Identify the problem statement ( Organizational level) who, what and why.

CASE STUDY:

It's Not My Job!

Dennis was not surprised to hear the company CEO, Tom Hughes, say that the time for change had come.Though the Hughes Motor Company was financially sound, its profits were being eaten away by a growing quality problem.Both scrap and rework were up by 7% over the past year and, Hughes being a small company operating on a narrow profit margin, the pinch was being felt.

"If the problem is not solved quickly," said Tom Hughes to the assembled department heads, "we will have to pass the cost of our quality problem along to our consumers and that is likely to weaken our competitive position in the marketplace. With several Japanese firms planning to introduce products into this market, our share will be hard to hold even without a price increase." Dennis understood the situation. He had worked his way up the ladder during his ten years with HMC. He knew the business from the ground up and thought he knew where the company's quality problems were coming from.

HMC had been in business for almost nineteen years, and as the demand for their product (fractional horsepower electric motors) had grown, so had the company. The plant now employed about four hundred people, mostly from the nearby community of Elkton, a small town having a population of about three thousand. In many ways, the assembly-line process employed today was not much different from when the plant first opened. Due to the small size and delicate nature of the components going into the motors and a lack of investment capital, the company had never made the transition to high tech. The production process was still labor intensive and the performance and durability of the motors was in large part a function of the assemblers' skill and care.It was a growing lack of care on the part of the workers that Dennis thought was the problem. However, not everyone shared his view.

Operation Quality

After Tom Hughes had finished expressing his concerns about rising costs and increasingly competitive markets, he presented his plan of action. The last hour of the department heads' meeting was spent outlining a new quality plan to go into effect next Monday.The key theme of "Operation Quality," as the plan came to be called, was improved inspection. All department heads were to start the ball rolling by meeting the following day with their section foremen. Once briefed, each foreman would be responsible for selling the program to the fifteen or so employees under his or her supervision.

At Dennis's staff meeting the next day, his six section foremen seemed receptive enough to Dennis's presentation. They listened patiently as he talked about the reasons behind the plan, yet they seemed much more interested in the mechanics of the operation. The department heads were to analyze each assembly job on the line and prominently post a list of the four to six checks each employee should make on every assembly produced before the components were placed in a common bin and moved to the next work station.

It was also noted that the twelve quality inspectors employed by HMC were to be much more conspicuous than in the past, with most of them now roving through the plant and doing random quality spot checks. As an additional means of making quality more visible, all outgoing products would have a bright green sticker affixed proclaiming "This product meets quality standards" if the motor had in fact been cleared by the final inspector.

First thing Monday, foremen throughout the plant met with their workers to lay out the details of Operation Quality. After all the line personnel were thoroughly briefed on their new responsibilities, the plan was off and running.

Four Weeks Later

At the end of four full weeks of Operation Quality, the effects of the plan were being felt by almost everyone, though not in the way Tom Hughes had intended. It was true that everyone had become more aware of quality and some departments had even shown reductions in waste after the first two weeks, but Dennis saw little if any improvements in the quality reports for the last two weeks. In fact. conversations he had overheard among the foremen and workers had increased his doubts about the long term success of the plan.

Passing by the break room at lunch on the Friday following the introduction of the plan, Dennis had overheard Mike and Sara, two of his foremen, saying the following:

Mike: I'm really worried about my year-end bonus. With all this quality stuff

coming down, it sure doesn't look good. The way they tie our bonuses

to meeting monthly production schedules and with the additional burden

of riding my people about their assembly checks, I'm eight hundred

units behind on this week's quota.

Sara: I know what you mean. With my son going off to college next year, this

is not the time for me to start sacrificing for the sake of the company.

Besides, what are they paying the quality control people for anyway?

Mike: You got me. I'll keep it up a little longer, but as soon as the heat is off,

I'll meet my quota first and let the quality cops worry about the rest. Just this past Wednesday, Dennis had observed a heated exchange between Hal, one of the senior workers, and his foreman.Almost in tears, Hal had said, "Look, Mister, you pay me to do two hundred brush assemblies an hour. You can't expect me to do that and all these quality checks, too! I'm pretty good at what I do, and if I do make mistakes the inspector will catch them.If old Mr. Hughes is worried about quality, tell him not to bother me. It's not my job!" Other workers listening to Hal's speech had clapped and whistled in support, and as the day went by, many of them came by his work station to pat him on the back.

Dennis was bothered by what he saw. In his interactions with his foremen, Dennis had been complimentary whenever he had found them promoting better quality. However, on only a few occasions had he seen the foremen doing the same with their workers. Dennis often felt powerless in his ability to add more support to the program, given the structure at HMC.

As the compensation plan was presently designed, the foremen were salaried with a bonus awarded at the end of each year based on the ability of each section to meet its production schedules. Each line worker was also paid on an incentive basis with his or her wages based on a standard hour plan. Under this plan, the daily wage for a worker was calculated by dividing his or her total daily output by the standard number of units per hour expected for the given assembly operation to determine the number of standard hours of output achieved. Standard hours were then multiplied by the hourly wage to get daily gross pay.

The Year-End Meeting

At the year-end meeting, Dennis could see defeat in Tom Hughes's eyes as he announced the introduction of price increases throughout the product line for the coming year.Though every box leaving the plant now wore a bright green quality sticker, and the inspectors were better than ever at spotting defects, the costs from scrap and rework were still out of hand.

Dennis couldn't bring himself to blame the workers or the foremen for the failure of Operation Quality, for he understood why they had reacted the way they had. How could he expect them to see the severity of the problem with Japan such a long way from the quiet little town of Elkton? He had some ideas about how the quality program might work but it would require some major changes in the reward and accountability systems.

Dennis couldn't help but wonder if the company could have had more success with the quality program if it had put its money where its mouth was. He struggled to build up the courage to talk with Mr. Hughes as he walked back to his office after the meeting.

Developing a Problem Statement (organizational level)

• Who- State the organization name, and those directly affected by this problem (no individual names).
• What?- are the boundaries of the problem, e.g. organizational, work flow, geographic, customer, segments, etc. - What is the issue? - What is the impact of the issue? - What impact is the issue causing? What OB concepts are impacting this issue?
• Why?- Is it important to fix this problem; what is its impact on the organization if the problem is not addressed/solved?
• Adapted from:http://www.ceptara.com/blog/how-to-write-problem-statement