Blue flowers (Pvt.) Ltd is an artificial flower manufacturing company situated in Monaragala with 350 total workforces. It provides artificial flowers for local and international markets. This has five functional departments namely Purchasing, Sales and Marketing, Production, Accounting and HR. They got a decision to increase production in 14% by last year onwards and an incentive program also implemented. When the carder produces more than the original target, company granted 10%-15% additional incentive. After 6 months company had evaluate their pros and cons and results was as follows, Production increased
1st month – 20%
Lower Quality and Rejection Rate – 10%-15%
After implementing this incentive program production employees complained that the reason of this problem is the slowness of other departments, and also 60% production employees were complained their objections through their Trade Unions. After that TUs called a meeting to its members. 60% employees said that this is not an incentive scheme but just another way of exploiting labor and they suggested a TU action. Then TU representatives met management and informed them that this incentive scheme is not lucrative or equitable. But management said that if they are not in a position to carter to this increase in order in the future, they are in for a heavy loss and as a result they might even consider an employee redundancy plan also. After this meeting trade unions requested some conditions also.
In this case we can identify several Management issues which influenced for the smooth functioning of the company. Those issues as follows;
Organization decided to increase their production and implement an incentive program for employees who had produce more than the original target given. But they did not screen the internal and external environment before implement this production and incentive scheme. They did not done feasibility study, SWOT analysis or a PESTEL.
There was no any awareness program for employees about those production targets and incentive schemes. There was no any target group identification or Job evaluation. Incentive was given without any Performance evaluation therefore other department people (Other than Production dept.) were enjoyed more of this incentive scheme.
Incentive scheme was not lucrative and not equitable. And also it was not conducted in a proper manner. Lower level workers were not reaping any benefits of this incentive scheme.
Given target is not SMART (Specific, Measurable, Achievable, Realistic, Time bound) They only announced to employees that production must be increased by 14%. They did not specify individual goals and objectives or Team goals and objectives. They express organizational goal and tried to achieve it through an incentive scheme. They should have to inform employees through a job description but they didn’t.
Some managers and supervisors considered employees as machines. Also there were biasness in branding low quality and product rejections. In the meeting which held between management and Trade Unions management said that if employees were not in a position to this increase in order in the future, they were in for a heavy loss as a result they might even consider an employee redundancy plan also.
There was no any interrelationship between management and employees. Management implements decisions without having employee’s collaboration. Therefore Trade Unions can influence.
Recommendations with Literature Review
There was no any feasibility study. No any internal or external environmental study. Both internal and external environmental factors are widely influence for the organizational functions. Before take any strategic decision organizational management should scan the internal and external environment. In this case organization is going to increase their production through incentive schemes. That means this organization is going to develop. Organizational development is all about improving organizations performance. But this performance development should be done by facing internal and external environmental changes. To do this organization should scan the internal and external environment. For internal scan organization should implement SWOT analysis and for external scan organization should implement PEST analysis. SWOT
In this case before implement the decision of product increment and incentive scheme organization should have to scan environmental factors. First of all whether existing employees are sufficient for fulfill this current target, if not organization should recruit additional employees to fulfill this target. If existing workforce is sufficient they should have being given a proper Training to do new job well. Existing employees. (Job rotation, Job enrichment, Job enlargement, Training and Development, Promotions etc.)
External employees. (Just in time talent, Identify talent pool, Attract, Gain, Retain) Not only that but also organization should have to conduct a feasibility study. They should scan whether existing technology is enough whether existing machinery or machine capacity is sufficient whether raw material supply is satisfy the given target etc. After scanning those types of internal factors organization should scan external factors also. In this case Blue Flowers did not scan anything about environment they just announced a target and told employees to fulfill it.
No target groups, Awareness program, Job evaluation and Performance appraisals Before implement an incentive scheme organization should have to
point out which group has being given the target. It will be helpful to give incentives for employees who actually meet targets. According to this case Production Department employees are the target group. By identifying the target group correctly other department people will not be able to enjoy incentives without performing towards the target. After identifying the target group organization should inform them about what to do? How to do? When to do? Which benefits can gain through the target?
This can be done through conducting an awareness program or an inauguration. And also the target group can be informing by a proper job description. Not only the target group but also the other department employees also should clarify according to the target to achieve and they also inform by proper job descriptions. Then organization should conduct a Job Evaluation to grade jobs according to its worth. Job evaluation is a systematic comparison done in order to determine the worth of one job relative to another.
It provides a basis for grading and establishes pay structure. After identifying the grades pay structure should established. And the incentive scheme should align with the Evaluation and target group should have being given more worth. According to this case although Blue Flowers implement an incentive scheme they did not conduct any Performance Evaluation program. Through PM organization can measure Actual performance of employees and can compare it with expected performance. Through this measurement organization can identify high performers and low performance and make rewards or punishments.
Incentive scheme was not lucrative and not equitable.
According to this case Incentive scheme was not lucrative or equitable. As production people mentioned other department employees enjoy more of this incentives. As I express in issue 2 it can be prevent by target group identification. Proper awareness, Job evaluation and Performance Appraisal based incentives. According to this case organization can introduce Group Incentive Scheme. Group Incentive Schemes are targeted at improving performance levels or the output among a group of employees. This is like an individual incentive scheme but give pay over and above base salary to all team members when the group or team collectively meets specified standards for performance, productivity or other work related behavior. Blue flowers are going to increase production by 40%.
They can introduce targets to Production team, Accounts team, Sales team, HR team and purchasing team. Then organization can introduce incentive schemes for separate departments as per its worth. But there is a disadvantage. By providing team incentives some employees can enjoy incentives without performing towards target. To prevent this organization can introduce individual performance appraisal system also and they can reward high performers and identify low performers. This will be reduce demotivation of high performers, reduce tardiness, reduce LTO, and mainly can achieve the target efficiency and effectively. Organization also can use motivation theories for implement sound incentive scheme. Basically organization can use Two Factor Theory by Fredric Herzberg, Vrooms Expectancy Theory and Goal setting theory.
Two Factor Theory
Herzberg view that man lives at two levels, physical and psychological level. Several factors lead to employee satisfaction while the other lead to dissatisfaction the satisfiers are called Motivators and the dissatisfies are called Hygiene factors. Motivators appeared to produce motivated behavior and hygiene factors produced dissatisfaction.
Vrooms Expectancy Theory
This says that an employee will be motivated to exert a high level of effort when he believes that effort will lead to a good performance appraisal; that a good appraisal will lead to organizational rewards and that rewards will satisfy the employees’ personal goals. This theory emphasize that motivation begins with a desire for something.
Goal Setting Theory
According to this theory, a person get motivated by following things
The goal should be SMART
They should be challenging but reachable
Goals are seen as fair and reasonable
Individual participation in goal-setting
Feedback ensures that people get a feeling of pride and satisfaction from the experience of achieving a challenging but fair goal
Feedback is used to gain commitment to even higher goal
After evaluating above factors organization can take following steps;
1. Identify the objective properly
2. Consult with staff and trade unions
3. Relate the scheme to the business remuneration system
4. Ensure that the planned scheme is competitive
5. Decide on performance measures for organizational staff
6. Regular review and obtain feedbacks
Target was not SMART
According to this case the given target was not SMART. All organizations have their corporate targets. Those targets are divided into sections and assigned individual departments with those divided targets. Then those individual departments assigned departmental target among their department members. Those are calls individual targets. Those individual targets and departmental targets should fulfill through strategic plans, and those decisions which implement to achieve departmental targets should always align with the corporate target.
When an organization establish a target it should be SMART (Specific, Measurable, Achievable, Realistic, Time bound) and also it should be structured with performance, conditions and standards. Ex: production team should produce 10000 flowers individually, 100% accurately within a given day within given machine capacity.
Biasness of managers and supervisors. No interrelationship among management and employees In this case there was no any interrelationship among management and employees. Some managers/supervisors consider employee as machines and they reject production or brand as low quality as their wish. This is no fair and conflicts, high LTO, high absenteeism, high tardiness can be happened The best theory for the Human Relation is Hawthorne Studies. Elton Mayo was the founder and he did a research in Western Electricals. He searches how the lightning and illumination affect to the worker
performance. From this research he founded that human relations can affect worker performance rather than physical conditions. We all are human being. We all are pleased to have pleasant relationships.
It is a psychological need. In an organization if there are so many good physical conditions but no interrelationship between employer and employee that organization will not be able to achieve its desirable targets. According to this case thre was no interrelationship between employees and management and also biasness was there. As a result employees were get together with Trade Unions for gain their rights. That was a huge disadvantage for an organization. And also in the meeting with TUs management stance that if employees enable to fulfill targets on time they will be implement a redundancy program. That was not suitable and a point of conflict. To prevent this situation organization can
Implement Soft Skill programs for managers and supervisors.
Maintain fair welfare programs.
Implement Participative Management System.
Make standard level of production quality and make aware employees about that.
Then rejection and low quality branding will not be bias.
Blue Flowers (Pvt.) ltd is a leading artificial flower manufacturer which provides artificial flowers for local and foreign markets. They desired to increase their production by minimum 40% but faced problems because of poor environmental awareness, poor targets, and weak incentives. If Blue flowers follow sound incentive system through a strategic plan they will never become unsuccessful in gaining 40% production increment.