1.0 Identifying main decisions/issues
Alpha is faced with a prospect of
dwindling profitability as a result of the plummeting of world oil prices and
Davidson’s main challenge is to return the company to profitability in light of
the prevailing circumstances. After a close examination of the situation,
Davidson decides to adopt a two-pronged solution whose components were:
improving cost effectiveness by cutting waste and refining operational
procedures; and improving productivity through enhanced performance standards
and motivation.
The first component was
implemented by putting installing new technologies that would help in
minimising the level of wastage in the organisation. Steps aimed at improving
productivity focused on empowering teams and providing them with tighter
targets to encourage them to work to their full potential. These are crucial
ways of motivating employees. However, subsequent altercations with the head
mill supervisor Mr Ang and his resultant dismissal led to the plummeting of
employee morale with all efforts aimed at motivating them proving futile.
Motivating employees to master the new systems and work to their full potential
is therefore Davidson’s main challenge at this point.
The approaches proposed
were expected to have the overall effect of improving the profitability of the
organisation despite the low prices of products.
2.0 Analysis of Issues and
Decisions
2.1 Contextual background for
decisions made
The decision making process is a complex
process that involves finding solutions for problems ailing individuals and
organisations with the main steps being problem recognition, setting
objectives, generating alternatives and selecting the most viable alternatives
before implementing and monitoring the implementation to gauge success or
failure of the same (Gitman, 2005).
Even though the
company’s problems are introduced as external, the problems at Alpha
plantations were both internal and external. The internal environment in
organisations refers to factors within the control of the organisation such as
operational efficiency, productivity, possession of required skills and
possession of the right technologies (Sabherwal, 2011). External factors on the
other hand are factors beyond the control of organisations and could include
political, economic, legal, environmental and technological factors. Economic
factors could include economic instabilities and price fluctuations in the
market among others. In oft times, organisations are tempted to focus on the
difficulties posed by the external factors without concentrating on internal
factors that may be contributing to their predicaments.
In the case of Alpha
Plantations, the external factors are mainly economic where the prices of oil
prices had plummeted causing the prices of palm oil to dip as well. As a result,
the company’s profitability was threatened. One main characteristic of external
factors is that they are beyond the control of the organisations affected. For
instance, Alpha’s options were very limited in terms of influencing the pricing
of their products and this prompted focus on the internal environment for
solutions. It is not uncommon for organisations to turn to their internal
environments when faced with heightened rivalry whose effect is often the
downward movement of average product prices. Internal efficiency brings
operational costs to a minimum hence allowing an organisation to charge lower
prices for their products and maintain profitability.
2.2 Decision element I: Improving
productivity
Productivity can be defined as the
output per unit input. In other words, higher levels of productivity involve
larger outputs with lower amounts of inputs both in terms of labour and other
inputs. In most cases, productivity is used interchangeably with labour
productivity which generally equates the amount of input to the number of
employees employed in an organisation (Hilmola, 2005; O’Brien and Weder, 2003).
An organisation that produces more with fewer employees can be said to be more
productive.
Davidson’s approach to
improve the level of productivity was to reorganise the working teams that were
more independent and which were provided with more stringent performance
targets. The raised performance targets were ostensibly introduced to push
employees into working harder and producing more. Performance targets have been
known to help in improving the performance of employees especially where
objective appraisal systems are in place and where the rewards for good
performance are good.
Davidson however fails
to implement his idea on cutting down on the number of staff and instead simply
introduces new technology. One of the main advantages of cutting down staff is
the ability of the exercise to instil a culture of achievement and high
productivity in organisations. This is of course in addition to the reduction
of the wage bill. This failure to shake up staffing could be said to be partly
responsible for the continued difficulty in the organisation.
2.3 Decision element II: Improving
employee motivation
Employee morale is said to be a crucial
determinant of the productivity of employees. Decisions to improve productivity
must therefore factor in employee morale/motivation as well. Employees can be
motivated by a number of factors in organisations with the main factors being
monetary rewards, compliments, empowerment, provision of a healthy workplace,
involvement in decision making and others (Althouse, et al., 2011). Motivation
can also be enhanced by introducing challenging goals that could provoke an
employee to work at achieving it. A motivated employee in turn puts in their
best efforts and improves productivity levels significantly.
Davidson targets
employee motivation by granting some level of autonomy to the working teams.
This is a break from their previous experiences where they would basically be
dictated to on how to work and therefore never owned the process. In addition
to this, challenging targets are introduced to get employees to strive to work
harder and raise their outputs. However, these approaches fail to produce the
desired results due to lack of total change from the old system to the new one.
2.4 Decision element III: Improving
operational efficiency and cost effectiveness
The introduction of new machines and
technology was aimed at cutting down on wastage. Waste eats into the profitability
and its minimisation implies that fewer raw materials are used hence lowering
operation costs. The automation properties of new technologies also enable
fewer employees to produce the desired output hence allowing the organisation
the liberty to do away with excess staff (Baik, et al, 2010). New machines also
tend to breakdown less often hence requiring lower maintenance expenditure
while contributing to the high quality of products. Davidson introduces new
machinery and technology to achieve this goal.
Operational efficiency
on the other hand refers to the ability of the organisation to operate
flawlessly and to the desired standards (Hejna and Hosking, 2004). This calls
for the resolution of bottlenecks that could halt production from time to time
and ensure that the time allocated for production is fully utilised in the
production processes. This calls for elimination of unnecessary stoppages and
scheduling maintenance activities in a manner that does not interfere with
normal operations.
Having identified that
there were unnecessary stoppages in the work, it is expected that the new
shifts would be organised in a manner that ensures that no unnecessary
interruptions in production are borne to make room for maintenance. This
assumption is made based on the observation that maintenance interruptions are
not mentioned among the issues dogging the company after the raft of reforms
were implemented.
2.5 Hitches in implementation and
analysis of decisions to be made
Flaws in the smooth implementation of
the plans appear to be related in part to the manner in which the whole process
was undertaken. Davidson appeared to ignore the principles of organisational
change as well as the importance of employee involvement in initiating major
changes in organisations. A change in the organisational culture where systems
of operations would change significantly appears to have been little understood
even by the head mill supervisor and this signifies inadequate or absence of
discussion of the same (Burnes, Cooper and West, 2003). This is exhibited
clearly when employees declare that they would support Davidson out of trust
even if they did not understand his approach. Employee empowerment and
involvement is a crucial component of employee motivation. It enables them to
own the process and do their best in understanding and implementing it. This
element of dedication is lacking and could be attributed to lack of involvement
from the very beginning.
Organisational change
management principles also call for a diagnosis of employees’ current roles and
a description of how such roles are meant to differ under the new systems. Mr
Ang was already used to a hands-on approach in managing the production
facility. He was therefore foreign to the idea of stepping back and letting his
subordinates make mistakes and learn from them. This causes him to interfere
with the learning processes of the teams through his frequent interventions and
authoritative approach in directing groups. In the end, the creativity and
commitment of the teams is not improved and the high targets set cannot be
achieved.
Davidson also fails to
appreciate that Mr Ang is a non-managerial staff and is therefore not likely to
be well versed with the essentials promoting natural growth in autonomous groups.
He simply knew how to exercise active control and take personal responsibility
of all eventualities. Identification of employee training needs is very good in
change implementation in organisations. Any changes require that certain skills
be possessed by employees and it is the responsibility of the managers to
ensure that the same is done. Davidson also fails to handle the situation with
Mr Ang properly when he makes the decision to dismiss him after a disagreement.
He ought to have appreciated the fact that Mr Ang was a source of inspiration
to the rest of the workers who would the feel disheartened by his departure.
The process of getting Mr Ang to act within expectation would certainly have
been easier than the daunting task facing him of ensuring that employee morale
and productivity is raised substantially.
In the present
circumstance, Davidson could either reinstate Mr Ang to restore employee morale
or employ other avenues such as empowerment, greater involvement and reward
systems to restore employee morale. Even though the first option would have an
immediate effect, it would entrench indiscipline in the organisation. Besides,
it would signify a return to the status quo where one person held all the
technical information in the organisation. Upholding the decision to dismiss Mr
Ang would leave a vacuum in terms of knowledge of the operations and this would
prompt team members to embrace greater involvement in resolving the problems.
Even though this option would be costly in the short term, it is likely to be
more beneficial to the organisation in the long run.
3.0 Discussion of Alternatives
Improvement of motivation and subsequent
productivity of employees could have been done very adopting a more
consultative approach to problem resolution. Involving employees would have led
to wastage of time as it would have taken longer for them to adopt the ideas as
is common with group solutions. However, it is this discussion that would have
enabled the employees to embrace the new system and give their all to ensure
that the systems are implemented as they should. Davidson’s attitude towards
employee involvement is also seen in his handling of Mr Ang who was an
important asset to the organisation and a source of inspiration to fellow
employees. The implementation hitches that resulted from Mr Ang’s poor
understanding of a new system could have been prevented by ensuring that Ang is
well trained for his new role. His objectives would change from being
responsible for the smooth running of the machines to the smooth operation and
independence of the reconstituted teams.
There is also little
mention of reward systems for employees despite the introduction of very high
targets. Rewards are very effective tools for promoting higher productivity
levels in organisations. However, the excessive use of rewards have been
decried as counterproductive especially where the improvement in productivity
is overshadowed by the amount spent in rewarding the employees. Davidson would
have to deal with higher wages through rewards and this could threaten the
profitability he wishes to improve through enhanced productivity.
The decision to cut
wastes by introducing new machines and automation was well founded. However, it
was only implemented halfway. The automation was expected to have the effect of
reducing the demand for labour and this would have made it necessary for the
organisation to retrench some of its employees. This would have had the effect
of lowering employee morale substantially. However, since retrenchment would
have been based on productivity, this would have had the effect of highlighting
the importance of productivity and provide a motivation for employees to secure
their jobs through enhanced productivity.
4.0 Recommendations
Organisational change is bound to occur
from time to time and managers should be able to apply the changes
systematically for it to be effective. The decision making process is the first
step in organisational change where the manager diagnoses the problems in the
organisation and maps a way forward (Branson, 2008). The decisions would then
need to be introduced into the organisation in a manner that ensures that
employee participation is maximised.
The implementation
process should begin with getting employees to embrace change by making the
need for urgent change imperative and getting them to appreciate that things
have to be done differently if the organisation is to survive. Discussions
would then be initiated on the different approaches that could be adopted
before the decisions arrived at by top management are introduced in form of
proposals and their viability determined (Vakola, Soderquist and Prastacos,
2007). Ratification of such proposals would be crucial in getting employees to
own them and participate fully in implementing them.
Once proposals have
been identified, the roles individual employees are identified. A diagnosis of
skills needed vis-à-vis skills possessed is done and training needs identified.
Training is crucial in implementing change in organisations. A good example is
the poor performance of Mr Ang whose performance and subsequent disappointments
led to his dismissal. A skilled employee of his stature and expertise was an
asset to the organisation and had he been better prepared for his new role, the
implementation would have yielded the desired results.
As can be seen, the
diagnosis done by Davidson was accurate and so were his proposed solutions to
the problems of the organisation. However, the implementation process was not
as smooth and it is therefore recommended that better application of the
principles of organisational change be done to ensure effective implementation
and delivery on the desired goals.
Referees
Althouse, N., Rose, S., Allan, L., Gitman, C.M.,
2011. The Future of Business. 3RD
Ed. Nielson
Baik, B., Chae, J., Choi, S., Farber, D.B., 2010.
Changes in Operational Efficiency and Firm Performance: A Frontier Analysis
Approach.
SSRN Working Paper Series, Sep 2010
Branson, C.M., 2008. Achieving organisational change
through values alignment. Journal of
Educational Administration, 46(3), pp. 376-395
Burnes, B., Cooper, C., West, P., 2003.
Organisational learning: The new management paradigm? Management Decision, 41(5/6), pp. 452-464
Gitman, L.J., 2005. The future of business, Mason, Ohio : Thomson/South-Western
Hejna, w.j., Hosking, J.E., 2004. Five Critical
Strategies for Achieving Operational Efficiency. Journal of Healthcare Management, 49(5), 289-292
Hilmola, O., 2005. Total productivity measurement
and competitiveness: towards ensuring sustainable business performance in
manufacturing organisations: a literature review. International Journal of Process Management and Benchmarking, 1(1),
pp. 45-62
O'Brien, J., Weder, B., 2003. Stimulating
productivity in complex global organisations. European Business Journal, 15(3), pp. 112-121
Sabherwal, R., 2011. Business intelligence : practices, technologies, and management / Rajiv
Sabherwal, Irma Becerra-Fernandez. Hoboken, NJ : Wiley
Vakola, M., Soderquist, K.E., Prastacos, G.P., 2007.
Competency management in support of organisational change. International Journal of Manpower, 28(3/4), pp. 260-275
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