corporate culture?
5. How can they manage diversity throughout the organization?
6. Is a strong communication campaign needed to ensure the public of Denny’s
commitment to diversity or is a more subtle approach needed?
7. How can Flagstar Companies go about reaching the public with their message of
diversity?
8. How should Adamson respond to the special interest groups?
Part B
1. Has Jim Adamson been successful in changing the corporate culture at Advantica?
2. How effective is the diversity strategy Advantica has put in place?
3. Do their efforts get to the core problems at Advantica?
4. What are the other major challenges facing the financial future of Advantica?
5. What other avenues of communication could be used to demonstrate the new corporate
culture of diversity?
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AT&T, AGE DISCRIMINATION, AND THE EEOC
This teaching note was prepared by McCall Lewis, MBA (David Eccles School of Business,
University of Utah).
Purpose of the Case Study
1. To help students understand age discrimination and its legal context.
2. To give students a brief overview of the Age Discrimination in Employment Act
(ADEA) and the U.S. Equal Employment Opportunity Commission (EEOC).
3. To provide students with an example of a case filed by the EEOC against a
company for allegedly committing age-based disparate impact discrimination
and violating the ADEA.
4. To provide students with an example of a company that changed its hiring
policies and practices to further prevent age discrimination.
5. To raise the question of whether a company should allow employees who retired
under an early incentive plan to reapply for jobs.
Identifying the Business Problem
AT&T offered an early retirement incentives plan in order to reduce its workforce.
Employees who met certain criteria were eligible. Within the next few years, some of the
employees who retired under the plan reapplied for jobs with the company. At the time,
AT&T’s policy prohibited retired employees from reapplying, so those employees were
denied consideration. The EEOC filed a suit against AT&T for allegedly violating the
ADEA. After the case was settled, AT&T eliminated the policy.
Forecasting the Most Desirable Outcome
AT&T continues to uphold anti-discrimination laws when hiring employees, and in
doing so, serves as example for other companies.
Identifying the Critical Issues
1. AT&T, like other wireless services and telecommunications companies, is facing an
increasingly competitive global market.
2. AT&T needed to reduce its workforce so it offered an early retirement incentives plan.
Employees voluntarily accepted the offer and then later wanted to re-apply to the
company.
3. AT&T shows its commitment to complying with anti-discrimination employment laws
by eliminating the company policy against retired AT&T employees.
