Case Study: Yong Woodworks

Dear Assignment Researchers (especially those from U21Global): I am aware that this assignment has been googled (I track my site referrals). In the interest of mutual sharing and research, and to protect myself, I would like to request that you put a reference to this page if you intend to use any information within. The Prof is not stupid – if you can google this site, he can too.

The team that was assigned to do this assignment originally consisted of 4 of us (one Singaporean and three Indians). Three dropped out, and eventually only I worked alone for this. It was one of my worst team assignment experience ever. It was only later that I found out that my coursemates were not doing the MBA but taking a stand-alone module sponsored by their company!

Section 1: Summarise the Situation

Part 1: Briefly summarise the company’s history and events leading to the current work situation. How would you characterise the current state? What is the desired state?

The company began as a manufacturer of up-market quality furniture catering first to the Hobart market, and then to the domestic market (mass-produced items), and built that as its brand since 1962.

The company currently maintains its lead and reputation as a premier furniture maker, but has been facing pressures on profit margins and schedule. The current HR system and the work process contribute significantly to these pressures. If left unchecked, the company is likely to face stagnation or even major losses due to the strengths of competitors in these two areas.
The company has to increase its profit margin and to improve its delivery schedule to its customers. Even without new products, once the company has solved these two problems, it should be able to move on with the new products – without sacrificing quality by seeking to cut costs from raw materials. The company should be able to move on to greater heights from there.

Section 2: Define the Problem

Clearly define the nature and scope of key problems faced by YWC. List problems in the form of problem statements, then provide “symptoms” or evidence to support your claim that these problems exist. Please organise the problems by category: work, people, formal organisation and informal organisation.

Work

These are problems faced by the company due to the tasks or jobs required of the people hired.

1. The company has to keep its brand image, but yet keep a broad enough product line at a reasonable cost. Ee Leen’s financial analyses of trends indicate the threat they face from competitors able to price them out of the market, but destroying the brand name of the company by adopting competing business methods may cost the company.

2. The company’s present machinery and processes are no longer able to keep up with the orders. The machinery (and the process needed to operate them) as well as the process needed in command-and-control of the operating staff are outdated. The lag in order fulfillment from manufacturing, pointed out by Ee Leen, attested to that.

People

These are problems faced by the company due to the nature of the workers hired.

1. An important group of skilled workers are not keeping up with the demands of the times (new manufacturing processes). Ian’s concerns over the “old-timers” inability to handle computerization and new manufacturing equipment bore testimony to that.

2. At the same time, these workers need to stay on with the company to keep the current manufacturing orders stable and filled. Any major changes that would affect the skilled workers, if not handled properly, may cause an exodus that will affect the company.

Informal Organisation

These are problems faced by the company due to the informal interactions between the staff.

1. Both the VP of Manufacturing and the CEO appear to have different visions for the company, and clashed over it. Ee Leen appears to want to move the company towards mass production and the global markets, while Ian felt that the company should stay true to the vision set by his mentor the former CEO, of high-end quality products.

Formal Organisation

These are problems faced by the company due to the structure and policies in place.

1. The Pay Structure gives incentives for neither speed nor quality of work. Ee Leen has pointed out that deadlines have been missed, as much as 50% of orders – this is a very bad portent for continued business relationships with customers. Ian has noted that many of the “old-timers” continued working out of pride, so quality is possible there only because of intrinsic personal pride of the workers, rather than the incentives.

2. The existing two-shift structure of the company could not cope with the existing orders, much less expansion. Again, we return to the point raised by Ee Leen – as much as 50% of orders have missed the deadline.

Section 3: Diagnose and Synthesise Causes

Identify what is causing problems using the 10-questions process to diagnose root causes of the problems identified in Section 2. After listing all causes, reduce the list of causes to root causes.

10-Questions Process:

Work

1. Are the problems caused by certain types of work not being done (or not being done properly)?

The work produced is of quality standard, but unfortunately is not able to meet the current deadlines demanded of the workers. At up to 50% of production orders, this is serious.

People

2. Are characteristics of people, such as abilities, skills, motivations and personalities, causing problems?

A notable number of workers are not working for money, but more to keep at a job – in other words they are working for leisure. These workers may not be easily motivated to work faster.
Also, these are the same workers who have a lot of experience with the kind of product the company produces and yet may have trouble with new machinery and processes that the company would need to expand and grow.

Informal Organisation

3. Is organisational culture (values, norms or informal roles) causing the problem(s)?

The company has grown because of the attention paid towards quality of products. This appears to be a strong value throughout the entire manufacturing division.
In addition, the workers have become accustomed to hourly wages and increments based on tenure. These helped to shape the values of the workers, giving no incentive to time-sensitive demands in production.

4. Is socialisation causing the problem(s)? (eg, a wrong initiation rite? cultural training? leadership?)

Socialisation does not appear to be the problem here. The leadership appears strong and visionary in all divisions. There were no indications of proper or improper initiation rites or cultural training in creating the present situation of the company.

5. Is conflict causing the problem(s)?

There currently is conflict between the values of Ian and the rest of upper management (who are firmly behind Ee Leen). Ian believes firmly that Ee Leen’s vision would destroy the company, while Ee Leen’s beliefs were precisely opposite.

6. Is power or are politics causing the problem(s)?

While the conflicts were between a VP and the CEO, the conflicts did not appear to due to power or politics.

Formal Organisation

7. Are the staff groupings causing the problem(s)? Are there too many or too few levels of hierarchy? Are there too many or too few departments and subunits? Are the wrong types of tasks grouped together?

Two shifts of workers are evidently not enough for even the current production level, much less talks of expansion. The way the company is organised, however, does not appear to cause the problems faced by the company.

8. Are the linkages causing the problem(s)? Is enough information flowing up and down? Is enough information flowing across departments?

The fact the Ian and the other divisions can voice out their concerns to each other and to the CEO, without getting offended (it appeared to be so from the limited information given) or overly-defensive should be enough evidence that linkages is not the cause of problems faced by the company.

9. Are the management processes causing the problem(s)? Is a wrong staffing system causing the problem(s)? Is a hiring, promotion or layoff system causing the problem(s)? Is a wrong planning and control system causing the problem(s)? Is a wrong reward system causing the problem(s)?

The training system appears to be weak, as it appears that a lot of residual experience from the “old-timers” is not being passed down. The fact that an exodus of these workers can aversely affect the company has been pointed out by Ian.

The reward system is also insufficient to overcome the problem of meeting deadlines. With a fixed wage tied to tenure, the person who completed 10 quality items is being paid the same as the person who completed 5. There is thus no incentive for a worker to increase output.

External Culture

10. Are characteristics of the external culture in which the organisation exists causing the problem(s)? Is friction among the organisation’s people, the formal/informal organisation and the environmental culture causing the problem(s)?

Little evidence of this can be seen in the limited information given. The parties external and yet related to the company (government, suppliers and customers) do not appear to be creating the trouble the company now face.

It would appear though, that the change in manufacturing processes (new machinery) adopted by competitors, as well as their use of cheaper raw materials, has been putting pressure on the company and may eventually overwhelm it if appropriate measures are not taken soon.

Synthesise Causes

Once you’ve identified possible causes, synthesise them and list only the final root causes in the table below.

Root Causes

1. The company’s current machinery could not produce enough to meet demands.
2. The company’s reward system is inadequate to motivate the workers to produce more.
3. The company’s present training management process is unable to assure redundancy.

Section 4: Generate Solutions

Part 1: Brainstorm Solutions

List the root causes and generate 1-2 possible solutions to resolve each.

Root Causes vs Solutions

1. The company’s current machinery could not produce enough to meet demands.
- Purchase new and more efficient ones and train the workers to use them.
- Increase one more shift to make the factory a 24h production facility.

2. The company’s reward system is inadequate to motivate the workers to produce more.
- Change the hourly wage based on tenure to one based on the quantity of quality products (passed by QC) produced.
- Change the hourly wage based on tenure to one based on bonuses for shift production and company earnings.

3. The company’s present training management process is unable to assure redundancy.
- Create a special allowance for “mentor” workers who are retired, to teach their skills.
- Phase in the machinery and training over time.

What criteria did you use to select the solutions?

1. It must not create more problems than it solved.
2. It must not create too much cash outflows for the company, and these cash outflows should be kept to a reasonably length, within a year.
3. The experienced workers must be kept, as much as possible, within the company.

Part 2: Implementation Plan: Priorities and Rationale

Review the list of solutions. Prioritise the order in which solutions should be implemented and provide rationales for your prioritisation.

Solution vs Rationale

1. Increase one more shift to make the factory a 24h production facility. This is actually the very first step in a series that would create a domino effect.

The additional shift would create open positions and new workers who are more agreeable to change and more willing to learn (assuming HR does its job). These new workers would also have the effect of “diluting” the “old-timers” ratio within the company.

Increasing the shifts means that new machinery can be phased in over time, throughout the entire 3 shifts, rather than disrupting the entire factory with new equipment at one time.

2. Change the hourly wage based on tenure to one based on bonuses for shift production and company earnings.

The workers should be made to understand that it is everybody’s effort that will increase their earnings and pay. Regular bonuses (quarterly) may be felt more quickly, especially if the production figures and targets are publicly shown.

Since it is a shift target rather than an individual target, the “old-timers” will not feel so bad that they are “dragging down” the shift.

3. Phase in the machinery and training over time.

A third of the machines should be replaced with new ones first – the new workers, as well as any “old-timers” keen to try out new technology, will operate them.

Training will be provided eventually to all, in phases. The more experienced workers should be encouraged to use the machines occasionally, even though they are still working on the old ones.

Eventually, over the course of the year, all the machinery will be replaced with new ones, and any old-timers who feel they should leave by now would have done so, minimizing the impact of a rash of resignations.

4. Create a special allowance for “mentor” workers who are retired, to teach their skills.

In the event that workers threaten an exodus, use this to encourage at least some to stay, and to “teach” the newer workers to use the older machinery while it is being phased out.

The making of furniture should have certain transferable skills not tied to machinery, and the “old-timers” (their livelihood is not being threatened anyway) can still feel appreciated for a while until their time is up.

5. Purchase new and more efficient ones and train the workers to use them.

In the event that the exodus of the workers occur anyway, this solution should be brought in. Everything would be new anyway. This is, however, a worse-case scenario.

6. Change the hourly wage based on tenure to one based on the quantity of quality products (passed by QC) produced.

Once the above scenario and solution generated by #5 really occur, the new workers should be receptive enough to this method of reward. Again, this should be considered a worse-case scenario as solution #2 should still work even with this situation in place.

Section 5: Plan for Contingencies

What difficulties do you anticipate in implementing your solutions? How can you manage those consequences so that the change process is not derailed? Use the following questions to guide your analysis.

• What positive and potentially negative consequences can you anticipate?
• What types of resistance will you encounter, and how will you manage it?
• What uncertainties will you encounter, and how will you manage it?

Positive Consequences

1. The company has excess man-hours due to a more efficient manufacturing process.
2. The company is able to produce new produce lines without compromising on the quality of its product.
3. Important skill-sets on furniture-making are passed down to the new workers, and a system of training set in place.

Negative Consequences

1. The company’s production is adversely affected by the exodus of a group of experienced workers. This is likely due to the resistances and uncertainties encountered by the workers.
Resistances Possibly Encountered
1. Fear of the new technology. The workers have been accustomed to the older technology and may fear the new technology. The technology has to be gradually assimilated, co-existing side-by-side with the familiar and old. Training needs to be sensitively done, preferably in an authentic and on-job-training style.
2. Self-interest. The workers may prefer their more leisurely working style, and may resist the additional time needed on top of their production schedule to learn new technology. Peer pressure/pleasure from changing to a shift-based bonus system should help with that.
3. Lack of self-confidence. The experienced workers may suddenly feel their obsolescence and react negatively. The old technology is something they were at least good at and could derive pleasure of superior knowledge. These workers may still leave in the end, but the objective is fulfilled – they would have remained in the facility until the machines have been totally replaced.
4. Homeostasis and Habit. Learning new habits take effort and time, and generally man does not like to take the additional effort. The managers would have to appeal to one important element – their sense of attachment to the company. Putting a sense of emergency should help galvanise the workers into action, especially since this is the first time the management would be presenting the scenario (avoiding cases of Cynicism).

Uncertainties Possibly Encountered

1. Workers wondering if the change was necessary. This is crucial, especially since it involves a key personnel – Ian the VP of Manufacturing. Ian must be won over by convincing him that there will be no changes in the quality of the products made. He must also be convinced that the brand name will still be preserved even as the changes occur.
2. The ability of the experienced workers to handle the change. The key technologies coming in will improve manufacturing processes but there is currently no information on how well the workers will take to the change. Also, a training mentality is new to many of these workers, and some of them may view the company’s approach with skepticism. They may also not be happy with the new wage structure and still decide to leave. The contingency solutions #5 and #6 would have to be employed in such a situation. It is less than desirable but at least the company will still be functioning, albeit at a reduced level temporarily.
3. The Personal Concerns of the Workers. Even if the workers are prepared to move with the new machinery, their concerns must be addressed. The fact that the new pay scale ties the bonuses to the entire shift means that the pressure is not really so much upon them but upon the entire shift. This should relieve some of the pressure of personal fault-finding somehow, yet give enough impetus to learn.