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The Urgent Order

Submitted to: Prof. Soumendra N Bagchi.

By Group 7 (Section B)
Name
Anubhav Agrawal
Anuj V Deshmukh
Keerthilakshmi BR
Maria Mathew

Roll No.
H14078
H14079
H14091
H14095

Executive Summary
Situational Analysis
-

HMC - leading Indian manufacturing company


Highly prevalent organizational politics
Interdepartmental politics effecting smooth functioning
Separate performance appraisal systems for supervisory staff and workers
2 sections in plant operating independently
Urgent order assignment led to the current problem

Critical Success Factors


-

Quality and reliability


Timely delivery of orders
Low cost

Problems Identified
Organization/ Structure
-

Two different sections : Leading to inefficiencies and duplication of work


Unsystematic allocation of orders
Interdepartmental conflict
Union management tensions
Ineffective communication of decisions
Ratio of 1:3 which prima facie indicates that there is overcrowding at the top levels

Workers
-

Time studies havent been revised in the last 10 years. Union resistance against revisions
Current PI system leads to reduction in pay for increased idle time of workers, over which they
have no control
Quality should be included as a metric in appraisal.

Supervisory staff
-

Dissatisfaction with the appraisal system leading to attrition


Undue union influence affecting the decision making

Proposed changes

1. PI System
- Initiate negotiation talks with union to change the current PAS
- New PAS to incorporate difference in the nature of work
- Convince the union that new system will not effect negatively on their incentive

- Update standard work times for non-repetitive jobs


- Continuous evaluation of quality deviance through control charts
2. Executive Appraisal System
- Analyse metrics for performance appraisal for internal alignment with organisational
strategy
- Benchmarking based on predetermined targets individual objectives
- Decide managerial potential via simulation
- Restrict role of apex committee in the process
3. Allocation of Orders
- Adhere to existing system by consulting relevant departments
- Avoid allocation based on employee requests

Situational Analysis
Heavy-Mover Corporation is a leading Indian company manufacturing equipment for transporting
materials. The atmosphere is shrouded in organizational politics. A failed implementation of VRS in the
past has resulted in tensions for those executives whose names had been on the shortlist but somehow
managed to stay on. The functioning of the company was also affected by interdepartmental conflicts
between the works department and the industrial engineering department.
There were two performance appraisal systems in place. The one for the executives was based on
balanced scorecard framework, and widespread dissatisfaction existed among the staff leading to high
attrition. The system for the workers called Performance Index (PI) was based on time studies that were
a decade old. Pressure from the union restricted any change in the same.
The plant was structured in two sections- 1 and 2, both of which operated independently and the work
allocation was decided by Mr. Ramachandran in consultation with the two section heads. The current
problem situation arose after an urgent order TGSX-115 had been haphazardly assigned to section 1 even
though essential parts required for the order were available only with section 2 currently.

Problems
There are several problems that prevail in Heavy Movers Corporation.

1.

Workers
a) Union interference for optimizing and fixation of standard time that were measured ten years
ago
b) Design of performance appraisal system making employees complacent
c) Quality found no place in appraisals as of now
d) Idle time due to varying production schedules affecting appraisals
e) Current system discouraging employees to take up unique/ challenging tasks
f) Group based incentive schemes no incentive to excel individually

2. Supervisory staff
a) Unwarranted union influence on managerial
b) Premature communication of shortlisted candidates for VRS created pressure and
dissatisfaction. Effects of the VRS still persist.
c) Lack of transparency in performance appraisal system leading to dissatisfaction and attrition
3. Organization/ structure
a) Two different sections for the same work not aligned to optimize operations: Leading to
duplication of work and efforts especially when same products were being made parallel.

b)

Unsystematic allocation of orders: The order decisions usually follow a particular system.
However the urgent order TGSX-115 seems to have been allocated solely based on request,
bypassing the existing system.
c) Political influence
d) Interdepartmental conflict: The Industrial Engineering Department was responsible for
framing the standard time for each task for the Works Department. Constant
disagreements on the fixation of standard time engendered an undying animosity between
the two departments.
e) Union management tensions: The union clearly had an upper hand in matters, and this did
not go down well with the management and also hindered certain decision making (such as
changing the decade old time studies).
f) Ineffective communication of decisions: The decision for loaning of parts from section 2 to 1
had been made at the section head level, but failed to percolate down to the concerned
workers.
g) There are 110 supervisory staff and 350 workers roughly a ratio of 1:3 which prima facie
indicates that there is overcrowding at the top levels.

Critical Success Factors


1. Quality and reliability: The end users stress hugely on quality as a breakdown of their
equipment will lead to disruption of their operations
2. Timely delivery of orders: In order to retain clients, it is important to deliver orders in a timely
fashion and in accordance with the specification.
3. Low cost: In order to stay competitive, especially in view of the bidding process and after the
entry of Chinese players into the Indian market, low cost is a critical factor.

Proposed changes
1. PI system: Remove the standard time studies for the standard jobs as this leads to workers taking
undue advantage of their progress on the learning curve.
For repetitive works, follow pay dependant on the number of units produced.
The current system yields a lower PI when a section has more idle time, thus inducing unhealthy
competition between the two sections. Overcome this by basing the incentive on time taken to
complete
the
job
instead
of
using
total
attendance
hours.
Job
1
2
3
TOTAL

Std Time (in hrs)


30
40
60
130

Current system of scoring = 130/200 = .65 (where 200 is the available attendance hrs)
Proposed system

Revise the standard time along with increase in pay-out, in order to align the system as
well as secure approval of the union.
Job
1
2
3
TOTAL

Std Time (in hrs)


30
40
60
130
30

40

Assumed completion time (hrs)


40
60
90
200

60

30(40)+40(60)+60(90)

= 0.65
130
The incentive can then be found from the same table that was in place earlier.
New system =

The new formula will give same or slightly higher pay as compared to the old system,
making it easier to obtain union consent. This change be negotiated during the next
cycle of pay revision talks.
Also establish a system that looks into why there are deviations from standard times. If
its a problem with the equipment, look into maintenance. If its the work process
followed by the worker, ensure rectification and training.
2. Executive appraisal system: Balanced scorecard approach has been successfully
implemented only by 20% of companies. Analyse the metrics on which the framework is
based. Instead of the apex committee leg of the appraisal process, the managerial
potential can be factored in during the annual joint meetings between the department
heads and the seniors who had evaluated the employees. The normalization process
should
be
made
transparent.
Cascade metrics from the top to the departments at the bottom.
For example the marketing department, one of the KPIs would be number of orders bid
successfully. This is then the basis for the procurement and planning department. The
works department performance is not to be linked to the availability of materials as that
is the responsibility of the procurement department and so on.

3. Allocation of orders: The existing system must be adhered to strictly while allocating
orders. The procurement team is also to be included in the same. For rush orders,
constitute a management team to track order till completion of hand-over to the client.
4. Improve communication channels, especially between the workers and the management
and
that
between
departments.
5. Pay with group threshold for workers Group members become eligible for rewards,
which are individual performance based, only after the group achieves its target.
6. Measurable quality indicator Has been postponed pending talks with the union, instead
implement this in a speedy manner.
7. Merger of two sections or introduce order allocation/ inventory management system in place

Decision criteria and Evaluation


PI SYSTEM

Existing system

Proposed system

Internal alignment
Quality
Ease of getting union
approval

N
N

Y
Y

PAS for supervisory staff

Existing system

Proposed system

Internal alignment
Transparency
Employee motivation

Y
N
N

Y
Y
Y

Action Plan and Timeline


1.
2.

3.
4.
5.

For the current issue between Mr.Kurien and Rabindra, first an inquiry committee must be set
up to probe into the matters and further decisions can be taken after the committee reports.
The urgent order TGSX-115 will be completed with high priority. And the compensation for the
section 2 workers will be taken up as an exceptional occurrence. If possible an order from section
1 can be transferred to 2.
Efforts to improve communication can begin instantly.
The team for tracking rush orders can be constituted instantly.
The proposed changes in the PI system can be negotiated with the unions as soon as possible. Set
a target of one month for the completion of the talks.

6. The PAS for the supervisory and executives can be remodelled after the top to bottom goal
alignment. The alignment should take 2 weeks and the changes in the PAS another extra two
weeks.