Case Study -1
Introduction: XYZ -An Organizational Perspective
The Pre-OD Scenario: Our Strengths and Areas of Concern
In the years 1990-91 XYZ had grown into the largest Indian HARDWARE company with revenues of over Rs. 1100 crores and racing towards achieving its vision of being global top ten. As pioneers in the industry, XYZ’s strengths included on time delivery, premier position in the industry in terms of revenues, focus on training programs, quality initiatives, use of good technical tools and procedures and encouragement of individual excellence in performance. However, XYZ’s was also, at that point in time, grappling with a few areas of concern with regard to its operational paradigm.
Mounting revenue pressures: The pressure to retain its strong premier position led the organization to tend towards short-term revenues, and relatively lesser efforts were being put into medium and long-term markets and activities (such as products and building up knowledge). Though XYZ’s built relationships with individual customers, Relationship Managers largely tended to focus on obtaining short-term projects – there was lesser investment on aligning to long-term objectives of customers. The approach, by and large, was of reactive project management and we were yet to espouse the approach of architecting proactive solutions for the customer.
Selectivity in projects: There was a tangible tension at, XYZ’s between generating revenues and organizing strategically, on basis of technology and business areas, impacting selectivity in projects accepted. Pressures from customers on schedules was resulting in faster delivery and hence, snowballing into further pressure on future schedules.
Focus on specialization: There was diffusion of expertise and we were yet to focus on building strategic expertise in individual centers. Employees were rotated across domains and skills in the interest of learn ability as well as for meeting requirements. In a sense, there was heightened focus on Voice of the Customer, in comparison to the Voice of Employee.
Efforts on Experimentation & Innovation: The management at XYZ’s felt that by and large, employees tended to go straight by the book. Though Dr. De Bono’s techniques were introduced and employees trained on these techniques to encourage innovation, there was a need to scale up on perceived rewards for experimentation.
Rewards and Recognitions: The reward structure at XYZ’s was, at this point in time, primarily focused on individual performance and we were yet to explore the institutionalization of team based rewards at the organizational level.
Inter group co-ordination & knowledge sharing: Sharing of knowledge was very centre-oriented, and although, informally, best practices spread by interaction and word of mouth, we were yet to evolve a formal system which would capture these for ease of replication across projects. Multiple centers and multiple projects within the same centre ended up resolving the same sort of issues, resulting in avoidable rework.
Branding and PR: Image building endeavors were not yet an area of focus and, in a subtle way, this affected the sense of pride of employees. Among educational institutions, this meant greater difficulty in terms of attracting quality talent, which further aggravated stress among the few key performers in the organization. By the year 2002, management felt the conscious need to bring in changes in our approach to the aforementioned areas, in order to align more closely with the customer, business and market requirements at an organizational level.
Questions
1. List the various reasons in Organization xyz, which lead to its development?
2. If the organization had not invested in its employee, would they have developed?
3. Site few examples of Indian companies, similar to XYZ mentioned above?
4. What would have been the drawback of the XYZ Company prior to 1991?
Case -2
The Great US Meltdown: Privatization of Profits, Nationalization of Losses
AIG, Bear Stearns, Freddie Mac & Fannie Mae required government bail-outs. Lehmann Brothers has filed for bankruptcy. Merrill Lynch has been sold. Such grave situation of affairs reflects immense failures in respect of management, leadership and regulation of these firms. The government, like a knight-in-shining-armor, comes to the rescue and lends bail-outs worth a trillion dollars to these companies. Consider the fact that only 12 countries in this world have a GDP more than $ 1 Trillion and a country of more than 1 Billion joined this elite club only last year. This act of bailing-out using taxpayer’s money has been rightly called “The Bail-out of all Bail-outs”. Also this raises serious questions on the way money has been used to protect private companies, which was supposed to be used for benefits of the society by large.
These bail-outs would certainly be a bitter pill to swallow for all those who argued that free market capitalism was the best, and there should be no regulations at all in an unfettered market. And this idea has been most certainly put to rest in the last few days with the US government curbing short-selling and offering guarantees to money market mutual funds on 19th of last month, as it attempted to bail-out hundreds of billions of dollars mortgage debts. This follows the bail-out of three financial giants early last month. The stocks soared in response to these actions. Though this certainly re-affirms the requirement for regulations, but the question arises as to what extent this marks a shift towards more interventions.
It is a fact supported by many leading economists that history suggests that policy makers demand de-regulation during good times and bailing out in a big way at the times of crisis.
The present action does address the short-term problems of liquidity crisis and mid-term problem of dealing with bad assets, but on the longer term regulatory issue, there is no strategic plan in place and that is really problematic. What is required is a complete overhaul of present regulations and not just more regulations. Moreover, the government rushed to rescue these firms without trying many of the private sector solutions.
Questions
1. Is it fine to privatize profits and nationalize losses, is it right for organizational development?
2. Was this a result of failure of leadership of these firms?
Case – 3
Tata Cummins Limited (TCL) is a 50-50 joint venture between Tata Motors and Cummins Engine Co., Inc., USA. Tata Motors is the largest manufacturer of commercial vehicles in India, and Cummins Engine Co. is the largest 200+ HP diesel engine manufacturer in the world. The Joint Venture was incorporated in October 1993 and commercial production commenced on January 1, 1996.
The vision of TCL is to be widely acknowledged and bench-marked as one of the best companies in the world. The company, thus, abides by the following core values: –
- Care for customers
- Obsession for quality
- Care deeply about people
- Do what’s right and not what’s convenient
- Guarantee product leadership
- Responsible citizenship
- Relentless improvement
TCL is a QS 9000 company. TCL Jamshedpur boasts of state-of-the-art, fully air-conditioned diesel engine plant, with a computerized Building Management System for safety and energy conservation. The plant has five major components manufacturing lines for Cylinder Block, Cylinder Head, Connecting Rod, Crankshaft & Camshaft, with the best measuring and gauging instruments to assure Consistent Quality. TCL has very strong systems and IT infrastructure for controlling and facilitating its operations. To further increase overall efficiency and visibility of information, Oracle Applications and a web-based Supply Chain Management System have been implemented in June 2000.
Products
The low emission Diesel Engines manufactured by Tata Cummins are for use in a new generation of Tata Motors Ltd’s Medium and Heavy Commercial Vehicles. The engines conform to EURO-I, EURO-II & EURO-III standards for emissions. The 78 to 235 Horsepower engines have a high power to weight ratio and will enable Tata Motors Ltd. access new markets worldwide with its advantage of emissions, power, oil consumption and durability.
Plant
Tata Cummins has a modern manufacturing facility located adjacent to Tata Motors Ltd., designed by Kevin Roche, John Dinkeloo Associates of USA and C. P. Kukreja Associates of Delhi. The unique plant comprises a fully air-conditioned 182 x 186 m building with pre-cast concrete coffer roofing and 15 x 15 m bays.
The North and South walls are of glazed curtain glass. Features such as a PLC controlled Fire Detection / Suppression System, Skylights and Building Management System ensures high levels of Safety and Energy efficiency.
Organizational Strategy
At Tata Cummins, the organizational strategy is designed by the leadership team which includes the top management and the department heads. The department goals are then formulated in accordance with the organizational goals. These goals are reflected in a document called ‘Goal-Tree’. The tree also contains the action plan, the schedule for achieving the goals, and the persons responsible for achieving them.
As per the Goal-Tree, the three organizational goals for 2005 are: –
- Grow Sales to 853 crores
- Improve PBIT by 10% over last year and achieve 25% ROANA
- Achieve and Sustain the respect of all Stake Holders
The organizational goals are broken down to the strategies. The initiatives for implementing the strategies are then identified. The responsibility for implementing these initiatives is then assigned to respective departments. Further, the tentative deadlines are also reflected. The targets are reviewed quarterly.
Questions
1. Do the core values, really influence and have a impact on organizational development? Explain.
2. Is organizational development depended internally on employees and externally influenced by customers? Discuss
CASE -4
Benchmarking Performance
Key performance indicators (KPIs) are the metrics deemed essential to understanding operational health. Measuring performance allows an organization to objectively determine what is working and what is not. In addition, by identifying successes, managers can reward and learn from best practices.
“Measurement has the power to focus attention on desired behavior and results,” said Gardner. “People will pay attention when they know their job is being measured, especially if the measurement is linked to compensation.” When targets are set using validated, normalized data, measurement will support a means to determine operational improvement. Of course, it is critical to tie process improvement to measures that matter to an organization. In doing so, measures can provide:
- Feedback to guide change,
- Assessment and baseline information,
- A compelling business case,
- A diagnostic tool to identify areas for improvement and set priorities, and
- A basis for communication (using a consistent definition).
Most measurement occurs at the process level, where the transformation from input (resources applied) to output (goods and services) takes place. The four main categories of metrics to assess performance at the process level are:
- Cost effectiveness (e.g., $ 6.22 per invoice),
- Staff productivity (e.g., 93 invoices processed per FTE),
- Process efficiency (e.g., 11.2 percent error rate), and
- Cycle time (e.g., processing time of 3.8 days).
Cost Effectiveness
Cost effectiveness measures tell how well companies manage cost. Normalized data usually include cost per unit, cost as a percentage of revenue, cost as a percentage of total budget, and actual costs versus budgeted costs. Supporting indicators include cost components as a percentage of total and disaggregated cost per unit. Examples of measures follow:
- Customer service/call centers
- Cost per call (or cost per minute)
- Cost per reported complaint
- Finance and accounting
- Cost per invoice
- Cost per remittance
- Human resources
- Cost per recruit
- Benefits administration cost per employee
Staff Productivity
Measuring staff productivity provides insights into how much output each FTE has produced. KPIs include units of output (e.g., invoices and purchase orders) per FTE and workload (e.g., customers and general ledger) per FTE. Supporting indicators can focus on factors influencing staff productivity such as hours of training per FTE and employee tenure. Examples of measures follow:
- Customer service/call centers
- Calls per representative
- Resolved complaints per FTE
- Finance and accounting
- Invoices processed per accounts payable FTE
- Remittances processed per accounts receivable FTE
- Human resources
- Total organization FTE per HR FTE
- Requisitions per recruiter
Questions
1) Measurement has the power to focus attention on desired behavior and results,” How it leads to
organizational development?
2) Discuss benchmarking techniques, are really helpful for succeeding in I today’s scenario?