In order for a company to develop and seek growth, it is necessary to analyse the working environment and make clear thought decisions, when faced with obstacles. For example, between employees and employers. The decision-making process carried out by managers is the foundation for achieving growth in a company. This essay will critically discuss the decision-making made by management in the case study Palm Toy Inc. It will further discuss how the decision-making process can be improved. Various theories and types of decisions will be analysed and evaluated showing how the said theories will lead to development and improvement of the decision-making process and subsequently of the company.
Palm Toy Inc is a manufacturer of hand-held electronic games. The manufacturing process (done by eight women) requires spray painting toys and hanging them on hooks. This part of the process has been met by countless obstacles, such as high staff turnover, absenteeism and low morale. Engineers came in to calculate how fast the hooks should be moving, and when the speed changed, the women grew unsatisfied. A consultant was bought in to help the supervisor resolve the issues. Discussions were held on working conditions. The women voiced their complaints and demands for moving forward. The supervisor came to an agreement to have fans in the room and to allow the women to adjust the speed of the hooks throughout the day. The result was an increase in production and earning of the women (earned more than skilled workers). Increased production in the painting process resulted in a build-up in other departments (i.e. the assembly process). Work efficiency in other departments was decreasing. The operations manager abruptly took away the learning bonus and the painting operation returned to its original pace. This was met by six out of the eight women resigning, and a drop in the production.
When issues arise within a department in an organisation, it is necessary to look at the company as a whole. This is to ensure that all departments that would be potentially affected by changes are taken into consideration. For example, in the case study when addressing the issues and dissatisfaction of the women in the painting process, the other departments such as the assembly process need to be taken into account. This is evident in the case study when production and efficiency in the assembly department slowed down due to changes in the painting process. A solution to this would be carrying out and repeating the system throughout the company. A consultant could be bought in for the other departments, such as the assembly department, to discuss where improvements are necessary. Instead of making changes in one department, management should discuss with the other departments whether they have dissatisfactions and how those could be improved. By looking at the company as a whole and not isolating one department, the company is able to progress and develop simultaneously.
FW Taylor is well known for his scientific approach in management. Taylorism is the scientific management theory for his approach and falls under rational decision making. Taylorism looks at the sections of tasks, financial incentives, co-operation and monitoring in an organisation. Taylor further believed that workers were lazy, uninterested in their duties and money was their driving force, this is seen in his model ‘Rational Economic Man’ (Morgan, 1996). Palm Toy embodies certain aspects of Taylorism. It is simple repetitive jobs where little training is required (e.g. painting the toys and hanging on the hooks), there was a financial incentive (learning bonus), however it lacked co-operation between management and workers, and monitoring. From the start the workers should have been monitored to ensure morale remained constant and did not decline. Going forward for Palm Toy and developing as a company, the relationship between the managers and the workforce need to be improved, and the workforce need to be monitored. This will ensure that when issues arise that they are dealt with immediately and dissatisfaction in the company does not rise. By using the calculations of the engineers, the supervisor made changes that would benefit the organisation. Although this was met by difficulties, once resolved, the basis of those calculations led to an increase in production in the painting process. Although other departments suffered, the result of the scientific approach resulted in success in the painting department.
The above links to rational decision making, where the supervisor held meetings and made decisions based on scientific calculations and feedback. Rational decisions are divided into formal and substantive decision making. Formal decision making involves calculations in the risks, costs and analysis of a situation (Buchanan and O’Connell 2006). This is a more scientific approach, similar to Taylorism. Substantive decision making involves acting according to value, it does not require calculations. In contrast, the operations manager made an irrational decision when he revoked the learning bones and returned the speed of the hooks. It was a knee jerk reaction and not a gradual approach. A formal rational decision should have been made by the operations manager when other departments were experiencing difficulties and becoming frustrated towards the women in the painting process earning more. A solution to this would be to calculate how many hours were required from the women to produce sufficient work and lessen their hours according to that; reduce the bonuses gradually; or to calculate an effective speed for the hooks and adjust the speed of the hooks accordingly to counteract the pace of production. In doing this, all departments would be on the same wavelength.
The relationship between an employer and an employee is crucial in having good work efficiency and satisfaction in a company. The psychological contract, a contract between an employer and employee regarding individual beliefs and agreements (Rousseau 1989), is therefore a vital aspect. The psychological contract states that employers and management should communicate any changes that they wish to make and give the employees notice on these changes. This shows their intentions to continue to support their employees. For example, in the case study, the operations manager should not have abruptly revoked the learning bonus. The operations director should have given warning about bonus being revoked and discussed why he was making this change (Hammond, J., Keeney, R., & Raiffa, H. 1998). By justifying the change and communicating with the women, the operations director would maintain the level of trust and satisfaction in the relationship with women. Through discussing changes, the operations director can anticipate any difficulties that will follow and how to counter them.
In the beginning of the case study the relationship between the employers and the employees was transactional. It was short term and monetary based. After the consultant came in and changes were made, the relationship between the women and supervisor evolved to relational. It became long term with support, increased benefits (learning the bonus) and advancement. The improvement in their relations due to their dissatisfaction being addressed, led to an improvement in their working efficiency (Sturdy, A. 2004). However, the relationship returned to transactional when the operations manager made abrupt changes. It is seen in the transactional relationship that employees become dissatisfied, morale lowered, and staff turnover increased. This is in contrast to the relational where it is evident that moral and quality of work is high. Palm Toy needs to work on the relationship between their employers and employees to ensure good work ethic and satisfaction in the company. Aim to maintain a relational relationship.
The three stages of fulfilment between employers and employees is mutuality, alignment and reciprocity. Mutuality means that employers and employees need to come to an agreement regarding a situation. Both perspectives need to be discussed and heard, and an agreement for going forward needs to be established. Secondly, alignment requires a balance in mutuality. Both parties need to contribute equally to changes that may occur. Thirdly, reciprocity requires both parties to report on their obligations and ensure both parties live up to their side of the agreement.
Behavioural economics suggests that strategic decisions have a longer lasting effect and impact (Baddeley, M. 2017). This involves fact gathering and analysis of situations. In order for this to be successful, individuals have to recognise their own bias. This means that an individual’s needs to be able to recognise when to look at the bigger picture and when they are focusing too much on how something would affect the directly. Individuals need to decide on what efforts and steps are required for development and improvement, then identify any bias and how to counter this, then the solution to moving forward. Research and analysis are essential in behavioural economics being effective. This is seen successfully when the supervisor recognised his bias and bought in the consultant to help manage the situation and discuss improvement measures. After meetings with supervisor and the women changes were implemented and it becomes evident that the painting process improves. In contrast, when the operations manager fails to recognise his bias and makes changes according to his terms it is seen how the painting process quickly declines.
In conclusion to the above information, it can be assessed that in order for Palm Toy Inc. to develop and improve there needs to be an improvement in relations between management and workforce. Through rational and scientific decision making when issues are raised, obstacles and issues can be avoided or resolved imminently, and the company can continue to seek growth.