Category Archives: Work Performance Measurement

Review and Discussion Questions

Review and Discussion Questions

1. Why are work measurement and time study activities still necessary today?

2. How do the latest approaches for determining time standards, as shown in the UMMI example, fit with the concepts of worker empowerment and team work?

3. What are the major differences between work measurement and work sampling? What are the objectives in each case?

4. Is there aJ}inconsistency when a company requires precise time standards and, at the same time, encourages job enrichment?

5. The conclusion of this chapter describes Southwest Airlines's fast flight turnarounds. What do you think has to be done inside the terminal to attain this performance?

6. Automated systems such as voice recognition units (VCUs) increase the efficiency of a call center, but what are the disadvantages of these systems?

Conclusion

Conclusion

Most readers of this book will encounter questions of work methods and measurement in the service sector. It appears that in services, as well as in manufacturing, the new performance metric will be speed, achieved through improved work methods and teamwork, Service- Master, for example, has been able to dominate the institutional custodial business (hospitals, schools, and offices) by applying fast cleaning methods to such basic tasks as mopping floors and washing windows. (Rather than using cumbersome ladders to wash windows, they employ specially designed, lightweight, long-handled squeegee using easy-to-remove velcro-backed washable cleaning cloths. Between uses, the clothes are soaked in fluids developed in ServiceMaster's laboratory.) Southwest Airlines uses teamwork (involving its
ground crew, baggage handlers, and flight attendants) to achieve a 15-minute turnaround of its flights. (See the OM in Practice on Anatomy of a 15 minute Turnaround.) Interestingly enough, these examples epitomize some of the fundamental ideas that Fredrick W. Taylor introduced almost a century ago.

Organizational Plans

Organizational Plans

Profit sharing and gain sharing are the major types of organizarionw.dc plans is simply distributing a percentage of corporate profits across the workforce. In “I’? United States, at least one-third of all organizations have profit sharing. Japan. companies give profit-based bonuses twice a year to all employees. Such bonuses may go from as high as 50 percent of salaries in good years, to nothing in bad years. Gain sharing also involves giving organization wide bonuses, but differs from profit sharing in two important respects: First, it typically measures controllable costs or units of output, not profits, in calculating a bonus. Second, gain sharing is always combined with a participative approach to management.

Individual or Small-Group Incentive Plans

Individual or Small-Group Incentive Plans

Individual and work-group plans traditionally have rewarded performance b~ U51f.; output (often defined by piece rates) and quality measures. Quality is accounted for b~ a quality adjustment factor. say percent of rework (e.g .. Incentive pay = Total output x [I -. Percent deduction for rework].’ In recent years skill development has also been raw  called pay for knowledge, this means that a worker is compensated for learning new tasks. This is particularly important in job shops using group technology. and II: where supervisors’ jobs require knowledge of new types of financial insrrun.e.u-, and selling approaches.

AT&T, for example, instituted incentive programs for its managers-an Incentive Award (HA) and a Management Team Incentive Award (YiTIA). The ideas lump-sum bonuses to outstanding performers. These outstanding performer  Determined by individual performance ratings accompanied by extensiveThe lump-sum bonus could range between 15 and 30 percent of base pay. ITIAs are granted to members of specific divisions or units. Appropriate te decision or unit goals are established at the beginning of the year. The goals include departure ice objectives and interdepartmental goals. A typical MTIA could call for a standard equivalent to 1.5 percent of wages plus overtime for the next three years based on the performance in the current year.

Financial Incentive Plans

Financial Incentive Plans

The third piece of the job design equation is the paycheck. In this section we briefly review common methods for setting financial incentives.

Basic Compensation Systems
The primary films of basic compensation are hourly pay. straight salary. piece r te. and commissions. The first two are based on time spent on the job. with individual performance ultimately rewarded by an increase in the base rate. Piece-rate plans reward on the basis of direct daily output (a worker is paid S5 a unit and if he or she produces 10 units per day. he or she earns 550). Sometimes. a guaranteed base is included in a piece-rate plan worker would receive this base amount regardless of output. plus his or her piece-rate bon J~. (For example. the worker’s hourly base pay is S8. so this coupled with S50 piece-rate earnings would give him or her $114 for an eight-hour day.) Another approach with the guaranteed base is that the worker is paid either the piece rate or the guaranteed base. whichever is higher. Commissions may be thought of as sales-based piece rates and are calculated in the same general way.

The two broad categories of financial incentive plans are individual or small group incentive plans and organization wide plans