Operations Management, Employee Ownership, and Leadership Provided by Management I would describe the operations management at New Belgium Brewing to be very well run. Founder, Jeff Lebesch, and co-founder, Kim Jordan, implemented an open-management system in 1996. This means that employees are directly involved in running the company. Employees are given training so that they understand how all of the financials of the New Belgian Brewery work.
Kim believes that understanding the financials helps employees pay closer attention to them. Employee, Doug Miller says, “Once Kim and Jeff decided to let us all know where everything was going, it made it real important for us to keep count of every keg, any cases that are damaged. You know, it all adds up.” After a year of working for the company, each employee is given a share, and treated as a shareholder. Employees have a say in the overall direction of the company, and they work with the owners, rather than for them. This gives employees a vested interest in seeing the company progress further.
The owners see all employee decisions and input as being very important to the success of the company. Chief Financial Officer, Jennifer V. Orgolini says, “How can you really care about the certain small things that are necessary to be done day in and day out if you don’t have a larger purpose behind them?” Since employees are shareholders, the more profit the company makes, the more their share is worth. This creates an environment of employee-owners that all want to work towards making the company as successful as possible. Employees all work at a similar level in separate, focused departments. Although, some departments needs to report certain things to other people and/or departments, no one in the company has more authority than anyone else.
This is known as a decentralized organization, which means that everything is delegated as far down the chain of command as possible. Since employees to do not need to seek approval from managers, they can implement needed changes as quickly as possible. Overall, this system makes for happier, hardworking employees. Co-founder, Kim Jordan says, “I hear it a lot from customers, people who I’ll run into and say, ‘Wow, I was at your brewery and the vibe there is amazing. You can just tell that people really like being there.'” She also claims that, “I think that combination of happiness and extending yourself to have real relationships with people and being excellent here at New Belgium really creates a magical vibe.”
Environmental Responsibility and Sustainability
New Belgium has been working very hard over the last few years to be more environmentally responsible and sustainable. In 2008, the company was used about 158 MJ/hl in energy for the year. By 2011, they dropped that number down to 138 MJ/hl, and hope to drop it to 125 MJ/hl by 2018. The company has done all this by reducing their need for electricity. They have been investing in efficient equipment, installing heat exchangers, and designing their facilities with conservation in mind. In 2010, New Belgium installed a Smart Grid. A Smart Grid allows 2-way communication between the electricity provider and the company.
The electricity provider can determine when New Belgium is running a non-essential function, and sends them a notice to turn it off. In January 2010, New Belgium installed solar panels on top of their packaging hall. It produces over 264,000 kWh each year and contributes to over 3% of the company’s total power supply. Both energy saving installations were partially funded by FortZED. New Belgium has an on-site Process Water Treatment Plant
The Five Functions of Management
The five functions of management are planning, organizing, staffing, directing, and controlling. Planning involves deciding what the company’s objectives are and how to accomplish them. Objectives are the desired end results determined by an organization, they derive from the organization’s mission. A mission describes a company’s fundamental purpose and basic philosophy. Meeting objectives involves three types of general plans – strategic, tactical, and operational. Strategic plans establish the long-range objectives of an organizations, as well as the overall strategy or course of action used to fulfill their missions.
Strategic plans factor in four things, the organizations strengths and weaknesses, as well as potential opportunities and threats. Strengths are the things that a company does well or the characteristics that give it an important aptitude. Weaknesses are things that a company does poorly with, does not have, or areas where it is at a disadvantage. Opportunities are things found in the external environment of a company that could be beneficial, cause potential growth, or be a source of competitive advantage. Threats are also found in the external environment, but hold the possibility of causing damage to a company.
Tactical Plans are short range and designed to utilize the objectives of the strategic plan. They are meant to help keep the company on the course set in the strategic plan. Tactical plans allow an organization the ability to react to unpredictable changes in the environment, so they must be periodically reviewed and updated by management. Operational Plans are very short term plans that determine what specific work groups, individuals, or departments must accomplish to achieve the goal of a tactical plan. Another part of planning is crisis management or contingency planning.
This area deals with potential disasters that a company may face. They may be natural disasters or disasters within the company. Some companies will have crisis management team who deal specifically with these problems, which allows managers to continue to focus on their regular duties. New Belgium Brewery’s strategic plan is to have happy employee-owners who enjoy their job and work very hard to make this company profitable.
They have and are continuing to achieve this with their tactical plan of making employees into owners, training workers to be financially literate, and by allowing employees access to the books. Since employees are given a share of the company after one year, they are treated like shareholders. They work with the owners, who listen to and consider all employee input into the operations. Because employees are shareholders, they work hard to make the company as successful as possible.
Organizing involves structuring resources and activities in a way that accomplishes objectives efficiently and effectively. Managers will review plans and determine what activities are needed for implementing them. Work will be divided into smaller units and assigned to specific departments, individuals, or groups. Most of the time work is organized into teams that handle core processes, rather than constructing around traditional departments, such as marketing and production. Organizing helps create synergy, which means the sum of the whole is greater than the sum of its parts.
Organization also establishes lines of authority, improves communication, helps avoid reproduction of resources, and helps improve competitiveness by speeding up the decision making process. New Belgium Brewery is divided into departments that focus on certain areas of the company. However, unlike most businesses, the departments at New Belgium are not divided into a hierarchy of people with more power and authority than those below them.
The staff in each department work together at the same level and do not need to report to any managers. This gives employees the power to apply any needed changes in the company without waiting for the approval of a manager. Staffing involves hiring enough of and the right kind of people to carry out the work of the organization. Managers must determine what skills are needed for specific jobs and must recruit accordingly.
Managers must determine how to motivate and train employees, how much to pay employees, what benefits should be provided, and how to prepare employees for potential higher-level jobs in the organization. Staffing also involves downsizing, which is the elimination of a large number of people from an organization. New Belgium focuses on hiring people who fit the culture of their company. Staff need to be willing to learn, willing to work hard, and need the people skills to get along with other people in the company.
Also, New Belgium makes employees wait a year before giving them a share in their organization. This gives the owners time to make sure that an employee will fit well with their company and also tests their loyalty. Directing involves motivating and leading employees to achieve an organization’s objectives. Employers may motivate employees to do a good job with incentives, such as promotions or pay raises. However, most employees want more than money. Workers want to know that their ideas and input are of value to their employer. Smart managers know to involve their employees in company decision making processes as often as possible.
This inclusion makes workers feel more important and better about their job, which greatly benefits the organization. New Belgium’s way of directing and motivating their employees is giving them shares in the company and making them employee-owners. Since staff are shareholders, they are a big part of decision making processes. Also, the incentive of owning a share in the company has employees trying to steer the company in a positive direction, so that they reap the benefits along with Jeff and Kim. Controlling involves evaluating and correcting the activities of an organization in order to keep them on course. This involves five activities: 1.Measuring performance
2.Comparing present performance with standards or objectives 3.Identifying deviations from the standards
4.Investigating the causes of deviations
5.Taking corrective action when necessary
Controlling is closely related to planning. Planning establishes the goals and standards of an organization, controlling compares present performance with those goals and standards in order to determine whether or not performance is on target.
When performance is not keeping up with the company’s expectations, employers must determine why that is and come up with a way to get back on track. Because employees at New Belgium do not have managers, and they all work at the same level, they can immediately implement any changes that may deviate the company from their desired course of action.
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Topic: Management of a Business – New Belgium Brewery
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