Management and Strategy

There are 4 types of professional practices

1. Pharmacist: Where customers know what like an aspirin and they want it at lowest price.
2. Nurse: Here the focus is not just on providing aspirin but on ability to council and guide the client through a process. Customer wants to be involved in decision making process
3. Brain Surgeon: Here customer has a problem and he wants a solution from a expert. He does not want to know how you get the solution.
4. Psychotherapist: In this case customer has a serious problem for which he needs and expert but he wants to be part of the process of solving the product.

    
    

 

Source: What kind of provider are you? (True Professionalism). Free Press.

Following are approaches to determining pay

• Merit Pay – pay for the job; based on the role an employee plays in the organization and how well s/he performs the role
• Person-Based Pay – pay for the person; based on what an employee brings to the job
• Results-Based Pay – pay for results; utilizes variable pay to reward results

Most important is to strike the balance between cost perspective, employer perspective and employee perspective.

 

 

 

 

 

 

 

 

 

 

 

Source: Mercer Human Resource Consulting, 2004

Another model for employee compensation that links Business results to employee compensation is Rewards of work model.

 

 

 

 

 

 

 

 

 

 

 

Source: (Segal/Sibson, 2006)

One challenge facing every organization is compensation of employees. Following is Total Rewards Framework which provides a framework to look at compensation as a complete package.

 

Source: Wilson, T. B. (2003). Innovative reward systems for the changing workplace

Following are 2 primary approaches in human resource management

Control Approach: The goal is to reduce labor costs or improve efficiency by enforcing employee compliance with specified rules and procedures and basing employee rewards on some measurable output criteria

Commitment Approach: This system shapes desired employee behaviors by forging psychological links between organizational and employee goals. The focus is on developing committed employees who can be trusted to carry out job tasks

 

I think Control approach never works, this was the traditional approach used in core manufacturing units. Commitment approach is the one companies should be using.

Progressive Bundle System: Each operation is done by a single worker operating a stationary sewing machine. Each worker receives a bundle of unfinished garment. Worker then performs a single operation on each garment. This system creates high level of Pace and labor productivity. The side effect is creation of huge WIP inventory. 90% of times inventory is sitting for worker to act upon.

Modular Production System: This groups tasks and assigns them to members of a module. Although most operators in the module still spend the majority of their time on a single assembly task, opeators do move to other tasks if work is building up at some other step. Compensation is based on module’s output. Modules are partially self directed and operators determine task assignment, pace and output targets. This systems reduces the buffers between assembly steps.

It’s not vision that makes a company successful. What sets the top performers apart is the organizational models they develop to realize their aspirations.

Organizational performance is the result of all the effort and activity that goes on inside a firm. Concept of Decision rights helps in defining: who gets to make what decisions; and what information, constraints, tools, and incentives affect the way they evaluate those decisions?

Clear Reporting/Organizational structure is key to success of a business. Lack of clarity creates total chaos in the organization and reduces accountibility. U never want company CEO questioning a developer about what he/she is doing…:)