Golden Years Investment Club

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This case provides us an insight into the Golden Years Investment Club and the conflict of group members when a newcomer challenges the views and ideas of the group’s experienced founder. Lenn Width, the founder of the investment club, has recently invited David Korn, a young architect, to join the twenty-six-member group. Width and Korn have very opposing viewpoints when it comes to how to invest. Width has a very strict investment policy: “a stock must have been publicly traded for at least five years; its sales must be growing by 15 percent a year; and it’s got to have a return on equity of 10 percent or better” (Fight at the Investment Club, 1994). On the other hand, Korn is interested in a more aggressive style, investing in riskier stocks with larger returns.

While the Gold Years Investment Club has been run as a democracy in which each member received votes based upon how many shares they owned. The more money members invested, the more shares they owned and votes they received when it came time to vote on stocks. However, the group has recently expressed concerns with Width’s lack of interest in their opinions and ideas, easily dismissing recommendations as too expensive, too risky or too speculative. The group comes to headway when Width decides to hold a secret meeting to have Korn removed from the group. Unfortunately, even with Korn gone, Width is displaying his dictator style of leadership over the group.

While upon first glance it may seem that the root cause of the problem is strictly between Width and Korn, if we really dig deeper into the issue the problem is with Width and all members of the group. The true problem is Width’s tyranny over the group. This is brought to light when Korn arrives because Korn is bold enough to challenge him. Throughout the case we hear members’ complaints of Width. One member, who only survived the group three months, Alyce Goss said of Width: “Lenn rules the roost. It was ‘Either you do it my way or we don’t do it at all’” (Fight at the Investment Club, 1994). Once Korn is removed from the club, none of the existing club members are brave enough to stand up to Width to follow through with a challenge of his ideas. When Kelly and Smith do decide to stand up to Width in requesting to buy more stocks in Aflac, they quickly back down when Width loses his temper, and once again Width gets his way. Ultimately it comes down to Width’s personality causing the root cause of distress in the group, not the clashing of personalities between Width and Korn.

I feel the theory that is most applicable to this case is groupthink. Groupthink can occur due to “the pressures on individual members to conform and reach consensus” (Luthans, 2011). The group members in our situation are so engrossed in being in sync with Width’s opinions that there is not any real progress occurring. Over the years they have developed a way of thinking that correlates directly with what Width wants. While some group members recognize that Width is highly controlling and has a ‘my way or the highway’ type of attitude, this also feeds into the Groupthink Theory. Groupthink commonly occurs when there is any one or a combination of the five following conditions: “(1) a high level of group cohesiveness; (2) insulation of the group members from opinions or information from outside of the group; (3) an inefficient procedure for gathering and interpreting information; (4) leadership that is both directive and influential; and (5) a high degree of stress and a tendency to avoid challenging the first acceptable alternative suggested by an influential member” (Callaway, & Esser, 1984). Clearly, at least four of these five conditions are met in our case. The group is extremely cohesive; they have been in existence for many years and share a unique dynamic that can only come with years of bonding. They also have an inefficient procedure for gathering and interpreting...
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