Explain BATH-TUB curve and Tero-Technology.
The bathtub curve is a concept that is used for describing particular forms of hazard functions which are decreasing failure rate, constant failure rate and Increasing failure rate. It has a wise usage in the field of reliability engineering and is derived from human life.
Whereas Terotechnology is the technology that studies the costs associated with assets throughout their lifecycle. This technology was developed with the aim of reducing different costs that are incurred from the acquisition of an asset to its disposal and also develops methods for extending the working life of the asset.
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RELIABILITY SPECIALISTS
often describe the lifetime of a population of products using a graphical representation called the bathtub curve. The bathtub curve consists of three periods:
1.an infant mortality period with a decreasing failure rate
2.followed by a normal life period (also known as “useful life”) with a low, relatively constant failure rate and
3.concluding with a wear-out period that exhibits an increasing failure rate.
DRAW A BATHTUB SHAPED CURVE.
describes the relative failure rate of an entire population of products over time. Some individual units will fail relatively early (infant mortality failures), others (we hope most) will last until wear-out, and some will fail during the relatively long period typically called normal life. Failures during infant mortality are highly undesirable and are always caused by defects and blunders: material defects, design blunders, errors in assembly, etc. Normal life failures are normally considered to be random cases of “stress exceeding strength.” However, many failures often considered normal life failures are actually infant mortality failures. Wear-out is a fact of life due to fatigue or depletion of materials (such as lubrication depletion in bearings). A product’s useful life is limited by its shortest-lived component. A product manufacturer must assure that all specified materials are adequate to function through the intended product life.
the curve at the start depicts
TYPES OF FAILURE
Early Life Failures
• large number of new component failures which
decreases with time
•Useful Life Failures
• small number of apparently random failures during
working life
•Wear-out Failures
• increasing number of failures with time as
components wear out
------------------------------------------------------------------------------------------------
MEASURING UNRELIABILITY
= failure rate
= number of failures
unit time
- typically failures per year
constant in useful life period
- data collection / processing simple
- defines "bath-tub" curve
---------------------------------------------------------------
EARLY LIFE PERIOD
• substandard weak specimens
• often caused by poor / variable manufacturing
and poor quality control
• prevented by effective quality control, burn-in,
and run-in, de-bugging techniques
• weak components eventually replaced by good ones
• probabilistic treatment less important
© University of Newcastle upon Tyne
USEFUL LIFE PERIOD
• random or chance failures
• caused by unpredictable sudden stress accumulations
outside and inside of the components
beyond the design strength
• over sufficiently long periods frequency of occurrence
is approximately constant
• failure rate used extensively in
Safety & Reliability analyses
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THE BATHTUB CURVE AT THE CENTRE
A BIG STRETCH DEPICTS THE
USEFUL LIFE PERIOD
defined by exponential or Poisson distribution
reliability R(t) = e- t
R(t) = probability that device will not fail in time t
= failure rate = number of failures
unit time
reciprocal 1 / = m = Mean Time Between Failures
- expected number of failures in time t is the same
for any equally long operating period
------------------------------------------------------------
USEFUL LIFE PERIOD
- chance of survival after m (10 years) = 36.8%
say 1 failure in 10 years, = 0.1, m = 10
- chance of failure after m (10 years) = 63.2%
- chance of survival after 1% of m (1 month) is 99%
- chance of survival after 10% m (1 year) is 90.5%
- chance of survival after 50% m (5 years) is 60.6%
- chance of survival after 90% m (9 years) is 40.7%
- chance of survival after 200% m (20 years) is 13.5%
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THE BATHTUB CURVE AT THE END
-A SHORT STRETCH DEPICTS THE
WEAR-OUT FAILURE PERIOD
• symptom of component ageing
• failures cluster around Mean Wear-Out Life M
• Mean Wear-Out Life M usually much shorter
than MTBF m
• Wear-out failure distribution approximates
to Normal Distribution with mean M
and standard deviation o
• prediction is important for replacement
and maintenance policy
© University of Newcastle upon Tyne
WEAR-OUT FAILURE PERIOD
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APPLICATION TO
CHEMICAL PLANTS
• are failures random?
• does reported data include early-life
and wear-out failures?
• how does maintenance policy affect
observed failure rate?
• can we predict the failures - useful life period?
or is failure rate rising / falling with time?
•can Weibull distribution help us?
f(t) - 1 - exp (-t/A)^B
•shape parameter B<1 decreasing failure rate
•if B>1, increasing failure rate
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YOUR NEW CAR.....…!
want 3 years operation with 99% reliability?
t = 3 years, exp(-lt) = 0.99,
so failure rate l = 0.00335
ie m (mean time between failures) = 1/ l = 298 years
NOTE the car doesn't last this long before breaking down!
- why?
Useful Life failure rate is an "Instantaneous Failure Rate"
- wear-out M takes over after 5 to 10 years!!
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TERO TECHNOLOGY IS A TOTAL FACILITY MANAGEMENT
OF ENGINEERING SOLUTIONS.
TERO Technology's experts team that caries out the daily operations of Facilities Management Services for the clients. It helps to optimize the assets with professional Facilities Management and Operation & Maintenance (O&M) Services for Mechanical & Electrical (M & E) Systems, Civil Works, Landscape, Janitorial and other facility specialization. Rather than bearing addition business burdens, a 'single point responsibility' through direct maintenance, subcontract & vendor management will save time, money and effort.
TERO Total Facilities Management handles various kinds of Facilities, including:
Commercial Buildings
Healthcare Facilities / Operation Theatre
Information & Communication Technology Centers
Manufacturing Facilities / Clean Room technology
Telecommunication infrastructure.
Transportation Support Infrastructure
(ports, airports, railway stations, etc)
Asset Management
TERO offers a seamless, independent and total management of the customers' asset portfolio where they finance, procure, implement, maintain and finally transfer the assets to the customer on mutually agreed terms. Close interactions with the clients' Chief Financial Officer results in amazing financial savings. And most importantly they completely relieve the organization of the initial financial and administrative burden.
The benefits bought to our clients include:
Transfer of ownership of Control and Risk Management, Analysis
Reporting, Implementation & Coordination, Defining & Planning
One-Stop project management and total engineering services form project inception to steady state operations
*Re-engineering of engineering and maintaining the organization work process.
*Helping to reducing the costs --expenses / capital.
*Establishing and maintaining safety, health and environment and managing
the quality assurance / risk management program.
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Thursday, April 24, 2008
MS-05 question 2
Discuss the importance of Ergonomics and Socio-technical approach in Job Design.
BEFORE A JOB DESIGN IS DONE,
A JOB ANALYSIS SHOULD BE CARRIED OUT.
Job Analysis is a process to identify and determine in detail the particular job duties and requirements and the relative importance of these duties for a given job. Job Analysis is a process where judgements are made about data collected on a job.
There are two key elements of a job analysis:
1. Identification of major job requirements (MJRs) which are the most important duties and responsibilities of the position to be filled. They are the main purpose or primary reasons the position exists. The primary source of MJRs is the most current, official position description.
2. Identification of knowledge, skills and abilities (KSAs) required to accomplish each MJR and the quality level and amount of the KSAs needed. Most job analyses deal with KSAs that are measurable, that can be documented, and produce meaningful differences between candidates. Typically, possession of KSAs is demonstrated by experience, education, or training. The goal of KSAs is to identify those candidates who are potentially best qualified to perform the position to be filled; they are most useful when they provide meaningful distinctions among qualified candidates. Source documents for KSAs may be the position description, HRM standard qualifications and job classification standards.
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Job Analysis should collect information on the following areas:
Duties and Tasks The basic unit of a job is the performance of specific tasks and duties. Information to be collected about these items may include: frequency, duration, effort, skill, complexity, equipment, standards, etc.
Environment This may have a significant impact on the physical requirements to be able to perform a job. The work environment may include unpleasant conditions such as offensive odors and temperature extremes. There may also be definite risks to the incumbent such as noxious fumes, radioactive substances, hostile and aggressive people, and dangerous explosives.
Tools and Equipment Some duties and tasks are performed using specific equipment and tools. Equipment may include protective clothing. These items need to be specified in a Job Analysis.
Relationships Supervision given and received. Relationships with internal or external people.
Requirements The knowledges, skills, and abilities (KSA's) required to perform the job. While an incumbent may have higher KSA's than those required for the job, a Job Analysis typically only states the minimum requirements to perform the job.
What does or should the person do?
What knowledge, skill, and abilities does it take to perform this job?
What is the result of the person performing the job?
How does this job fit in with other jobs in the organization?
What is the job’s contribution toward the organization’s goals?
The process may seek to obtain information about the:
work
worker
context within which the job exists
=================================================
Worker Functions. The relationship of the worker to data, people, and things.
Work Fields. The techniques used to complete the tasks of the job. Over 100 such fields have been identified. This descriptor also includes the machines, tools, equipment, and work aids that are used in the job.
Materials, Products, Subject Matter, and/or Services. The outcomes of the job or the purpose of performing the job.
Worker Traits. The aptitudes, educational and vocational training, and personal traits required of the worker.
Physical Demands. Job requirements such as strength, observation, and talking. This descriptor also includes the physical environment of the work.
skills
abilities
knowledge
tasks
work activities
work context
experience levels required
job interests
work values/needs
====================================
To properly perform a job analysis, the individual performing the job should be observed and interviewed. In addition, co-workers and other individuals with similar and related jobs should be interviewed. It is imperative that job tasks be recorded with videotape, pictures, and/or sketches. Also, if the job is performed in a sequence, the work completed before and after the particular job should be documented.
A. Purpose
What are the job duties necessary for job performance? The number of job duties is usually less than ten essential activities, which are necessary to the job.
B. Job Setting
1. Work-site
What equipment is used in the work setting?
How is the workstation arranged?
How is the work organized?
3. Work Activities
What worker movements are necessary to accomplish the job? If there is another way to perform a job function, note this (lifting with an assistive device, typing with an alternative input device).
What are the subject's anthropometric data? Document the subject's stature; eye, shoulder, and knee height; arm reach; leg length; and waist level. Anthropometric data are used to specify appropriate reach and space requirements for various populations.
What types of personal protective equipment (PPE) are used? Document any gloves, arm guards, hardhats, safety glasses, respirators, or shoes.
B. Workstation
1. Office
Are the space dimensions within the workstation sufficient? The top of the computer monitor should be level with the operator's eyes and positioned at a comfortable viewing distance. (This is task specific.) Repositioning with an adjustable monitor arm is an option. The monitor should be placed directly in front of the chair and over the center of the workstation knee well. Screen height should be between 33 and 42 inches, the angle of the monitor screen should be between 0 and 7 degrees, and viewing distance should be between 18 and 28 inches.
Is glare diffused with panel diffusers and/or glare screens? Task lighting with a dimmer control should help, and adjustable blinds can taper excessive sunlight.
2. Industrial
Is the pace setting appropriate? Document what body parts remain idle and what body parts are in steady motion.
Are the "proper" tools available? Tools that are pneumatic; tools that can be used in either hand; tools with pistol shaped handles for power grips; tools with round edges, padded handles, spring activation, and space between closed handles will reduce palm stress and grip force. Newer tools equipped with tool wraps and tool balancers/positioners are also helpful.
3. Service
Is traffic flow designed to most effectively meet the needs of workers, contractors, and customers? Document the most frequently traveled areas and whether goods are stored in an accessible place.
Is anti-fatigue matting available in areas where individuals must stand for long periods of time? If available, document whether the matting is properly fixed to the floor.
Is a preventive maintenance program in place for all equipment?
4. Health Care
Are laundry and food carts pushed rather than pulled? Do carts have an oval or round push bar around waist height? Are powered push/pull devices available for use with beds and heavy or multiple carts? Some manufactures have a motorized option available on a hospital bed.
Have job task analysis been performed to identify awkward postures and motions in all jobs? Examination of past injury reports can identify areas of concern to address first. Look for tasks involving reaching, bending, prolonged static postures, forceful exertions, and heavy lifting.
5. General
Does the job include repeated and sustained exertions? Document whether the job entails stagnant postures for prolonged periods, repetitive motions, and whole body exertions (lifts, pushes, pulls, etc.).
What are the general environmental factors? Document noise levels, ventilation, flooring material, lighting, air quality, and temperature variations, specifically when the worker is exposed to temperatures greater than 75 degrees or less than 50 degrees.
C. Work-site
1. Spacing
Are extra electrical outlets for workers using powered assistive technology available?
Are walkways blocked? Obstructed walkways should be opened to eliminate the potential for trips and falls. At least one clear path of travel (without stairs) at least 36 inches wide, except for a minimum of 60 inches in two-way halls and 32 inches through doorways should be provided. Allow a minimum of 60 inches of clear, level floor space in front of and behind a door and 18 inches on the latch side of the door.
2. Flooring
Are proper treads, handrails, and detectable warnings installed?
Have changes in floor level been identified with visual and texture contrast?
Are door closers adjusted so that from an open position of 70 degrees, the door will take at least 3 seconds to move to a point 3 inches from the latch? (This is measured to the leading edge of the door.)
Do doorways provide at least 32 inches of level clearance?
Do the inside and outside of doors provide 60 inches of clear floor space and 18 inches to the latch side?
Are materials stored in an accessible area, between 15 inches and 48 inches above the floor?
Are hard-to-reach materials labeled? Materials should have visible labels and color codes.
Are electrical outlets accessible? Electrical outlets should be provided at least 15 inches above the floor.
Are items placed in the most "accessible" place possible? Position storage for pushing rather than pulling, pulling rather than carrying, carrying rather than lowering, and lowering rather than lifting. Make storage available for intermediate transporting and transferring of materials.
5. Other
Are accessible drinking fountains provided?
Are employees properly trained in ergonomic principles? Training should include proper lifting techniques, adequate maintenance and correct equipment use, and neutral postures.
Are job tasks varied? An individual should alter positions every 45 minutes, e.g., distribute tasks between right and left hands, alternate between intensive fine motor and gross motor manipulation, and change between sitting and standing.
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Ergonomics is the science of fitting jobs to people. The discipline encompasses a body of knowledge about physical abilities and limitations as well as other human characteristics that are relevant to job design. Essentially, ergonomics is the relationship between the worker and the job and focuses on the design of work areas to enhance job performance. Ergonomics can help prevent injuries and limit secondary injuries as well as accommodate individuals with various disabilities, including those with musculoskeletal disorders (MSDs).
ERGONOMICS HELPS WORK ORGANIZATION
How can work organization help prevent work-related musculoskeletal disorders (WMSDs) that can result from using hand tools?
People working at a correctly designed workstation and using the best available tools can still get injured. It happens where their work is poorly designed. Work organization involves:
job content -- task variety
work pace
work breaks
rest breaks
adjustment or acclimatization time
training
Task variety
Where a job involves using only one kind of tool for one or a few tasks that vary insignificantly, the same small group of muscles is used over and over again. The resulting overload on the same part of the body can cause pain and injury. A greater variety of tasks allow for changing body position to distribute the workload over different parts of the body, and to give overtaxed muscles some relief and recovery time.
Rotate tasks among workers; have workers move from one task to another according to a schedule.
Add more tasks to the job.
Assign a larger part of work to a team: workers form a team and each member of the team shares several different tasks.
Work pace
A fast pace of work is a strong risk factor for WMSDs. If the pace is too fast, the muscles involved do not have enough time to recover from the effort and to restore sufficient energy to continue the work.
If the pace of work is imposed externally -- assembly line speed, for example -- adjusts it to the speed that is acceptable for the slowest worker.
Incentive systems that reward for the quality of work naturally determine the "right" pace of work.
Incentive systems that reward for the amount or quantity of work increase the risk for WMSDs and, in the long run, will compromise quality as well.
Work breaks
The work break is a time period between tasks. Even short periods of time, literally seconds, that allow one to relax muscles involved in operating tools are important in preventing injuries.
Rest breaks
The rest break is the period after work stops. Besides allowing for refreshment, rest breaks can be used to stretch and relax.
Adjustment period
An adjustment or acclimatization period is the time needed to get "in shape" when returning to work after a long absence, or when starting a new job. It should allow one to refresh old work habits or get used to a new routine. An adjustment period is a very important element of injury prevention. Inexperienced and "new" workers, as well as "old timers" returning to work after a period of recovery and rehabilitation, are more prone than most workers to both injury and re-injury, so adjustment periods are a vitally important way to reintegrate them into the workflow.
Training
Training workers on the safe use of tools, and on the hazards involved in working with them, has always been extremely important. Today, more than ever, when new materials, new technologies and new equipment are replacing older ones faster then ever before, the importance of such training is magnified. The introduction of a new tool or equipment, as well as any change in way the job has been done previously should be preceded by refresher training that includes new information relevant to the changes being introduced. Even the best-designed tool, or the most ergonomically correct workstation, or the most up-to-date work organization will fail to prevent injuries if the worker is not properly trained.
========================
SOCIO-TECNICAL APPROACH TO JOB DESIGN
Socio-technical system
A sociotechnical system is the term usually given to any instantiation of socio and technical elements engaged in goal directed behaviour. Sociotechnical systems are a particular expression of sociotechnical theory, although they are not necessarily one and the same thing. Sociotechnical systems theory is a mixture of sociotechnical theory, joint optimisation and so forth and general systems theory. The term sociotechnical system recognises that organisations have boundaries and that transactions occur within the system (and its sub-systems) and between the wider context and dynamics of the environment. It is an extension of Sociotechnical Theory which provides a richer descriptive and conceptual language for describing, analysing and designing organisations. A Sociotechnical System, therefore, often describes a ‘thing’ (an interlinked, systems based mixture of people, technology and their environment).
Socio-technical systems approach
Socio-technical systems in organizational development is the term for an approach to complex organizational work design that recognizes the interaction between people and technology in workplaces. The term also refers to the interaction between society's complex infrastructures and human behaviour. In this sense, society itself, and most of its sub-structures, are complex socio-technical systems.
FIRST,THE APPROACH SHOULD BE APPLIED TO THE ORGANIZATION
IN DESIGNING.
A sociotechnical systems approach to designing organizations is based upon a set of guiding propositions:
The design of the organization must fit its goals.
Employees must be actively involved in designing the structure of the organization.
Control of variances in production or service must be undertaken as close to their source as possible.
Subsystems must be designed around relatively self-contained and recognizable units of work.
Support systems must fit in with the design of the organization.
The design should allow for a high quality of working life.
Changes should continue to be made as necessary to meet the changing environmental pressures.
Motivation Factors
It has been suggested that four categories of job characteristic are significant in terms of motivation and performance:
responsible autonomy- the group's acceptance of responsibility for the production cycle, output rate, quality, and quantity of output;
adaptability;
variety;
participation.
Autonomous behavior includes the self-regulation by the group of work content, critical self-evaluation of work group performance, self-adjustment to cope with changes, and participation in goal setting.
Limitations
The socio-technical systems approach is not without its limitations. Whilst many advantages can result from focusing on the work group rather than the individuals and their jobs, autonomous group working does not seem to have widespread appeal.
Certainly the roles of both supervision and specialist advisers are considerably affected and in some cases eliminated.
Movement of personnel between work groups with high levels of autonomy may be difficult, hence removing some of management's flexibility.
Difficulties are often experienced in implementation in existing work situations.
A participative design process is not acceptable in many organizations and can be very time-consuming.
Alternative ways of organizing work are not always apparent where existing technology has to be employed.
Management are often not prepared to take the risk of introducing radically different approaches to organizing work alongside other changes which already have a high element of disruption and associated risk.
=========================
Approaches to Job Design USING SOCIO TECHNICAL SYSTEMS
There are three important approaches to job design, viz.,
Engineering approach,
Human approach and
The Job characteristic approach.
Engineering Approach
The most important single element in the Engineering approaches, proposed by FW Taylor and others, was the task idea, “The work of every workman is fully planned out by the management at least one day in advance and each man receives in most cases complete written instructions, describing in detail the task which he is to accomplish . . . This task specifies not only what is to be done but how it is to be done and the exact time allowed for doing it.” The principles offered by scientific management to job design can be summarised thus:
l Work should be scientifically studied. As advocated fragmentation and routinisation of work to reap the advantages of specialisation.
l Work should be arranged so that workers can be efficient.
l Employees selected for work should be matched to the demands of the job.
l Employees should be trained to perform the job.
l Monetary compensation should be used to reward successful performance of the job.
These principles to job design seem to be quite rational and appealing because they point towards increased organisational performance. Specialisation and routinisation over a period of time result in job incumbents becoming experts rather quickly, leading to higher levels of output. Despite the assumed gains in efficiency, behavioural scientists have found that some job incumbents dislike specialised and routine jobs.
Human Relations Approach
The human relations approach recognised the need to design jobs in an interesting manner. In the past two decades much work has been directed to changing jobs so that job incumbents can satisfy their needs for growth, recognition and responsibilility, enhancing need satisfaction through what is called job enrichment. One widely publicised approach to job enrichment uses what is called job characteristics model and this has been explained separately in the ensuing section.
Two types of factors, viz. (i) motivators like achievements, recognition, work itself, responsibility, advancement and growth and (ii) hygiene factors (which merely maintain the employee on the job and in the organization) like working conditions, organisational policies, inter-personnel relations, pay and job security. The employee is dissatisfied with the job if maintenance factors to the required degree are not introduced into the job. But, the employee may not be satisfied even if the required maintenance factors are provided. The employee will be satisfied with his job and he will be more productive if motivators are introduced into the job content. As such, he asserts that the job designer has to introduce hygienic factors adequately to reduce dissatisfaction and build motivating factors. Thus, THE emphasis is on the psychological needs of the employees in designing jobs.
The Job Characteristics Approach
The Job Characteristics Theory states that employees will work hard when they are rewarded for the work they do and when the work gives them satisfaction. Hence, they suggest that motivation, satisfaction and performance should be integrated in the job design. According to this approach, any job can be described in terms of five core job dimensions which are defined as follows:
(a) Skill variety: The degree to which the job requires that workers use a variety of different activities, talents and skills in order to successfully complete the job requirements.
(b) Task identity: The degree to which the job allows workers to complete whole tasks from start to finish, rather than disjointed portions of the job.
(c) Task significance: The degree to which the job significantly impacts the lives of others both within and outside the workplace.
(d) Autonomy: The degree to which the job allows workers freedom in planning and scheduling and the methods used to complete the job.
(e) Feedback: The degree to which the job itself provides workers with clear, direct and understandable knowledge of their performance.
All of the job dimensions impact workers psychologically. The first three dimensions affect whether or not workers view their job as meaningful. Autonomy determines the extent of responsibility workers feel. Feedback allows for feelings of satisfaction for a job well done by providing knowledge of results.
The core job dimensions can be combined into a single predictive index called the Motivating Potential Score. Its computation is as follows:
Motivating Skill variety + Task identity + Task significance
potential = x Autonomy x Feedback
score
Jobs that are high on motivating potential must be high at least in one of the three factors that lead to meaningful work and must be high in both autonomy and feedback and vice versa. These three critical psychological states lead to the outcome such as (a) high internal work motivation, (b) high growth satisfaction, (c) high quality work performance, (d) high general job satisfaction, (e) high work effectiveness and (f) low absenteeism and turnover . The model says that internal rewards are obtained by an individual when he learns that he personally has performed well on a task that he cares about.
Sociotechnical Systems Approach
The above theories of job design are all concerned with designing individual jobs. The approach taken by the sociotechnical systems method is the design or work systems that foster a meshing of the technical and social aspects of jobs. In order to create jobs, which have this supportive relationship, work teams not individual jobs, must be studied. Jobs in the traditional sense are non-existent and instead, each worker plays an assigned role in accomplishing the group’s objectives. Redesigning work through sociotechnical systems methods requires the combined efforts of employees, supervisors and union representatives in analysing significant job operations. Jobs are not necessarily designed to be intrinsically motivating; rather, they are designed so that the work is accomplished. As in scientific management, a supervisor’s goal is to ensure that the organization’s objectives are met. However, this is accomplished by concentrating only on critical job aspects, by forming work teams consisting of members who have the necessary qualifications to accomplish the tasks and by allowing work groups the autonomy to manage their own work process.
The thrust of the sociotechnical approach to job design is that both the technical system and the accompanying social system should be considered when designing jobs. According to this concept, jobs should be designed by taking a ‘holistic’ or ‘systems’ view of the entire job situation, including its physical and social environment. Using the sociotechnical approach, the following guidelines have been developed for designing jobs:
1. A job needs to be reasonably demanding for the individual in terms other than sheer endurance and yet provide some variety (not necessarily novelty).
2. Employees need to be able to learn on the job and to go on learning.
3. Employees need some minimum area of decision making that they can call their own.
4. Employees need some minimal degree of social support and recognition at the workplace.
5. Employees need to be able to relate what they do and what they produce to their social life.
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BEFORE A JOB DESIGN IS DONE,
A JOB ANALYSIS SHOULD BE CARRIED OUT.
Job Analysis is a process to identify and determine in detail the particular job duties and requirements and the relative importance of these duties for a given job. Job Analysis is a process where judgements are made about data collected on a job.
There are two key elements of a job analysis:
1. Identification of major job requirements (MJRs) which are the most important duties and responsibilities of the position to be filled. They are the main purpose or primary reasons the position exists. The primary source of MJRs is the most current, official position description.
2. Identification of knowledge, skills and abilities (KSAs) required to accomplish each MJR and the quality level and amount of the KSAs needed. Most job analyses deal with KSAs that are measurable, that can be documented, and produce meaningful differences between candidates. Typically, possession of KSAs is demonstrated by experience, education, or training. The goal of KSAs is to identify those candidates who are potentially best qualified to perform the position to be filled; they are most useful when they provide meaningful distinctions among qualified candidates. Source documents for KSAs may be the position description, HRM standard qualifications and job classification standards.
==========================================
Job Analysis should collect information on the following areas:
Duties and Tasks The basic unit of a job is the performance of specific tasks and duties. Information to be collected about these items may include: frequency, duration, effort, skill, complexity, equipment, standards, etc.
Environment This may have a significant impact on the physical requirements to be able to perform a job. The work environment may include unpleasant conditions such as offensive odors and temperature extremes. There may also be definite risks to the incumbent such as noxious fumes, radioactive substances, hostile and aggressive people, and dangerous explosives.
Tools and Equipment Some duties and tasks are performed using specific equipment and tools. Equipment may include protective clothing. These items need to be specified in a Job Analysis.
Relationships Supervision given and received. Relationships with internal or external people.
Requirements The knowledges, skills, and abilities (KSA's) required to perform the job. While an incumbent may have higher KSA's than those required for the job, a Job Analysis typically only states the minimum requirements to perform the job.
What does or should the person do?
What knowledge, skill, and abilities does it take to perform this job?
What is the result of the person performing the job?
How does this job fit in with other jobs in the organization?
What is the job’s contribution toward the organization’s goals?
The process may seek to obtain information about the:
work
worker
context within which the job exists
=================================================
Worker Functions. The relationship of the worker to data, people, and things.
Work Fields. The techniques used to complete the tasks of the job. Over 100 such fields have been identified. This descriptor also includes the machines, tools, equipment, and work aids that are used in the job.
Materials, Products, Subject Matter, and/or Services. The outcomes of the job or the purpose of performing the job.
Worker Traits. The aptitudes, educational and vocational training, and personal traits required of the worker.
Physical Demands. Job requirements such as strength, observation, and talking. This descriptor also includes the physical environment of the work.
skills
abilities
knowledge
tasks
work activities
work context
experience levels required
job interests
work values/needs
====================================
To properly perform a job analysis, the individual performing the job should be observed and interviewed. In addition, co-workers and other individuals with similar and related jobs should be interviewed. It is imperative that job tasks be recorded with videotape, pictures, and/or sketches. Also, if the job is performed in a sequence, the work completed before and after the particular job should be documented.
A. Purpose
What are the job duties necessary for job performance? The number of job duties is usually less than ten essential activities, which are necessary to the job.
B. Job Setting
1. Work-site
What equipment is used in the work setting?
How is the workstation arranged?
How is the work organized?
3. Work Activities
What worker movements are necessary to accomplish the job? If there is another way to perform a job function, note this (lifting with an assistive device, typing with an alternative input device).
What are the subject's anthropometric data? Document the subject's stature; eye, shoulder, and knee height; arm reach; leg length; and waist level. Anthropometric data are used to specify appropriate reach and space requirements for various populations.
What types of personal protective equipment (PPE) are used? Document any gloves, arm guards, hardhats, safety glasses, respirators, or shoes.
B. Workstation
1. Office
Are the space dimensions within the workstation sufficient? The top of the computer monitor should be level with the operator's eyes and positioned at a comfortable viewing distance. (This is task specific.) Repositioning with an adjustable monitor arm is an option. The monitor should be placed directly in front of the chair and over the center of the workstation knee well. Screen height should be between 33 and 42 inches, the angle of the monitor screen should be between 0 and 7 degrees, and viewing distance should be between 18 and 28 inches.
Is glare diffused with panel diffusers and/or glare screens? Task lighting with a dimmer control should help, and adjustable blinds can taper excessive sunlight.
2. Industrial
Is the pace setting appropriate? Document what body parts remain idle and what body parts are in steady motion.
Are the "proper" tools available? Tools that are pneumatic; tools that can be used in either hand; tools with pistol shaped handles for power grips; tools with round edges, padded handles, spring activation, and space between closed handles will reduce palm stress and grip force. Newer tools equipped with tool wraps and tool balancers/positioners are also helpful.
3. Service
Is traffic flow designed to most effectively meet the needs of workers, contractors, and customers? Document the most frequently traveled areas and whether goods are stored in an accessible place.
Is anti-fatigue matting available in areas where individuals must stand for long periods of time? If available, document whether the matting is properly fixed to the floor.
Is a preventive maintenance program in place for all equipment?
4. Health Care
Are laundry and food carts pushed rather than pulled? Do carts have an oval or round push bar around waist height? Are powered push/pull devices available for use with beds and heavy or multiple carts? Some manufactures have a motorized option available on a hospital bed.
Have job task analysis been performed to identify awkward postures and motions in all jobs? Examination of past injury reports can identify areas of concern to address first. Look for tasks involving reaching, bending, prolonged static postures, forceful exertions, and heavy lifting.
5. General
Does the job include repeated and sustained exertions? Document whether the job entails stagnant postures for prolonged periods, repetitive motions, and whole body exertions (lifts, pushes, pulls, etc.).
What are the general environmental factors? Document noise levels, ventilation, flooring material, lighting, air quality, and temperature variations, specifically when the worker is exposed to temperatures greater than 75 degrees or less than 50 degrees.
C. Work-site
1. Spacing
Are extra electrical outlets for workers using powered assistive technology available?
Are walkways blocked? Obstructed walkways should be opened to eliminate the potential for trips and falls. At least one clear path of travel (without stairs) at least 36 inches wide, except for a minimum of 60 inches in two-way halls and 32 inches through doorways should be provided. Allow a minimum of 60 inches of clear, level floor space in front of and behind a door and 18 inches on the latch side of the door.
2. Flooring
Are proper treads, handrails, and detectable warnings installed?
Have changes in floor level been identified with visual and texture contrast?
Are door closers adjusted so that from an open position of 70 degrees, the door will take at least 3 seconds to move to a point 3 inches from the latch? (This is measured to the leading edge of the door.)
Do doorways provide at least 32 inches of level clearance?
Do the inside and outside of doors provide 60 inches of clear floor space and 18 inches to the latch side?
Are materials stored in an accessible area, between 15 inches and 48 inches above the floor?
Are hard-to-reach materials labeled? Materials should have visible labels and color codes.
Are electrical outlets accessible? Electrical outlets should be provided at least 15 inches above the floor.
Are items placed in the most "accessible" place possible? Position storage for pushing rather than pulling, pulling rather than carrying, carrying rather than lowering, and lowering rather than lifting. Make storage available for intermediate transporting and transferring of materials.
5. Other
Are accessible drinking fountains provided?
Are employees properly trained in ergonomic principles? Training should include proper lifting techniques, adequate maintenance and correct equipment use, and neutral postures.
Are job tasks varied? An individual should alter positions every 45 minutes, e.g., distribute tasks between right and left hands, alternate between intensive fine motor and gross motor manipulation, and change between sitting and standing.
==================================================
Ergonomics is the science of fitting jobs to people. The discipline encompasses a body of knowledge about physical abilities and limitations as well as other human characteristics that are relevant to job design. Essentially, ergonomics is the relationship between the worker and the job and focuses on the design of work areas to enhance job performance. Ergonomics can help prevent injuries and limit secondary injuries as well as accommodate individuals with various disabilities, including those with musculoskeletal disorders (MSDs).
ERGONOMICS HELPS WORK ORGANIZATION
How can work organization help prevent work-related musculoskeletal disorders (WMSDs) that can result from using hand tools?
People working at a correctly designed workstation and using the best available tools can still get injured. It happens where their work is poorly designed. Work organization involves:
job content -- task variety
work pace
work breaks
rest breaks
adjustment or acclimatization time
training
Task variety
Where a job involves using only one kind of tool for one or a few tasks that vary insignificantly, the same small group of muscles is used over and over again. The resulting overload on the same part of the body can cause pain and injury. A greater variety of tasks allow for changing body position to distribute the workload over different parts of the body, and to give overtaxed muscles some relief and recovery time.
Rotate tasks among workers; have workers move from one task to another according to a schedule.
Add more tasks to the job.
Assign a larger part of work to a team: workers form a team and each member of the team shares several different tasks.
Work pace
A fast pace of work is a strong risk factor for WMSDs. If the pace is too fast, the muscles involved do not have enough time to recover from the effort and to restore sufficient energy to continue the work.
If the pace of work is imposed externally -- assembly line speed, for example -- adjusts it to the speed that is acceptable for the slowest worker.
Incentive systems that reward for the quality of work naturally determine the "right" pace of work.
Incentive systems that reward for the amount or quantity of work increase the risk for WMSDs and, in the long run, will compromise quality as well.
Work breaks
The work break is a time period between tasks. Even short periods of time, literally seconds, that allow one to relax muscles involved in operating tools are important in preventing injuries.
Rest breaks
The rest break is the period after work stops. Besides allowing for refreshment, rest breaks can be used to stretch and relax.
Adjustment period
An adjustment or acclimatization period is the time needed to get "in shape" when returning to work after a long absence, or when starting a new job. It should allow one to refresh old work habits or get used to a new routine. An adjustment period is a very important element of injury prevention. Inexperienced and "new" workers, as well as "old timers" returning to work after a period of recovery and rehabilitation, are more prone than most workers to both injury and re-injury, so adjustment periods are a vitally important way to reintegrate them into the workflow.
Training
Training workers on the safe use of tools, and on the hazards involved in working with them, has always been extremely important. Today, more than ever, when new materials, new technologies and new equipment are replacing older ones faster then ever before, the importance of such training is magnified. The introduction of a new tool or equipment, as well as any change in way the job has been done previously should be preceded by refresher training that includes new information relevant to the changes being introduced. Even the best-designed tool, or the most ergonomically correct workstation, or the most up-to-date work organization will fail to prevent injuries if the worker is not properly trained.
========================
SOCIO-TECNICAL APPROACH TO JOB DESIGN
Socio-technical system
A sociotechnical system is the term usually given to any instantiation of socio and technical elements engaged in goal directed behaviour. Sociotechnical systems are a particular expression of sociotechnical theory, although they are not necessarily one and the same thing. Sociotechnical systems theory is a mixture of sociotechnical theory, joint optimisation and so forth and general systems theory. The term sociotechnical system recognises that organisations have boundaries and that transactions occur within the system (and its sub-systems) and between the wider context and dynamics of the environment. It is an extension of Sociotechnical Theory which provides a richer descriptive and conceptual language for describing, analysing and designing organisations. A Sociotechnical System, therefore, often describes a ‘thing’ (an interlinked, systems based mixture of people, technology and their environment).
Socio-technical systems approach
Socio-technical systems in organizational development is the term for an approach to complex organizational work design that recognizes the interaction between people and technology in workplaces. The term also refers to the interaction between society's complex infrastructures and human behaviour. In this sense, society itself, and most of its sub-structures, are complex socio-technical systems.
FIRST,THE APPROACH SHOULD BE APPLIED TO THE ORGANIZATION
IN DESIGNING.
A sociotechnical systems approach to designing organizations is based upon a set of guiding propositions:
The design of the organization must fit its goals.
Employees must be actively involved in designing the structure of the organization.
Control of variances in production or service must be undertaken as close to their source as possible.
Subsystems must be designed around relatively self-contained and recognizable units of work.
Support systems must fit in with the design of the organization.
The design should allow for a high quality of working life.
Changes should continue to be made as necessary to meet the changing environmental pressures.
Motivation Factors
It has been suggested that four categories of job characteristic are significant in terms of motivation and performance:
responsible autonomy- the group's acceptance of responsibility for the production cycle, output rate, quality, and quantity of output;
adaptability;
variety;
participation.
Autonomous behavior includes the self-regulation by the group of work content, critical self-evaluation of work group performance, self-adjustment to cope with changes, and participation in goal setting.
Limitations
The socio-technical systems approach is not without its limitations. Whilst many advantages can result from focusing on the work group rather than the individuals and their jobs, autonomous group working does not seem to have widespread appeal.
Certainly the roles of both supervision and specialist advisers are considerably affected and in some cases eliminated.
Movement of personnel between work groups with high levels of autonomy may be difficult, hence removing some of management's flexibility.
Difficulties are often experienced in implementation in existing work situations.
A participative design process is not acceptable in many organizations and can be very time-consuming.
Alternative ways of organizing work are not always apparent where existing technology has to be employed.
Management are often not prepared to take the risk of introducing radically different approaches to organizing work alongside other changes which already have a high element of disruption and associated risk.
=========================
Approaches to Job Design USING SOCIO TECHNICAL SYSTEMS
There are three important approaches to job design, viz.,
Engineering approach,
Human approach and
The Job characteristic approach.
Engineering Approach
The most important single element in the Engineering approaches, proposed by FW Taylor and others, was the task idea, “The work of every workman is fully planned out by the management at least one day in advance and each man receives in most cases complete written instructions, describing in detail the task which he is to accomplish . . . This task specifies not only what is to be done but how it is to be done and the exact time allowed for doing it.” The principles offered by scientific management to job design can be summarised thus:
l Work should be scientifically studied. As advocated fragmentation and routinisation of work to reap the advantages of specialisation.
l Work should be arranged so that workers can be efficient.
l Employees selected for work should be matched to the demands of the job.
l Employees should be trained to perform the job.
l Monetary compensation should be used to reward successful performance of the job.
These principles to job design seem to be quite rational and appealing because they point towards increased organisational performance. Specialisation and routinisation over a period of time result in job incumbents becoming experts rather quickly, leading to higher levels of output. Despite the assumed gains in efficiency, behavioural scientists have found that some job incumbents dislike specialised and routine jobs.
Human Relations Approach
The human relations approach recognised the need to design jobs in an interesting manner. In the past two decades much work has been directed to changing jobs so that job incumbents can satisfy their needs for growth, recognition and responsibilility, enhancing need satisfaction through what is called job enrichment. One widely publicised approach to job enrichment uses what is called job characteristics model and this has been explained separately in the ensuing section.
Two types of factors, viz. (i) motivators like achievements, recognition, work itself, responsibility, advancement and growth and (ii) hygiene factors (which merely maintain the employee on the job and in the organization) like working conditions, organisational policies, inter-personnel relations, pay and job security. The employee is dissatisfied with the job if maintenance factors to the required degree are not introduced into the job. But, the employee may not be satisfied even if the required maintenance factors are provided. The employee will be satisfied with his job and he will be more productive if motivators are introduced into the job content. As such, he asserts that the job designer has to introduce hygienic factors adequately to reduce dissatisfaction and build motivating factors. Thus, THE emphasis is on the psychological needs of the employees in designing jobs.
The Job Characteristics Approach
The Job Characteristics Theory states that employees will work hard when they are rewarded for the work they do and when the work gives them satisfaction. Hence, they suggest that motivation, satisfaction and performance should be integrated in the job design. According to this approach, any job can be described in terms of five core job dimensions which are defined as follows:
(a) Skill variety: The degree to which the job requires that workers use a variety of different activities, talents and skills in order to successfully complete the job requirements.
(b) Task identity: The degree to which the job allows workers to complete whole tasks from start to finish, rather than disjointed portions of the job.
(c) Task significance: The degree to which the job significantly impacts the lives of others both within and outside the workplace.
(d) Autonomy: The degree to which the job allows workers freedom in planning and scheduling and the methods used to complete the job.
(e) Feedback: The degree to which the job itself provides workers with clear, direct and understandable knowledge of their performance.
All of the job dimensions impact workers psychologically. The first three dimensions affect whether or not workers view their job as meaningful. Autonomy determines the extent of responsibility workers feel. Feedback allows for feelings of satisfaction for a job well done by providing knowledge of results.
The core job dimensions can be combined into a single predictive index called the Motivating Potential Score. Its computation is as follows:
Motivating Skill variety + Task identity + Task significance
potential = x Autonomy x Feedback
score
Jobs that are high on motivating potential must be high at least in one of the three factors that lead to meaningful work and must be high in both autonomy and feedback and vice versa. These three critical psychological states lead to the outcome such as (a) high internal work motivation, (b) high growth satisfaction, (c) high quality work performance, (d) high general job satisfaction, (e) high work effectiveness and (f) low absenteeism and turnover . The model says that internal rewards are obtained by an individual when he learns that he personally has performed well on a task that he cares about.
Sociotechnical Systems Approach
The above theories of job design are all concerned with designing individual jobs. The approach taken by the sociotechnical systems method is the design or work systems that foster a meshing of the technical and social aspects of jobs. In order to create jobs, which have this supportive relationship, work teams not individual jobs, must be studied. Jobs in the traditional sense are non-existent and instead, each worker plays an assigned role in accomplishing the group’s objectives. Redesigning work through sociotechnical systems methods requires the combined efforts of employees, supervisors and union representatives in analysing significant job operations. Jobs are not necessarily designed to be intrinsically motivating; rather, they are designed so that the work is accomplished. As in scientific management, a supervisor’s goal is to ensure that the organization’s objectives are met. However, this is accomplished by concentrating only on critical job aspects, by forming work teams consisting of members who have the necessary qualifications to accomplish the tasks and by allowing work groups the autonomy to manage their own work process.
The thrust of the sociotechnical approach to job design is that both the technical system and the accompanying social system should be considered when designing jobs. According to this concept, jobs should be designed by taking a ‘holistic’ or ‘systems’ view of the entire job situation, including its physical and social environment. Using the sociotechnical approach, the following guidelines have been developed for designing jobs:
1. A job needs to be reasonably demanding for the individual in terms other than sheer endurance and yet provide some variety (not necessarily novelty).
2. Employees need to be able to learn on the job and to go on learning.
3. Employees need some minimum area of decision making that they can call their own.
4. Employees need some minimal degree of social support and recognition at the workplace.
5. Employees need to be able to relate what they do and what they produce to their social life.
=====================================================================
===================================================================
MS-05 question 2
Discuss the importance of Ergonomics and Socio-technical approach in Job Design.
BEFORE A JOB DESIGN IS DONE,
A JOB ANALYSIS SHOULD BE CARRIED OUT.
Job Analysis is a process to identify and determine in detail the particular job duties and requirements and the relative importance of these duties for a given job. Job Analysis is a process where judgements are made about data collected on a job.
There are two key elements of a job analysis:
1. Identification of major job requirements (MJRs) which are the most important duties and responsibilities of the position to be filled. They are the main purpose or primary reasons the position exists. The primary source of MJRs is the most current, official position description.
2. Identification of knowledge, skills and abilities (KSAs) required to accomplish each MJR and the quality level and amount of the KSAs needed. Most job analyses deal with KSAs that are measurable, that can be documented, and produce meaningful differences between candidates. Typically, possession of KSAs is demonstrated by experience, education, or training. The goal of KSAs is to identify those candidates who are potentially best qualified to perform the position to be filled; they are most useful when they provide meaningful distinctions among qualified candidates. Source documents for KSAs may be the position description, HRM standard qualifications and job classification standards.
==========================================
Job Analysis should collect information on the following areas:
Duties and Tasks The basic unit of a job is the performance of specific tasks and duties. Information to be collected about these items may include: frequency, duration, effort, skill, complexity, equipment, standards, etc.
Environment This may have a significant impact on the physical requirements to be able to perform a job. The work environment may include unpleasant conditions such as offensive odors and temperature extremes. There may also be definite risks to the incumbent such as noxious fumes, radioactive substances, hostile and aggressive people, and dangerous explosives.
Tools and Equipment Some duties and tasks are performed using specific equipment and tools. Equipment may include protective clothing. These items need to be specified in a Job Analysis.
Relationships Supervision given and received. Relationships with internal or external people.
Requirements The knowledges, skills, and abilities (KSA's) required to perform the job. While an incumbent may have higher KSA's than those required for the job, a Job Analysis typically only states the minimum requirements to perform the job.
What does or should the person do?
What knowledge, skill, and abilities does it take to perform this job?
What is the result of the person performing the job?
How does this job fit in with other jobs in the organization?
What is the job’s contribution toward the organization’s goals?
The process may seek to obtain information about the:
work
worker
context within which the job exists
=================================================
Worker Functions. The relationship of the worker to data, people, and things.
Work Fields. The techniques used to complete the tasks of the job. Over 100 such fields have been identified. This descriptor also includes the machines, tools, equipment, and work aids that are used in the job.
Materials, Products, Subject Matter, and/or Services. The outcomes of the job or the purpose of performing the job.
Worker Traits. The aptitudes, educational and vocational training, and personal traits required of the worker.
Physical Demands. Job requirements such as strength, observation, and talking. This descriptor also includes the physical environment of the work.
skills
abilities
knowledge
tasks
work activities
work context
experience levels required
job interests
work values/needs
====================================
To properly perform a job analysis, the individual performing the job should be observed and interviewed. In addition, co-workers and other individuals with similar and related jobs should be interviewed. It is imperative that job tasks be recorded with videotape, pictures, and/or sketches. Also, if the job is performed in a sequence, the work completed before and after the particular job should be documented.
A. Purpose
What are the job duties necessary for job performance? The number of job duties is usually less than ten essential activities, which are necessary to the job.
B. Job Setting
1. Work-site
What equipment is used in the work setting?
How is the workstation arranged?
How is the work organized?
3. Work Activities
What worker movements are necessary to accomplish the job? If there is another way to perform a job function, note this (lifting with an assistive device, typing with an alternative input device).
What are the subject's anthropometric data? Document the subject's stature; eye, shoulder, and knee height; arm reach; leg length; and waist level. Anthropometric data are used to specify appropriate reach and space requirements for various populations.
What types of personal protective equipment (PPE) are used? Document any gloves, arm guards, hardhats, safety glasses, respirators, or shoes.
B. Workstation
1. Office
Are the space dimensions within the workstation sufficient? The top of the computer monitor should be level with the operator's eyes and positioned at a comfortable viewing distance. (This is task specific.) Repositioning with an adjustable monitor arm is an option. The monitor should be placed directly in front of the chair and over the center of the workstation knee well. Screen height should be between 33 and 42 inches, the angle of the monitor screen should be between 0 and 7 degrees, and viewing distance should be between 18 and 28 inches.
Is glare diffused with panel diffusers and/or glare screens? Task lighting with a dimmer control should help, and adjustable blinds can taper excessive sunlight.
2. Industrial
Is the pace setting appropriate? Document what body parts remain idle and what body parts are in steady motion.
Are the "proper" tools available? Tools that are pneumatic; tools that can be used in either hand; tools with pistol shaped handles for power grips; tools with round edges, padded handles, spring activation, and space between closed handles will reduce palm stress and grip force. Newer tools equipped with tool wraps and tool balancers/positioners are also helpful.
3. Service
Is traffic flow designed to most effectively meet the needs of workers, contractors, and customers? Document the most frequently traveled areas and whether goods are stored in an accessible place.
Is anti-fatigue matting available in areas where individuals must stand for long periods of time? If available, document whether the matting is properly fixed to the floor.
Is a preventive maintenance program in place for all equipment?
4. Health Care
Are laundry and food carts pushed rather than pulled? Do carts have an oval or round push bar around waist height? Are powered push/pull devices available for use with beds and heavy or multiple carts? Some manufactures have a motorized option available on a hospital bed.
Have job task analysis been performed to identify awkward postures and motions in all jobs? Examination of past injury reports can identify areas of concern to address first. Look for tasks involving reaching, bending, prolonged static postures, forceful exertions, and heavy lifting.
5. General
Does the job include repeated and sustained exertions? Document whether the job entails stagnant postures for prolonged periods, repetitive motions, and whole body exertions (lifts, pushes, pulls, etc.).
What are the general environmental factors? Document noise levels, ventilation, flooring material, lighting, air quality, and temperature variations, specifically when the worker is exposed to temperatures greater than 75 degrees or less than 50 degrees.
C. Work-site
1. Spacing
Are extra electrical outlets for workers using powered assistive technology available?
Are walkways blocked? Obstructed walkways should be opened to eliminate the potential for trips and falls. At least one clear path of travel (without stairs) at least 36 inches wide, except for a minimum of 60 inches in two-way halls and 32 inches through doorways should be provided. Allow a minimum of 60 inches of clear, level floor space in front of and behind a door and 18 inches on the latch side of the door.
2. Flooring
Are proper treads, handrails, and detectable warnings installed?
Have changes in floor level been identified with visual and texture contrast?
Are door closers adjusted so that from an open position of 70 degrees, the door will take at least 3 seconds to move to a point 3 inches from the latch? (This is measured to the leading edge of the door.)
Do doorways provide at least 32 inches of level clearance?
Do the inside and outside of doors provide 60 inches of clear floor space and 18 inches to the latch side?
Are materials stored in an accessible area, between 15 inches and 48 inches above the floor?
Are hard-to-reach materials labeled? Materials should have visible labels and color codes.
Are electrical outlets accessible? Electrical outlets should be provided at least 15 inches above the floor.
Are items placed in the most "accessible" place possible? Position storage for pushing rather than pulling, pulling rather than carrying, carrying rather than lowering, and lowering rather than lifting. Make storage available for intermediate transporting and transferring of materials.
5. Other
Are accessible drinking fountains provided?
Are employees properly trained in ergonomic principles? Training should include proper lifting techniques, adequate maintenance and correct equipment use, and neutral postures.
Are job tasks varied? An individual should alter positions every 45 minutes, e.g., distribute tasks between right and left hands, alternate between intensive fine motor and gross motor manipulation, and change between sitting and standing.
==================================================
Ergonomics is the science of fitting jobs to people. The discipline encompasses a body of knowledge about physical abilities and limitations as well as other human characteristics that are relevant to job design. Essentially, ergonomics is the relationship between the worker and the job and focuses on the design of work areas to enhance job performance. Ergonomics can help prevent injuries and limit secondary injuries as well as accommodate individuals with various disabilities, including those with musculoskeletal disorders (MSDs).
ERGONOMICS HELPS WORK ORGANIZATION
How can work organization help prevent work-related musculoskeletal disorders (WMSDs) that can result from using hand tools?
People working at a correctly designed workstation and using the best available tools can still get injured. It happens where their work is poorly designed. Work organization involves:
job content -- task variety
work pace
work breaks
rest breaks
adjustment or acclimatization time
training
Task variety
Where a job involves using only one kind of tool for one or a few tasks that vary insignificantly, the same small group of muscles is used over and over again. The resulting overload on the same part of the body can cause pain and injury. A greater variety of tasks allow for changing body position to distribute the workload over different parts of the body, and to give overtaxed muscles some relief and recovery time.
Rotate tasks among workers; have workers move from one task to another according to a schedule.
Add more tasks to the job.
Assign a larger part of work to a team: workers form a team and each member of the team shares several different tasks.
Work pace
A fast pace of work is a strong risk factor for WMSDs. If the pace is too fast, the muscles involved do not have enough time to recover from the effort and to restore sufficient energy to continue the work.
If the pace of work is imposed externally -- assembly line speed, for example -- adjusts it to the speed that is acceptable for the slowest worker.
Incentive systems that reward for the quality of work naturally determine the "right" pace of work.
Incentive systems that reward for the amount or quantity of work increase the risk for WMSDs and, in the long run, will compromise quality as well.
Work breaks
The work break is a time period between tasks. Even short periods of time, literally seconds, that allow one to relax muscles involved in operating tools are important in preventing injuries.
Rest breaks
The rest break is the period after work stops. Besides allowing for refreshment, rest breaks can be used to stretch and relax.
Adjustment period
An adjustment or acclimatization period is the time needed to get "in shape" when returning to work after a long absence, or when starting a new job. It should allow one to refresh old work habits or get used to a new routine. An adjustment period is a very important element of injury prevention. Inexperienced and "new" workers, as well as "old timers" returning to work after a period of recovery and rehabilitation, are more prone than most workers to both injury and re-injury, so adjustment periods are a vitally important way to reintegrate them into the workflow.
Training
Training workers on the safe use of tools, and on the hazards involved in working with them, has always been extremely important. Today, more than ever, when new materials, new technologies and new equipment are replacing older ones faster then ever before, the importance of such training is magnified. The introduction of a new tool or equipment, as well as any change in way the job has been done previously should be preceded by refresher training that includes new information relevant to the changes being introduced. Even the best-designed tool, or the most ergonomically correct workstation, or the most up-to-date work organization will fail to prevent injuries if the worker is not properly trained.
========================
SOCIO-TECNICAL APPROACH TO JOB DESIGN
Socio-technical system
A sociotechnical system is the term usually given to any instantiation of socio and technical elements engaged in goal directed behaviour. Sociotechnical systems are a particular expression of sociotechnical theory, although they are not necessarily one and the same thing. Sociotechnical systems theory is a mixture of sociotechnical theory, joint optimisation and so forth and general systems theory. The term sociotechnical system recognises that organisations have boundaries and that transactions occur within the system (and its sub-systems) and between the wider context and dynamics of the environment. It is an extension of Sociotechnical Theory which provides a richer descriptive and conceptual language for describing, analysing and designing organisations. A Sociotechnical System, therefore, often describes a ‘thing’ (an interlinked, systems based mixture of people, technology and their environment).
Socio-technical systems approach
Socio-technical systems in organizational development is the term for an approach to complex organizational work design that recognizes the interaction between people and technology in workplaces. The term also refers to the interaction between society's complex infrastructures and human behaviour. In this sense, society itself, and most of its sub-structures, are complex socio-technical systems.
FIRST,THE APPROACH SHOULD BE APPLIED TO THE ORGANIZATION
IN DESIGNING.
A sociotechnical systems approach to designing organizations is based upon a set of guiding propositions:
The design of the organization must fit its goals.
Employees must be actively involved in designing the structure of the organization.
Control of variances in production or service must be undertaken as close to their source as possible.
Subsystems must be designed around relatively self-contained and recognizable units of work.
Support systems must fit in with the design of the organization.
The design should allow for a high quality of working life.
Changes should continue to be made as necessary to meet the changing environmental pressures.
Motivation Factors
It has been suggested that four categories of job characteristic are significant in terms of motivation and performance:
responsible autonomy- the group's acceptance of responsibility for the production cycle, output rate, quality, and quantity of output;
adaptability;
variety;
participation.
Autonomous behavior includes the self-regulation by the group of work content, critical self-evaluation of work group performance, self-adjustment to cope with changes, and participation in goal setting.
Limitations
The socio-technical systems approach is not without its limitations. Whilst many advantages can result from focusing on the work group rather than the individuals and their jobs, autonomous group working does not seem to have widespread appeal.
Certainly the roles of both supervision and specialist advisers are considerably affected and in some cases eliminated.
Movement of personnel between work groups with high levels of autonomy may be difficult, hence removing some of management's flexibility.
Difficulties are often experienced in implementation in existing work situations.
A participative design process is not acceptable in many organizations and can be very time-consuming.
Alternative ways of organizing work are not always apparent where existing technology has to be employed.
Management are often not prepared to take the risk of introducing radically different approaches to organizing work alongside other changes which already have a high element of disruption and associated risk.
=========================
Approaches to Job Design USING SOCIO TECHNICAL SYSTEMS
There are three important approaches to job design, viz.,
Engineering approach,
Human approach and
The Job characteristic approach.
Engineering Approach
The most important single element in the Engineering approaches, proposed by FW Taylor and others, was the task idea, “The work of every workman is fully planned out by the management at least one day in advance and each man receives in most cases complete written instructions, describing in detail the task which he is to accomplish . . . This task specifies not only what is to be done but how it is to be done and the exact time allowed for doing it.” The principles offered by scientific management to job design can be summarised thus:
l Work should be scientifically studied. As advocated fragmentation and routinisation of work to reap the advantages of specialisation.
l Work should be arranged so that workers can be efficient.
l Employees selected for work should be matched to the demands of the job.
l Employees should be trained to perform the job.
l Monetary compensation should be used to reward successful performance of the job.
These principles to job design seem to be quite rational and appealing because they point towards increased organisational performance. Specialisation and routinisation over a period of time result in job incumbents becoming experts rather quickly, leading to higher levels of output. Despite the assumed gains in efficiency, behavioural scientists have found that some job incumbents dislike specialised and routine jobs.
Human Relations Approach
The human relations approach recognised the need to design jobs in an interesting manner. In the past two decades much work has been directed to changing jobs so that job incumbents can satisfy their needs for growth, recognition and responsibilility, enhancing need satisfaction through what is called job enrichment. One widely publicised approach to job enrichment uses what is called job characteristics model and this has been explained separately in the ensuing section.
Two types of factors, viz. (i) motivators like achievements, recognition, work itself, responsibility, advancement and growth and (ii) hygiene factors (which merely maintain the employee on the job and in the organization) like working conditions, organisational policies, inter-personnel relations, pay and job security. The employee is dissatisfied with the job if maintenance factors to the required degree are not introduced into the job. But, the employee may not be satisfied even if the required maintenance factors are provided. The employee will be satisfied with his job and he will be more productive if motivators are introduced into the job content. As such, he asserts that the job designer has to introduce hygienic factors adequately to reduce dissatisfaction and build motivating factors. Thus, THE emphasis is on the psychological needs of the employees in designing jobs.
The Job Characteristics Approach
The Job Characteristics Theory states that employees will work hard when they are rewarded for the work they do and when the work gives them satisfaction. Hence, they suggest that motivation, satisfaction and performance should be integrated in the job design. According to this approach, any job can be described in terms of five core job dimensions which are defined as follows:
(a) Skill variety: The degree to which the job requires that workers use a variety of different activities, talents and skills in order to successfully complete the job requirements.
(b) Task identity: The degree to which the job allows workers to complete whole tasks from start to finish, rather than disjointed portions of the job.
(c) Task significance: The degree to which the job significantly impacts the lives of others both within and outside the workplace.
(d) Autonomy: The degree to which the job allows workers freedom in planning and scheduling and the methods used to complete the job.
(e) Feedback: The degree to which the job itself provides workers with clear, direct and understandable knowledge of their performance.
All of the job dimensions impact workers psychologically. The first three dimensions affect whether or not workers view their job as meaningful. Autonomy determines the extent of responsibility workers feel. Feedback allows for feelings of satisfaction for a job well done by providing knowledge of results.
The core job dimensions can be combined into a single predictive index called the Motivating Potential Score. Its computation is as follows:
Motivating Skill variety + Task identity + Task significance
potential = x Autonomy x Feedback
score
Jobs that are high on motivating potential must be high at least in one of the three factors that lead to meaningful work and must be high in both autonomy and feedback and vice versa. These three critical psychological states lead to the outcome such as (a) high internal work motivation, (b) high growth satisfaction, (c) high quality work performance, (d) high general job satisfaction, (e) high work effectiveness and (f) low absenteeism and turnover . The model says that internal rewards are obtained by an individual when he learns that he personally has performed well on a task that he cares about.
Sociotechnical Systems Approach
The above theories of job design are all concerned with designing individual jobs. The approach taken by the sociotechnical systems method is the design or work systems that foster a meshing of the technical and social aspects of jobs. In order to create jobs, which have this supportive relationship, work teams not individual jobs, must be studied. Jobs in the traditional sense are non-existent and instead, each worker plays an assigned role in accomplishing the group’s objectives. Redesigning work through sociotechnical systems methods requires the combined efforts of employees, supervisors and union representatives in analysing significant job operations. Jobs are not necessarily designed to be intrinsically motivating; rather, they are designed so that the work is accomplished. As in scientific management, a supervisor’s goal is to ensure that the organization’s objectives are met. However, this is accomplished by concentrating only on critical job aspects, by forming work teams consisting of members who have the necessary qualifications to accomplish the tasks and by allowing work groups the autonomy to manage their own work process.
The thrust of the sociotechnical approach to job design is that both the technical system and the accompanying social system should be considered when designing jobs. According to this concept, jobs should be designed by taking a ‘holistic’ or ‘systems’ view of the entire job situation, including its physical and social environment. Using the sociotechnical approach, the following guidelines have been developed for designing jobs:
1. A job needs to be reasonably demanding for the individual in terms other than sheer endurance and yet provide some variety (not necessarily novelty).
2. Employees need to be able to learn on the job and to go on learning.
3. Employees need some minimum area of decision making that they can call their own.
4. Employees need some minimal degree of social support and recognition at the workplace.
5. Employees need to be able to relate what they do and what they produce to their social life.
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BEFORE A JOB DESIGN IS DONE,
A JOB ANALYSIS SHOULD BE CARRIED OUT.
Job Analysis is a process to identify and determine in detail the particular job duties and requirements and the relative importance of these duties for a given job. Job Analysis is a process where judgements are made about data collected on a job.
There are two key elements of a job analysis:
1. Identification of major job requirements (MJRs) which are the most important duties and responsibilities of the position to be filled. They are the main purpose or primary reasons the position exists. The primary source of MJRs is the most current, official position description.
2. Identification of knowledge, skills and abilities (KSAs) required to accomplish each MJR and the quality level and amount of the KSAs needed. Most job analyses deal with KSAs that are measurable, that can be documented, and produce meaningful differences between candidates. Typically, possession of KSAs is demonstrated by experience, education, or training. The goal of KSAs is to identify those candidates who are potentially best qualified to perform the position to be filled; they are most useful when they provide meaningful distinctions among qualified candidates. Source documents for KSAs may be the position description, HRM standard qualifications and job classification standards.
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Job Analysis should collect information on the following areas:
Duties and Tasks The basic unit of a job is the performance of specific tasks and duties. Information to be collected about these items may include: frequency, duration, effort, skill, complexity, equipment, standards, etc.
Environment This may have a significant impact on the physical requirements to be able to perform a job. The work environment may include unpleasant conditions such as offensive odors and temperature extremes. There may also be definite risks to the incumbent such as noxious fumes, radioactive substances, hostile and aggressive people, and dangerous explosives.
Tools and Equipment Some duties and tasks are performed using specific equipment and tools. Equipment may include protective clothing. These items need to be specified in a Job Analysis.
Relationships Supervision given and received. Relationships with internal or external people.
Requirements The knowledges, skills, and abilities (KSA's) required to perform the job. While an incumbent may have higher KSA's than those required for the job, a Job Analysis typically only states the minimum requirements to perform the job.
What does or should the person do?
What knowledge, skill, and abilities does it take to perform this job?
What is the result of the person performing the job?
How does this job fit in with other jobs in the organization?
What is the job’s contribution toward the organization’s goals?
The process may seek to obtain information about the:
work
worker
context within which the job exists
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Worker Functions. The relationship of the worker to data, people, and things.
Work Fields. The techniques used to complete the tasks of the job. Over 100 such fields have been identified. This descriptor also includes the machines, tools, equipment, and work aids that are used in the job.
Materials, Products, Subject Matter, and/or Services. The outcomes of the job or the purpose of performing the job.
Worker Traits. The aptitudes, educational and vocational training, and personal traits required of the worker.
Physical Demands. Job requirements such as strength, observation, and talking. This descriptor also includes the physical environment of the work.
skills
abilities
knowledge
tasks
work activities
work context
experience levels required
job interests
work values/needs
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To properly perform a job analysis, the individual performing the job should be observed and interviewed. In addition, co-workers and other individuals with similar and related jobs should be interviewed. It is imperative that job tasks be recorded with videotape, pictures, and/or sketches. Also, if the job is performed in a sequence, the work completed before and after the particular job should be documented.
A. Purpose
What are the job duties necessary for job performance? The number of job duties is usually less than ten essential activities, which are necessary to the job.
B. Job Setting
1. Work-site
What equipment is used in the work setting?
How is the workstation arranged?
How is the work organized?
3. Work Activities
What worker movements are necessary to accomplish the job? If there is another way to perform a job function, note this (lifting with an assistive device, typing with an alternative input device).
What are the subject's anthropometric data? Document the subject's stature; eye, shoulder, and knee height; arm reach; leg length; and waist level. Anthropometric data are used to specify appropriate reach and space requirements for various populations.
What types of personal protective equipment (PPE) are used? Document any gloves, arm guards, hardhats, safety glasses, respirators, or shoes.
B. Workstation
1. Office
Are the space dimensions within the workstation sufficient? The top of the computer monitor should be level with the operator's eyes and positioned at a comfortable viewing distance. (This is task specific.) Repositioning with an adjustable monitor arm is an option. The monitor should be placed directly in front of the chair and over the center of the workstation knee well. Screen height should be between 33 and 42 inches, the angle of the monitor screen should be between 0 and 7 degrees, and viewing distance should be between 18 and 28 inches.
Is glare diffused with panel diffusers and/or glare screens? Task lighting with a dimmer control should help, and adjustable blinds can taper excessive sunlight.
2. Industrial
Is the pace setting appropriate? Document what body parts remain idle and what body parts are in steady motion.
Are the "proper" tools available? Tools that are pneumatic; tools that can be used in either hand; tools with pistol shaped handles for power grips; tools with round edges, padded handles, spring activation, and space between closed handles will reduce palm stress and grip force. Newer tools equipped with tool wraps and tool balancers/positioners are also helpful.
3. Service
Is traffic flow designed to most effectively meet the needs of workers, contractors, and customers? Document the most frequently traveled areas and whether goods are stored in an accessible place.
Is anti-fatigue matting available in areas where individuals must stand for long periods of time? If available, document whether the matting is properly fixed to the floor.
Is a preventive maintenance program in place for all equipment?
4. Health Care
Are laundry and food carts pushed rather than pulled? Do carts have an oval or round push bar around waist height? Are powered push/pull devices available for use with beds and heavy or multiple carts? Some manufactures have a motorized option available on a hospital bed.
Have job task analysis been performed to identify awkward postures and motions in all jobs? Examination of past injury reports can identify areas of concern to address first. Look for tasks involving reaching, bending, prolonged static postures, forceful exertions, and heavy lifting.
5. General
Does the job include repeated and sustained exertions? Document whether the job entails stagnant postures for prolonged periods, repetitive motions, and whole body exertions (lifts, pushes, pulls, etc.).
What are the general environmental factors? Document noise levels, ventilation, flooring material, lighting, air quality, and temperature variations, specifically when the worker is exposed to temperatures greater than 75 degrees or less than 50 degrees.
C. Work-site
1. Spacing
Are extra electrical outlets for workers using powered assistive technology available?
Are walkways blocked? Obstructed walkways should be opened to eliminate the potential for trips and falls. At least one clear path of travel (without stairs) at least 36 inches wide, except for a minimum of 60 inches in two-way halls and 32 inches through doorways should be provided. Allow a minimum of 60 inches of clear, level floor space in front of and behind a door and 18 inches on the latch side of the door.
2. Flooring
Are proper treads, handrails, and detectable warnings installed?
Have changes in floor level been identified with visual and texture contrast?
Are door closers adjusted so that from an open position of 70 degrees, the door will take at least 3 seconds to move to a point 3 inches from the latch? (This is measured to the leading edge of the door.)
Do doorways provide at least 32 inches of level clearance?
Do the inside and outside of doors provide 60 inches of clear floor space and 18 inches to the latch side?
Are materials stored in an accessible area, between 15 inches and 48 inches above the floor?
Are hard-to-reach materials labeled? Materials should have visible labels and color codes.
Are electrical outlets accessible? Electrical outlets should be provided at least 15 inches above the floor.
Are items placed in the most "accessible" place possible? Position storage for pushing rather than pulling, pulling rather than carrying, carrying rather than lowering, and lowering rather than lifting. Make storage available for intermediate transporting and transferring of materials.
5. Other
Are accessible drinking fountains provided?
Are employees properly trained in ergonomic principles? Training should include proper lifting techniques, adequate maintenance and correct equipment use, and neutral postures.
Are job tasks varied? An individual should alter positions every 45 minutes, e.g., distribute tasks between right and left hands, alternate between intensive fine motor and gross motor manipulation, and change between sitting and standing.
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Ergonomics is the science of fitting jobs to people. The discipline encompasses a body of knowledge about physical abilities and limitations as well as other human characteristics that are relevant to job design. Essentially, ergonomics is the relationship between the worker and the job and focuses on the design of work areas to enhance job performance. Ergonomics can help prevent injuries and limit secondary injuries as well as accommodate individuals with various disabilities, including those with musculoskeletal disorders (MSDs).
ERGONOMICS HELPS WORK ORGANIZATION
How can work organization help prevent work-related musculoskeletal disorders (WMSDs) that can result from using hand tools?
People working at a correctly designed workstation and using the best available tools can still get injured. It happens where their work is poorly designed. Work organization involves:
job content -- task variety
work pace
work breaks
rest breaks
adjustment or acclimatization time
training
Task variety
Where a job involves using only one kind of tool for one or a few tasks that vary insignificantly, the same small group of muscles is used over and over again. The resulting overload on the same part of the body can cause pain and injury. A greater variety of tasks allow for changing body position to distribute the workload over different parts of the body, and to give overtaxed muscles some relief and recovery time.
Rotate tasks among workers; have workers move from one task to another according to a schedule.
Add more tasks to the job.
Assign a larger part of work to a team: workers form a team and each member of the team shares several different tasks.
Work pace
A fast pace of work is a strong risk factor for WMSDs. If the pace is too fast, the muscles involved do not have enough time to recover from the effort and to restore sufficient energy to continue the work.
If the pace of work is imposed externally -- assembly line speed, for example -- adjusts it to the speed that is acceptable for the slowest worker.
Incentive systems that reward for the quality of work naturally determine the "right" pace of work.
Incentive systems that reward for the amount or quantity of work increase the risk for WMSDs and, in the long run, will compromise quality as well.
Work breaks
The work break is a time period between tasks. Even short periods of time, literally seconds, that allow one to relax muscles involved in operating tools are important in preventing injuries.
Rest breaks
The rest break is the period after work stops. Besides allowing for refreshment, rest breaks can be used to stretch and relax.
Adjustment period
An adjustment or acclimatization period is the time needed to get "in shape" when returning to work after a long absence, or when starting a new job. It should allow one to refresh old work habits or get used to a new routine. An adjustment period is a very important element of injury prevention. Inexperienced and "new" workers, as well as "old timers" returning to work after a period of recovery and rehabilitation, are more prone than most workers to both injury and re-injury, so adjustment periods are a vitally important way to reintegrate them into the workflow.
Training
Training workers on the safe use of tools, and on the hazards involved in working with them, has always been extremely important. Today, more than ever, when new materials, new technologies and new equipment are replacing older ones faster then ever before, the importance of such training is magnified. The introduction of a new tool or equipment, as well as any change in way the job has been done previously should be preceded by refresher training that includes new information relevant to the changes being introduced. Even the best-designed tool, or the most ergonomically correct workstation, or the most up-to-date work organization will fail to prevent injuries if the worker is not properly trained.
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SOCIO-TECNICAL APPROACH TO JOB DESIGN
Socio-technical system
A sociotechnical system is the term usually given to any instantiation of socio and technical elements engaged in goal directed behaviour. Sociotechnical systems are a particular expression of sociotechnical theory, although they are not necessarily one and the same thing. Sociotechnical systems theory is a mixture of sociotechnical theory, joint optimisation and so forth and general systems theory. The term sociotechnical system recognises that organisations have boundaries and that transactions occur within the system (and its sub-systems) and between the wider context and dynamics of the environment. It is an extension of Sociotechnical Theory which provides a richer descriptive and conceptual language for describing, analysing and designing organisations. A Sociotechnical System, therefore, often describes a ‘thing’ (an interlinked, systems based mixture of people, technology and their environment).
Socio-technical systems approach
Socio-technical systems in organizational development is the term for an approach to complex organizational work design that recognizes the interaction between people and technology in workplaces. The term also refers to the interaction between society's complex infrastructures and human behaviour. In this sense, society itself, and most of its sub-structures, are complex socio-technical systems.
FIRST,THE APPROACH SHOULD BE APPLIED TO THE ORGANIZATION
IN DESIGNING.
A sociotechnical systems approach to designing organizations is based upon a set of guiding propositions:
The design of the organization must fit its goals.
Employees must be actively involved in designing the structure of the organization.
Control of variances in production or service must be undertaken as close to their source as possible.
Subsystems must be designed around relatively self-contained and recognizable units of work.
Support systems must fit in with the design of the organization.
The design should allow for a high quality of working life.
Changes should continue to be made as necessary to meet the changing environmental pressures.
Motivation Factors
It has been suggested that four categories of job characteristic are significant in terms of motivation and performance:
responsible autonomy- the group's acceptance of responsibility for the production cycle, output rate, quality, and quantity of output;
adaptability;
variety;
participation.
Autonomous behavior includes the self-regulation by the group of work content, critical self-evaluation of work group performance, self-adjustment to cope with changes, and participation in goal setting.
Limitations
The socio-technical systems approach is not without its limitations. Whilst many advantages can result from focusing on the work group rather than the individuals and their jobs, autonomous group working does not seem to have widespread appeal.
Certainly the roles of both supervision and specialist advisers are considerably affected and in some cases eliminated.
Movement of personnel between work groups with high levels of autonomy may be difficult, hence removing some of management's flexibility.
Difficulties are often experienced in implementation in existing work situations.
A participative design process is not acceptable in many organizations and can be very time-consuming.
Alternative ways of organizing work are not always apparent where existing technology has to be employed.
Management are often not prepared to take the risk of introducing radically different approaches to organizing work alongside other changes which already have a high element of disruption and associated risk.
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Approaches to Job Design USING SOCIO TECHNICAL SYSTEMS
There are three important approaches to job design, viz.,
Engineering approach,
Human approach and
The Job characteristic approach.
Engineering Approach
The most important single element in the Engineering approaches, proposed by FW Taylor and others, was the task idea, “The work of every workman is fully planned out by the management at least one day in advance and each man receives in most cases complete written instructions, describing in detail the task which he is to accomplish . . . This task specifies not only what is to be done but how it is to be done and the exact time allowed for doing it.” The principles offered by scientific management to job design can be summarised thus:
l Work should be scientifically studied. As advocated fragmentation and routinisation of work to reap the advantages of specialisation.
l Work should be arranged so that workers can be efficient.
l Employees selected for work should be matched to the demands of the job.
l Employees should be trained to perform the job.
l Monetary compensation should be used to reward successful performance of the job.
These principles to job design seem to be quite rational and appealing because they point towards increased organisational performance. Specialisation and routinisation over a period of time result in job incumbents becoming experts rather quickly, leading to higher levels of output. Despite the assumed gains in efficiency, behavioural scientists have found that some job incumbents dislike specialised and routine jobs.
Human Relations Approach
The human relations approach recognised the need to design jobs in an interesting manner. In the past two decades much work has been directed to changing jobs so that job incumbents can satisfy their needs for growth, recognition and responsibilility, enhancing need satisfaction through what is called job enrichment. One widely publicised approach to job enrichment uses what is called job characteristics model and this has been explained separately in the ensuing section.
Two types of factors, viz. (i) motivators like achievements, recognition, work itself, responsibility, advancement and growth and (ii) hygiene factors (which merely maintain the employee on the job and in the organization) like working conditions, organisational policies, inter-personnel relations, pay and job security. The employee is dissatisfied with the job if maintenance factors to the required degree are not introduced into the job. But, the employee may not be satisfied even if the required maintenance factors are provided. The employee will be satisfied with his job and he will be more productive if motivators are introduced into the job content. As such, he asserts that the job designer has to introduce hygienic factors adequately to reduce dissatisfaction and build motivating factors. Thus, THE emphasis is on the psychological needs of the employees in designing jobs.
The Job Characteristics Approach
The Job Characteristics Theory states that employees will work hard when they are rewarded for the work they do and when the work gives them satisfaction. Hence, they suggest that motivation, satisfaction and performance should be integrated in the job design. According to this approach, any job can be described in terms of five core job dimensions which are defined as follows:
(a) Skill variety: The degree to which the job requires that workers use a variety of different activities, talents and skills in order to successfully complete the job requirements.
(b) Task identity: The degree to which the job allows workers to complete whole tasks from start to finish, rather than disjointed portions of the job.
(c) Task significance: The degree to which the job significantly impacts the lives of others both within and outside the workplace.
(d) Autonomy: The degree to which the job allows workers freedom in planning and scheduling and the methods used to complete the job.
(e) Feedback: The degree to which the job itself provides workers with clear, direct and understandable knowledge of their performance.
All of the job dimensions impact workers psychologically. The first three dimensions affect whether or not workers view their job as meaningful. Autonomy determines the extent of responsibility workers feel. Feedback allows for feelings of satisfaction for a job well done by providing knowledge of results.
The core job dimensions can be combined into a single predictive index called the Motivating Potential Score. Its computation is as follows:
Motivating Skill variety + Task identity + Task significance
potential = x Autonomy x Feedback
score
Jobs that are high on motivating potential must be high at least in one of the three factors that lead to meaningful work and must be high in both autonomy and feedback and vice versa. These three critical psychological states lead to the outcome such as (a) high internal work motivation, (b) high growth satisfaction, (c) high quality work performance, (d) high general job satisfaction, (e) high work effectiveness and (f) low absenteeism and turnover . The model says that internal rewards are obtained by an individual when he learns that he personally has performed well on a task that he cares about.
Sociotechnical Systems Approach
The above theories of job design are all concerned with designing individual jobs. The approach taken by the sociotechnical systems method is the design or work systems that foster a meshing of the technical and social aspects of jobs. In order to create jobs, which have this supportive relationship, work teams not individual jobs, must be studied. Jobs in the traditional sense are non-existent and instead, each worker plays an assigned role in accomplishing the group’s objectives. Redesigning work through sociotechnical systems methods requires the combined efforts of employees, supervisors and union representatives in analysing significant job operations. Jobs are not necessarily designed to be intrinsically motivating; rather, they are designed so that the work is accomplished. As in scientific management, a supervisor’s goal is to ensure that the organization’s objectives are met. However, this is accomplished by concentrating only on critical job aspects, by forming work teams consisting of members who have the necessary qualifications to accomplish the tasks and by allowing work groups the autonomy to manage their own work process.
The thrust of the sociotechnical approach to job design is that both the technical system and the accompanying social system should be considered when designing jobs. According to this concept, jobs should be designed by taking a ‘holistic’ or ‘systems’ view of the entire job situation, including its physical and social environment. Using the sociotechnical approach, the following guidelines have been developed for designing jobs:
1. A job needs to be reasonably demanding for the individual in terms other than sheer endurance and yet provide some variety (not necessarily novelty).
2. Employees need to be able to learn on the job and to go on learning.
3. Employees need some minimum area of decision making that they can call their own.
4. Employees need some minimal degree of social support and recognition at the workplace.
5. Employees need to be able to relate what they do and what they produce to their social life.
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MS-05 question 1
Explain the concept of life-cycle in Operations Management.
1. Introduction
Every organization has an objective or objectives and goals to achieve. These objectives and goals achieving can be possible only when management organizing the available recourses in a suitable structure with a plan. The whole process of achieving objectives like planning, organizing and implementation and correction process by means of feedback bring together by operation management. The physical resources like space, machinery, money and men who organize those physical will take major role in the operation management.
The objectives related to both performance and cost, decision making process related production or operation of the organization, strategic and operational and feedback control system will play important role in deciding life cycle of any organization. The various stages and their life span each stage life cycle of system is discussed in the next section.
2. Life cycle concept
Life cycle concept is applied in operational management for any production system which takes input and produces some out put by using some process. The production system may be mass production, batch production, Job shop production or unit manufacture or project. The different production system is applicable to process of production depends on the type of product we produce and the volume of the process we use to produce the goods. The whole process of operation form birth to death of a production system can be viewed as definite Life cycle.
The life cycle concept of any product is similar to any life cycle of a living being. The major stages in the life cycle concept are 1) Introduction or Birth 2) Growth 3) Maturity 4) Death. The similar Life cycle concept we can apply to any product in production system. The Typical product Life- cycle is represented in Figure A1-1. The concept also shows the product life influenced by the external environment and go through the various stages in its life cycle. Through out the cycle the whole process of operation management is applied on the production system to maintain to sustain longer. The in evitable situation due to the environmental influences like people taste, interest there is always new born of other production system. The same concept is shown in the Figure A1-1 Product A and Product B. product B emerged in the market when the Product enjoying the maturity stage of its life cycle.
Birth
Growth
Maturity
Death
Product A
Product B
Volume
Time
The life span of each stage of a product may vary few months to years Example some products in the market as soon as they introduce, with in no time they reach growth stage. Now we will discuss about each stage of life cycle of product.
2.1 Birth (or Introduction stage)
This is the stage where a product will be introduced after initial decisions like selection, technology selection, location and layout design of production facility after study of various aspects of business unit in transpiration and raw material, manpower resources availability etc. This is the stage we call it as Birth stage of the product.
2.2 Growth stage
After introducing the product the next stage for any product is looking for growth. The growth is stage is very critical in the operation management. The key of success is lying in this stage. How we take this product to people or how people will have feel of necessity of the product depends on the efficient marketing strategies of the management. Some times the time taking to reach to growth stage will be faster because of the uniqueness of its usage when compare with its competitor products. The major efforts are required at this stage to push with all possible strategies in an ethical manner.
2.3 Maturity stage
Once the product is established, the product life cycle enter in to the maturity stage. At this stage organization takes feed back from various groups of users and improve the product usability with add on features and introduce different models with out change in basic application. This is the stage business will be exposed more to the external competitive market which initiate new comers with similar product where they will take off the market or share the market which causes the original product business organization will go for further improvement or for new product line. Sustainability of in this stage is depends on the factors like the management's views, how fast they recognize their product obsolesced and how fast new comers taking over the market.
2.4 Death stage.
As discussed above in maturity stage, in case of business management could not predict the impact of the new product growth and lack of taking necessary changes in the product design, the product life cycle enter into the dearth stage which leads to organization to merge with new companies or liquidation or sale.
3. Life-cycle costing
The cost of the product through out the product life-cycle referred as Life-cycle costing. The new concept of this Life-cycle costing is long term costing. The short term costing always lead us to in efficient decisions which put us in a wring track of product selection, design and production. The initial cost may be higher at growth stage, but if know that product sustain longer in the market in future, we should go ahead with considerable investment keeping the future market in mind. The decision policy through out the life cycle should be maintained in the operational management of such business opportunity.
4. Conclusion
As we discussed in the above section the any business organization will have their product life cycles. The operation management of the organization should always keep watching the new trends of people taste or requirement, the available latest technology and competitors new proposals so that necessary action can be taken in advance to decrease the to reach growth stage and increase the span of the maturity stage. The type of operational decisions and selection procedures all depends on the product one any organization plan to develop or introduce in the market.
1. Introduction
Every organization has an objective or objectives and goals to achieve. These objectives and goals achieving can be possible only when management organizing the available recourses in a suitable structure with a plan. The whole process of achieving objectives like planning, organizing and implementation and correction process by means of feedback bring together by operation management. The physical resources like space, machinery, money and men who organize those physical will take major role in the operation management.
The objectives related to both performance and cost, decision making process related production or operation of the organization, strategic and operational and feedback control system will play important role in deciding life cycle of any organization. The various stages and their life span each stage life cycle of system is discussed in the next section.
2. Life cycle concept
Life cycle concept is applied in operational management for any production system which takes input and produces some out put by using some process. The production system may be mass production, batch production, Job shop production or unit manufacture or project. The different production system is applicable to process of production depends on the type of product we produce and the volume of the process we use to produce the goods. The whole process of operation form birth to death of a production system can be viewed as definite Life cycle.
The life cycle concept of any product is similar to any life cycle of a living being. The major stages in the life cycle concept are 1) Introduction or Birth 2) Growth 3) Maturity 4) Death. The similar Life cycle concept we can apply to any product in production system. The Typical product Life- cycle is represented in Figure A1-1. The concept also shows the product life influenced by the external environment and go through the various stages in its life cycle. Through out the cycle the whole process of operation management is applied on the production system to maintain to sustain longer. The in evitable situation due to the environmental influences like people taste, interest there is always new born of other production system. The same concept is shown in the Figure A1-1 Product A and Product B. product B emerged in the market when the Product enjoying the maturity stage of its life cycle.
Birth
Growth
Maturity
Death
Product A
Product B
Volume
Time
The life span of each stage of a product may vary few months to years Example some products in the market as soon as they introduce, with in no time they reach growth stage. Now we will discuss about each stage of life cycle of product.
2.1 Birth (or Introduction stage)
This is the stage where a product will be introduced after initial decisions like selection, technology selection, location and layout design of production facility after study of various aspects of business unit in transpiration and raw material, manpower resources availability etc. This is the stage we call it as Birth stage of the product.
2.2 Growth stage
After introducing the product the next stage for any product is looking for growth. The growth is stage is very critical in the operation management. The key of success is lying in this stage. How we take this product to people or how people will have feel of necessity of the product depends on the efficient marketing strategies of the management. Some times the time taking to reach to growth stage will be faster because of the uniqueness of its usage when compare with its competitor products. The major efforts are required at this stage to push with all possible strategies in an ethical manner.
2.3 Maturity stage
Once the product is established, the product life cycle enter in to the maturity stage. At this stage organization takes feed back from various groups of users and improve the product usability with add on features and introduce different models with out change in basic application. This is the stage business will be exposed more to the external competitive market which initiate new comers with similar product where they will take off the market or share the market which causes the original product business organization will go for further improvement or for new product line. Sustainability of in this stage is depends on the factors like the management's views, how fast they recognize their product obsolesced and how fast new comers taking over the market.
2.4 Death stage.
As discussed above in maturity stage, in case of business management could not predict the impact of the new product growth and lack of taking necessary changes in the product design, the product life cycle enter into the dearth stage which leads to organization to merge with new companies or liquidation or sale.
3. Life-cycle costing
The cost of the product through out the product life-cycle referred as Life-cycle costing. The new concept of this Life-cycle costing is long term costing. The short term costing always lead us to in efficient decisions which put us in a wring track of product selection, design and production. The initial cost may be higher at growth stage, but if know that product sustain longer in the market in future, we should go ahead with considerable investment keeping the future market in mind. The decision policy through out the life cycle should be maintained in the operational management of such business opportunity.
4. Conclusion
As we discussed in the above section the any business organization will have their product life cycles. The operation management of the organization should always keep watching the new trends of people taste or requirement, the available latest technology and competitors new proposals so that necessary action can be taken in advance to decrease the to reach growth stage and increase the span of the maturity stage. The type of operational decisions and selection procedures all depends on the product one any organization plan to develop or introduce in the market.
Wednesday, April 23, 2008
MS-04 question 1
Describe the accounting information system that is being followed by your organization. Also point out the flaws in the prevailing system, if any, and give suggestions to overcome the same
The organization, I am familiar with is a -a large manufacturer/ marketer of safety products
-the products are used as
[personal protection safety]
[ industrial safety]
-the products are distributed through the distributors as well as sold directly-the products are sold to various industries like mining/fireservices/defence/as well as to various manufacturing companies.-the company employs about 235 people.-the company has the following functional departments
*marketing
*manufacturing
*sales
*finance/ administration
*human resource
*customer service
*distribution
*warehousing/ transportation
*TQM
==============================================
THE Components of the Accounting SystemThink of the accounting system as a wheel whose hub is the general ledger (G/L). Feeding the hub information are the spokes of the wheel. These include Accounts receivable/ Accounts payable /Order entry/ Inventory control /Cost accounting /Payroll /Fixed assets accounting These modules are ledgers themselves. We call them subledgers. Each contains the detailed entries of its specific field, such as accounts receivable. The subledgers summarize the entries, then send the summary up to the general ledger. For example, each day the receivables subledger records all credit sales and payments received. The transactions net together then go up to the G/L to increase or decrease A/R, increase cash and decrease inventory. We'll always check to be sure that the balance of the subledger exactly equals the account balance for that subledger account in the G/L. If it doesn't, then there's a problem. Differences between Manual and Automated LedgersThink of the G/L as a sheet of paper on which transactions from all four categories of
accounts-assets,
-liabilities,
-income, and
-expenses-are recorded. Some of them flow up from various subledgers, and some are entered directly into the G/L through a general journal entry. An example of such a direct entry would be the payment on a loan. The same concept of a sheet of paper holds for each subledger that feeds the general ledger. A computerized accounting system works the same way, except that the general ledger and subledgers are computer files instead of sheets of paper. Entries are posted to each and summarized, then the summary is sent up to the G/L for posting. ORGANIZATION OF THE ACCOUNTING DEPARTMENTOrganizing the business accounting system by functions.-credit-accounting-management accounting-accounts receivable-accounts payable-banking/ administration
===========================================
Accounting Basics•
Bookkeeping
• Accounting
• Reporting
• Non-financial data
• Financial data Components of an Accounting System
• Revenue Cycle • Order Entry
• Cash Receipts / Deposits
• Accounts Receivable
• Purchase Cycle
• Purchase Orders / Purchasing
• Cash Disbursements / Checks
• Accounts Payable
• Payroll Cycle
• General Journal Cycle
• How does posting work? Accounting Terms and Concepts
• Double-Entry Accounting Basic Accounting Structure
• Balance sheet • Income Statement
• Basic Accounting Formula Accounting Methods
• Accrual Method
• Cash Method
• Percentage of Completion Method Reporting Standards
• GAAP - Generally Accepted Accounting Principles
• The Matching Principle • Conformity
• Valuation • Inventory Valuation
• Materiality Types of Reports
• External Reports
• Compilation
• Review
• Audit
• SEC - Audit
• Internal Reports
Summary
1 Internal Auditing
2.2.2 Payroll
2.2.3 Finance And Treasury
2.2.4 Information Systems
2.2.5 Security Planning
2.2.6 Disaster Recovery
3.0 Management Responsibility
3.1 Accounting Organization
3.1.1 Accounting Department Org Chart
3.1.2 Finance & Treasury Responsibilities
3.1.3 Controller Responsibilities
3.1.4 Accounting Staff Responsibilities
3.1.5 Operations Staff Responsibilities
3.2 Management Commitment
3.3 Management Accounting Policy
3.4 Planning
3.4.1 Accounting Objectives
3.4.2 Accounting System Planning
3.5 Responsibility, Authority, And Communication
3.5.1 Responsibility And Authority
3.5.2 Management Representative
3.5.3 Internal Communication
3.5.4 Referenced Procedures
3.6 Management Reporting
3.6.1 General
3.6.2 Review Input
3.6.3 Review Output
3.6.4 Referenced Procedures
3.7 Business Conduct
4.0 Accounting Management System
4.1 Objectives
4.2 Requirements
4.2.1 Overview
4.2.2 Internal Controls
4.2.3 Audit Findings
4.3 Transactions
4.3.1 Authorization
4.3.2 Timing
4.3.3 Amounts
4.3.4 Accuracy
4.3.5 Referenced Procedures
4.4 Documentation
4.4.1 Accounting Manual
4.4.2 Control Of Documents
4.4.3 Control Of Records
4.4.4 Accounting Transactions
4.4.5 Referenced Procedures
4.5 Security
4.5.1 Physical Security
4.5.2 Disaster Security
4.5.3 Information Security
4.6 Cost Accounting
4.6.1 Costing Purposes
4.6.2 Cost - Time Incurred
4.6.3 Cost - Reaction To Changes In Activity Levels
4.6.4 Cost - Influence On Decision Making
4.7 Basis Of Accounting 5.0 Processes And Controls
5.1 General & Administrative
5.1.1 Chart Of Accounts
5.1.2 Files And Records Management
5.1.3 Travel And Entertainment
5.1.4 Management Reports
5.1.5 Period-End Review & Closing
5.1.6 Controlling Legal Costs
5.1.7 Taxes And Insurance
5.1.8 Property Tax Assessments
5.1.9 Confidential Information Release
5.1.10 Document Control
5.1.11 Referenced Procedures
5.2 Cash
5.2.1 Cash Drawers And Credit Cards
5.2.2 Cash Receipts And Deposits
5.2.3 Problem Checks
5.2.4 Wire Transfers
5.2.5 Check Signing Authority
5.2.6 Check Requests
5.2.7 Bank Account Reconciliations
5.2.8 Referenced Procedures
5.3 Inventory & Assets
5.3.1 Inventory Control
5.3.2 Inventory Counts
5.3.3 Fixed Asset Control
5.3.4 Customer Property
5.3.5 Fixed Asset Capitalization & Depreciation
5.3.6 Referenced Procedures
5.4 Revenue
5.4.1 Sales Order Entry
5.4.2 Point-Of-Sale Orders
5.4.3 Customer Credit Approval And Terms
5.4.4 Sales Order Acceptance
5.4.5 Shipment Of Goods
5.4.6 Invoicing And Accounts Receivable
5.4.7 Sales Tax Collection 5.4.8 Progress Billing
5.4.9 Account Collections 5.4.10 Customer Returns
5.4.11 Referenced Procedures
5.5 Purchasing 5.5.1 Vendor Selection
5.5.2 General Purchasing
5.5.3 Project Purchasing
5.5.4 Receiving And Inspection
5.5.5 Shipping And Freight Claims
5.5.6 Accounts Payable And Cash Disbursements
5.5.7 Referenced Procedures
6.0 Resource Management
6.1 Provision Of Resources 6.2 Human Resources
6.2.1 Accounting Staff
6.2.2 Competence, Awareness, And Training
6.2.3 Separation And Supervision Of Duties
6.2.4 Referenced Procedures
6.3 Infrastructure
6.4 Work Environment
==========================================
THE COMPANY USES ''STANDARD COSTING''.THE COMPANY IS MANAGED BY MARKETING ----products' contributionsSALES ----gross contributionsMANUFACTURING --COST CENTRE.SERVICE - PROFIT CENTRE.WAREHOUSING --COST CENTRECUSTOMER SERVICE --COST CENTRER&D --COST CENTREETC ETC
====================================
Also point out the flaws in the prevailing system,if any,and give suggestion to overcome the same.
THE ONLY FLAW , CURRENTLY , IS THE PRODUCT COSTING,DUE TO THE FLUCTATING INTERNATIONAL IMPORTS PRICEDUE TO THE DOLLAR VOLATILITY.WE HAVE DECIDED TO GO FOR -future trading/ transfer pricing.-absorbing the variances into the wholesale pricing.
=================================================
The organization, I am familiar with is a -a large manufacturer/ marketer of safety products
-the products are used as
[personal protection safety]
[ industrial safety]
-the products are distributed through the distributors as well as sold directly-the products are sold to various industries like mining/fireservices/defence/as well as to various manufacturing companies.-the company employs about 235 people.-the company has the following functional departments
*marketing
*manufacturing
*sales
*finance/ administration
*human resource
*customer service
*distribution
*warehousing/ transportation
*TQM
==============================================
THE Components of the Accounting SystemThink of the accounting system as a wheel whose hub is the general ledger (G/L). Feeding the hub information are the spokes of the wheel. These include Accounts receivable/ Accounts payable /Order entry/ Inventory control /Cost accounting /Payroll /Fixed assets accounting These modules are ledgers themselves. We call them subledgers. Each contains the detailed entries of its specific field, such as accounts receivable. The subledgers summarize the entries, then send the summary up to the general ledger. For example, each day the receivables subledger records all credit sales and payments received. The transactions net together then go up to the G/L to increase or decrease A/R, increase cash and decrease inventory. We'll always check to be sure that the balance of the subledger exactly equals the account balance for that subledger account in the G/L. If it doesn't, then there's a problem. Differences between Manual and Automated LedgersThink of the G/L as a sheet of paper on which transactions from all four categories of
accounts-assets,
-liabilities,
-income, and
-expenses-are recorded. Some of them flow up from various subledgers, and some are entered directly into the G/L through a general journal entry. An example of such a direct entry would be the payment on a loan. The same concept of a sheet of paper holds for each subledger that feeds the general ledger. A computerized accounting system works the same way, except that the general ledger and subledgers are computer files instead of sheets of paper. Entries are posted to each and summarized, then the summary is sent up to the G/L for posting. ORGANIZATION OF THE ACCOUNTING DEPARTMENTOrganizing the business accounting system by functions.-credit-accounting-management accounting-accounts receivable-accounts payable-banking/ administration
===========================================
Accounting Basics•
Bookkeeping
• Accounting
• Reporting
• Non-financial data
• Financial data Components of an Accounting System
• Revenue Cycle • Order Entry
• Cash Receipts / Deposits
• Accounts Receivable
• Purchase Cycle
• Purchase Orders / Purchasing
• Cash Disbursements / Checks
• Accounts Payable
• Payroll Cycle
• General Journal Cycle
• How does posting work? Accounting Terms and Concepts
• Double-Entry Accounting Basic Accounting Structure
• Balance sheet • Income Statement
• Basic Accounting Formula Accounting Methods
• Accrual Method
• Cash Method
• Percentage of Completion Method Reporting Standards
• GAAP - Generally Accepted Accounting Principles
• The Matching Principle • Conformity
• Valuation • Inventory Valuation
• Materiality Types of Reports
• External Reports
• Compilation
• Review
• Audit
• SEC - Audit
• Internal Reports
Summary
1 Internal Auditing
2.2.2 Payroll
2.2.3 Finance And Treasury
2.2.4 Information Systems
2.2.5 Security Planning
2.2.6 Disaster Recovery
3.0 Management Responsibility
3.1 Accounting Organization
3.1.1 Accounting Department Org Chart
3.1.2 Finance & Treasury Responsibilities
3.1.3 Controller Responsibilities
3.1.4 Accounting Staff Responsibilities
3.1.5 Operations Staff Responsibilities
3.2 Management Commitment
3.3 Management Accounting Policy
3.4 Planning
3.4.1 Accounting Objectives
3.4.2 Accounting System Planning
3.5 Responsibility, Authority, And Communication
3.5.1 Responsibility And Authority
3.5.2 Management Representative
3.5.3 Internal Communication
3.5.4 Referenced Procedures
3.6 Management Reporting
3.6.1 General
3.6.2 Review Input
3.6.3 Review Output
3.6.4 Referenced Procedures
3.7 Business Conduct
4.0 Accounting Management System
4.1 Objectives
4.2 Requirements
4.2.1 Overview
4.2.2 Internal Controls
4.2.3 Audit Findings
4.3 Transactions
4.3.1 Authorization
4.3.2 Timing
4.3.3 Amounts
4.3.4 Accuracy
4.3.5 Referenced Procedures
4.4 Documentation
4.4.1 Accounting Manual
4.4.2 Control Of Documents
4.4.3 Control Of Records
4.4.4 Accounting Transactions
4.4.5 Referenced Procedures
4.5 Security
4.5.1 Physical Security
4.5.2 Disaster Security
4.5.3 Information Security
4.6 Cost Accounting
4.6.1 Costing Purposes
4.6.2 Cost - Time Incurred
4.6.3 Cost - Reaction To Changes In Activity Levels
4.6.4 Cost - Influence On Decision Making
4.7 Basis Of Accounting 5.0 Processes And Controls
5.1 General & Administrative
5.1.1 Chart Of Accounts
5.1.2 Files And Records Management
5.1.3 Travel And Entertainment
5.1.4 Management Reports
5.1.5 Period-End Review & Closing
5.1.6 Controlling Legal Costs
5.1.7 Taxes And Insurance
5.1.8 Property Tax Assessments
5.1.9 Confidential Information Release
5.1.10 Document Control
5.1.11 Referenced Procedures
5.2 Cash
5.2.1 Cash Drawers And Credit Cards
5.2.2 Cash Receipts And Deposits
5.2.3 Problem Checks
5.2.4 Wire Transfers
5.2.5 Check Signing Authority
5.2.6 Check Requests
5.2.7 Bank Account Reconciliations
5.2.8 Referenced Procedures
5.3 Inventory & Assets
5.3.1 Inventory Control
5.3.2 Inventory Counts
5.3.3 Fixed Asset Control
5.3.4 Customer Property
5.3.5 Fixed Asset Capitalization & Depreciation
5.3.6 Referenced Procedures
5.4 Revenue
5.4.1 Sales Order Entry
5.4.2 Point-Of-Sale Orders
5.4.3 Customer Credit Approval And Terms
5.4.4 Sales Order Acceptance
5.4.5 Shipment Of Goods
5.4.6 Invoicing And Accounts Receivable
5.4.7 Sales Tax Collection 5.4.8 Progress Billing
5.4.9 Account Collections 5.4.10 Customer Returns
5.4.11 Referenced Procedures
5.5 Purchasing 5.5.1 Vendor Selection
5.5.2 General Purchasing
5.5.3 Project Purchasing
5.5.4 Receiving And Inspection
5.5.5 Shipping And Freight Claims
5.5.6 Accounts Payable And Cash Disbursements
5.5.7 Referenced Procedures
6.0 Resource Management
6.1 Provision Of Resources 6.2 Human Resources
6.2.1 Accounting Staff
6.2.2 Competence, Awareness, And Training
6.2.3 Separation And Supervision Of Duties
6.2.4 Referenced Procedures
6.3 Infrastructure
6.4 Work Environment
==========================================
THE COMPANY USES ''STANDARD COSTING''.THE COMPANY IS MANAGED BY MARKETING ----products' contributionsSALES ----gross contributionsMANUFACTURING --COST CENTRE.SERVICE - PROFIT CENTRE.WAREHOUSING --COST CENTRECUSTOMER SERVICE --COST CENTRER&D --COST CENTREETC ETC
====================================
Also point out the flaws in the prevailing system,if any,and give suggestion to overcome the same.
THE ONLY FLAW , CURRENTLY , IS THE PRODUCT COSTING,DUE TO THE FLUCTATING INTERNATIONAL IMPORTS PRICEDUE TO THE DOLLAR VOLATILITY.WE HAVE DECIDED TO GO FOR -future trading/ transfer pricing.-absorbing the variances into the wholesale pricing.
=================================================
MS-04 question 4
How do you envisage your role as a Finance Manager in matters related to dividend policy? What are the alternatives and factors that you may consider before finalizing your views on dividend policy
AS A FINANCE MANAGER, I AM AWARE OF -Firms rely on both current earnings and past dividends- dividends tend to be more sensitive to current earnings than prior dividends.
- Any variability in the earnings of the corporation is directly reflected in the level of dividends. -dividend policy does vary across financial and non-financial industries.
-a low target payout ratio of respectively 16% and 27% for non-financial and financial firms while the adjustment speed respectively ranges from 0.68 to 1.56. Non-financial institutions adopt therefore a more smoothing dividend policy. HERE IS SOME highlight OF factors that may influence the dividend policy pattern. First, riskier firms with high financial leverage pay out fewer dividends and have lower dividend yields. Furthermore, high-profitability firms with more stable earnings can also afford more dividends. However, larger investment opportunities deprive firms from higher dividends. Similarly, growing firms distribute fewer dividends. Additionally, dividends serve to reduce agency costs between the shareholders themselves only whereas the conflicts between insiders and outsiders seem to be not resolved with dividends. This matter holds true only in non-financial firms. In this vein, it should be noted that our analysis does show significant differences throughout financial versus non-financial industries.Finally, the size of corporations has a systematic negative effect on dividend policy. =======================================================
AS A FINANCE MANAGER,HERE ARE SOME OF MY COMMENTS.The blemishes in the traditional dividend policyThere are some blemishes existing in the making and the process of carrying out the traditional policy:
1.The traditional dividend policy is not devoted to the maximization of enterprise valueThe traditional dividend policy is not devoted to the maximum of enterprise value, but to the maximum of the profit or shareholder's wealth. The main blemish of taking the maximum of profit as the final goal of dividend policy is that it only considers the interests of enterprise's operator to emphasize the amount of profit of enterprise to reach most top in a certain period, but it did not go to consider the enterprise itself. When pursue the maximum of profit unilaterally, it may cause the acts and efforts for expediency of enterprises and is unfavorable to enterprise's long-term development. While, when we regard the maximum of shareholder's wealth as the goal, the weak point is that the maximum of shareholder wealth is related to the maximum of the market value of the stock, but in fact, the factor influencing the change of the stock price, not merely include enterprise's business performance, but also include investor¡¯s psychology expectation and economic policy, political situation etc. .All these make it lose standard and objective Dimensions. In this kind of case, when make the policy; we will only often consider the income of shareholder but no consideration for the future of enterprise. In addition, the traditional dividend distribution policy can't systematically have contact with the behavior that creates value. That is another reason to not realize maximum of enterprise value. In another word, when we make the policy, we only think of the matters, such as how to distribute dividend, which means of payment to choose, which kind of distribution policy to use, etc., but do not think of the relationship of the behavior of the value creation. That¡¯s to say we don¡¯t take the principle of the value management into the dividend policy.
2.There is no consideration about the sustainable development of enterprises in traditional dividend policyFirst, it doesn¡¯t take ¡°maximizes the enterprise value ¡±as the final goals when establish firm¡¯s dividend policy. Just as we have stated, while set down the policy, firms only pursue the short-term interests such as the maximum of profit and shareholder¡¯s wealth, and neglect the long-term income and the effect to the sustainable development of enterprise. To a great extent, we cannot say it is stable and relative independent as a policy. Secondly, it lacks the whole, overall and long-term planning while establish the dividend policy. That is without thinking of the factor of enterprise value, it only pays attention to carrying on unilateral, short-term planning. All these are unfavorable to the long-term development of enterprises, and also can't realize the sustainable development of enterprises.
3 The traditional dividend policy is out of joint with the overall business decisions of enterprisesThe traditional dividend policy often ignores the close relationship among the dividend policy and investment decisions and financing decisions. It makes dividend policy is out of joint with the business decisions. So the business activities may not accordance with the promoting enterprises value. In addition, we often don¡¯t take consider of which kind of effect the dividend policy will bring to the stock market and how it can influence the long-term development of the companies. In fact, cutting down dividend can make a response as negative signal at the stock market, which might make the company¡¯s stock price drops.
AS A FINANCE MANAGER, WE DEVELOP THE DIVIDEND POLICYBASED ON THE VALUE MANAGEMENT OF THE COMPANY.
Characteristics of dividend policy based on value management
1. Regarding maximum of enterprise value as the final goalDividend policy based on value management can realize the final goal of maximizing enterprise value. While making the distribution policy of the dividend, emphasizing on the goal of maximizing the enterprise value, we will overcome the defect in the policy of maximizing the shareholder's wealth with the profit. It pursues the balanced and effective cash flow in a long time period and promotes enterprise's value. The essence is to make enterprise more adaptable to future changes of environments and realize value creation and the sustainable increasing. As value creation is a starting point of value management, so the main characteristic of dividend policy based on value management is to pay attention to creating firm¡¯s value and increasing it to realize the maximum of enterprise value, and promote enterprise's long-term development when consider the dividend policy.
2. Focus on the enterprise¡¯s long-term sustainable development Dividend policy based on value management focus on enterprise's long-term sustainable development, but does not pay attention to enterprise's short-term state excessively. For example£¬in order to realize stable long-term maximizing of the enterprise value, sometimes we have to sacrifice temporary interests and take the temporary stock price drops easy. Because on long terms, so long as enterprises have developed, the stock price will drop in a short time, but will rise eventually. If enterprises only emphasize the short-term spurt of the stock prices, and ignore the ups and downs later on, the temporary rise will be managed improperly by wrong management, the scale atrophy and low benefit. So the dividend policy will conform to enterprise's goal in the long-term, the short-term contradiction is common. So, our every dividend decision, every dividend policy does not demand to make enterprise's stock price highest, but to make enterprise value maximum, and we only need to do is to realize the long-term financial goal. In addition, we should make the dividend policy of in terms of not only the stock price or the income determinants but also the overall situation of enterprise. In order to create enterprise's value, we must improve the profitability and strengthen the development ability in the future, in other words, we must strengthen the sustainable development ability, since enterprises with perfect prospects have the most powerful developmental potentiality of creating value. Dividend policy that regards the idea of value management and sustainable development as guidelines with overall perspective and long-term characteristic could realize enterprise's long-term sustainable development.
3. Coordinate with company's management decisionDividend policy based on value management can coordinate with every sub-decision and help to realize the overall management decision of enterprise. The function of the dividend policy£¬fundamentally speaking, is to serve the overall management decision and offer the essential condition for decision making, and what¡¯s more, it can coordinate with other investment and financing decision to accelerate the decision making. The adjustment of enterprise's investment decision will impact future profits, while the dividend policy will also be affected by the future business performance and financial situation. When the expectation is good and is thought to be keeping continuously in the future, the enterprise will adopt more positive dividend policy, and vice versa. So it¡¯s important to make the policy cooperate with enterprise's investment decision. Some factors, such as the arrangement and adjustment of decision of financing will influence the dividend policy, the ability of financing outside the company will inevitably influence the proportion of retained earnings, the state of development of enterprises will also influence on the financing channels, all these will be reflected by the undistributed profit, then influence enterprise's dividend policy. So we should make dividend policy coordinate with every sub-decision, which is the only way to realize the business decision and analyze the strategy that can create biggest value for enterprise. Enterprises must analyze from many angles about enterprise's reality and predict while carrying on the dividend policy, and then select a best scheme that can meet the demand of not only the development but also investors. So, enterprises should not study the dividend distribution with the financial angle only, we also have to consider the whole enterprise to make enterprise's dividend policy concert with enterprise's business decision.4. Optimize the capital structureThe dividend policy based on value management can realize the optimization of capital structure. The way granting dividend directly influences enterprise¡¯s capital structure, and a good dividend policy contributes to improving the structure of the capital and makes it reasonable. If the total debt ratio of company is too high, we should reserve more dividend or increase the capital stock to improve the capital structure, strengthen its leverage, reduce the financial risk; On the contrary, we should distribute the cash dividend, increase debt and improve financial leverage interests. On the basis of necessary fund for the good capital project, we should arrange the reasonable sum of the surplus and debt according to the best capital structure.
4. The influence of the value management to the dividend policy In practice, we can introduce the value management to the process of the policy making of dividend distribution to make it scientific, reasonable and perspective. According to the traditional dividend distribution policy, the advantages of the one based on value management is that it take the rule of maximizing and increasing the enterprise value. Linking the distribution policy of the dividend to the profit or the EVA can make it consistent with the target of creating value and contribute to realize it. The core of this management system is to set up the management system of dividend distribution based on value, and we could analyzes and make point according to business unit using EVA and profit state which can be distributed. One business unit must have clear value creating decision, and should be sure of the index that is closely linked to with value drivers. We must know that which business unit inside enterprises can create value? Which business unit limits enterprise value creating ability? We should regard it as strip and sell target. Which business unit has the ability of getting cash flows? Which business unit is always consuming enterprise's cash flows? In another words, when business unit¡¯s EVA> 0, it means value creating; otherwise is value damage.There are four kinds of dividend distribution state.
Now let¡¯s state them respectively:
1. Business units can create value and have surplus profitThis is the best situation. In this case, we could promote the business with the surplus undistributed profit, such as increasing the inside investment, purchase other similar or related business. If there is no such project whose expected payback exceeds capital cost to investment, we should distribute the dividend, in another word, return retained earnings to the owner ¡ªThe shareholder of the company who can choose the investment of value creating. There are some method of distributing the retained earnings, such as special cash dividend paying and stock buy-back. The stock buy-back is an effective way for tax avoidance. Improving capital structure, reducing the agent cost and combining with the market effect is all the method to increase enterprise value.
2. Business units can create value but short of distributed profitIn this case, when distributed profit is in short, we must reduce or cancel the distribution of the dividend to the shareholders. In addition, because the strategic operating unit at this moment can create value for company, we should send new equity capital and issue new stock to increase capital. As to these new equity capitals, business unit can increase funds in debt to keep the optimum capital structure.
3. Business units damage value but have surplus profitWe should make it stable before the distributed profit was used up as soon as possible. Part of the surplus profit can be made to improve the Paying rate of dividend and return to shareholders in the form of cash dividend, the others should be used in the rebuilding of business as quickly as possible. The goal is to make the payback of the investment exceed the capital cost. If present capital structure is not optimum or minimum level, we could adjust the capital structure of business unit to reduce average capital cost. One of the considerable tactics is selling the business unit to the one who can manage it better.
4. Business units damage value and short of distributed profitIt is the worst state. Manager should immediately pay attention to the condition and take action to cancel the dividend distribution. If the business unit can't be quickly and thoroughly rebuilt, we should sell it as quickly as we can. Deciding to rebuild thoroughly, we should sell some assets which can increase cashes immediately and keep the scale of business to the state that can survive in a short time. The final purpose is to keep the retained business become one that can create value for the enterprise. If it ¡®s hopeless to carry on quick and successful conversion, we should sell it immediately before it influence the long-term existence of company's other parts.After we get which kind of state the company is in, we could make the dividend distribution policy and company's total management tactics for the concrete company and concrete business unit. In this way , we can make the best dividend distribution policy that take the core of value, regard the maximum of enterprise value as the goal and take enterprise's sustainable development as prerequisite.5. Conclusion Today, as the economy globalizes day by day, the management mode- value management is accepted by enterprises gradually. Operating objective, management idea, decision standard and management style are changing fundamentally, so we have stepped into the era that take value as the foundation and maximum of enterprise value as the goal. The core of the value management is value and the main content is the process of the creating, increasing, realizing and assigning of the value. Value management has put forward the clear task and defines the key goal of management activity: Maximum of enterprise value. Through the activity of creating value, we increase the cash flows of the company and prompt the whole value of enterprises constantly, thus realize the maximum of enterprise value. In order to realize the maximum of enterprise value, it¡¯s necessary to minimize the risk that enterprises face, maximize the cash flows and the ability of continuing operating. The realization of the goal of maximum of enterprise value depends on the effective and scientific financial policy, including company's financial investment and distribution policy. The dividend policy substantially pursue the relationship between dividend and retaining profit, and it is the important decision about the equity distributing and fund operation of the company. Through dividend policy, managers arrange the net profit between the reinvestment and distributing to shareholders, and it¡¯s the way to offer enough fund for the further development and enlarged reproduction.We should make it be advantageous to both the long-term development and the cash flow need of owners. In the modern society, in order to make company's value to the maximum extent, we must strengthen value management to get the maximized income. So, while making the dividend policy, it¡¯s helpful to introduce the value management method and idea. It contributes to regarding value creating as the prerequisite. According to this, we can design an overall, long-term and instructive dividend policy that is based on value management and can promote the long-term sustainable development of enterprises.
======================================================
AS A FINANCE MANAGER, FOR THE DIVIDEND POLICY,I WOULD TAKE INTO CONSIDERATION THE FOLLOWING:-investment decision for the future.-future profit forecast-business performance-cash flow status for the next 3/5 years.-financial situation-capital structure optimization.-fianancial risks-net profit-company's intentions-shareholders' intensions-current stock price-recommendation of the board-strategic planning of the company-liquidity assessment-net cash flow-capital expenditure-debt service-balance sheet.etc etc
=================================
AS A FINANCE MANAGER, I AM AWARE OF -Firms rely on both current earnings and past dividends- dividends tend to be more sensitive to current earnings than prior dividends.
- Any variability in the earnings of the corporation is directly reflected in the level of dividends. -dividend policy does vary across financial and non-financial industries.
-a low target payout ratio of respectively 16% and 27% for non-financial and financial firms while the adjustment speed respectively ranges from 0.68 to 1.56. Non-financial institutions adopt therefore a more smoothing dividend policy. HERE IS SOME highlight OF factors that may influence the dividend policy pattern. First, riskier firms with high financial leverage pay out fewer dividends and have lower dividend yields. Furthermore, high-profitability firms with more stable earnings can also afford more dividends. However, larger investment opportunities deprive firms from higher dividends. Similarly, growing firms distribute fewer dividends. Additionally, dividends serve to reduce agency costs between the shareholders themselves only whereas the conflicts between insiders and outsiders seem to be not resolved with dividends. This matter holds true only in non-financial firms. In this vein, it should be noted that our analysis does show significant differences throughout financial versus non-financial industries.Finally, the size of corporations has a systematic negative effect on dividend policy. =======================================================
AS A FINANCE MANAGER,HERE ARE SOME OF MY COMMENTS.The blemishes in the traditional dividend policyThere are some blemishes existing in the making and the process of carrying out the traditional policy:
1.The traditional dividend policy is not devoted to the maximization of enterprise valueThe traditional dividend policy is not devoted to the maximum of enterprise value, but to the maximum of the profit or shareholder's wealth. The main blemish of taking the maximum of profit as the final goal of dividend policy is that it only considers the interests of enterprise's operator to emphasize the amount of profit of enterprise to reach most top in a certain period, but it did not go to consider the enterprise itself. When pursue the maximum of profit unilaterally, it may cause the acts and efforts for expediency of enterprises and is unfavorable to enterprise's long-term development. While, when we regard the maximum of shareholder's wealth as the goal, the weak point is that the maximum of shareholder wealth is related to the maximum of the market value of the stock, but in fact, the factor influencing the change of the stock price, not merely include enterprise's business performance, but also include investor¡¯s psychology expectation and economic policy, political situation etc. .All these make it lose standard and objective Dimensions. In this kind of case, when make the policy; we will only often consider the income of shareholder but no consideration for the future of enterprise. In addition, the traditional dividend distribution policy can't systematically have contact with the behavior that creates value. That is another reason to not realize maximum of enterprise value. In another word, when we make the policy, we only think of the matters, such as how to distribute dividend, which means of payment to choose, which kind of distribution policy to use, etc., but do not think of the relationship of the behavior of the value creation. That¡¯s to say we don¡¯t take the principle of the value management into the dividend policy.
2.There is no consideration about the sustainable development of enterprises in traditional dividend policyFirst, it doesn¡¯t take ¡°maximizes the enterprise value ¡±as the final goals when establish firm¡¯s dividend policy. Just as we have stated, while set down the policy, firms only pursue the short-term interests such as the maximum of profit and shareholder¡¯s wealth, and neglect the long-term income and the effect to the sustainable development of enterprise. To a great extent, we cannot say it is stable and relative independent as a policy. Secondly, it lacks the whole, overall and long-term planning while establish the dividend policy. That is without thinking of the factor of enterprise value, it only pays attention to carrying on unilateral, short-term planning. All these are unfavorable to the long-term development of enterprises, and also can't realize the sustainable development of enterprises.
3 The traditional dividend policy is out of joint with the overall business decisions of enterprisesThe traditional dividend policy often ignores the close relationship among the dividend policy and investment decisions and financing decisions. It makes dividend policy is out of joint with the business decisions. So the business activities may not accordance with the promoting enterprises value. In addition, we often don¡¯t take consider of which kind of effect the dividend policy will bring to the stock market and how it can influence the long-term development of the companies. In fact, cutting down dividend can make a response as negative signal at the stock market, which might make the company¡¯s stock price drops.
AS A FINANCE MANAGER, WE DEVELOP THE DIVIDEND POLICYBASED ON THE VALUE MANAGEMENT OF THE COMPANY.
Characteristics of dividend policy based on value management
1. Regarding maximum of enterprise value as the final goalDividend policy based on value management can realize the final goal of maximizing enterprise value. While making the distribution policy of the dividend, emphasizing on the goal of maximizing the enterprise value, we will overcome the defect in the policy of maximizing the shareholder's wealth with the profit. It pursues the balanced and effective cash flow in a long time period and promotes enterprise's value. The essence is to make enterprise more adaptable to future changes of environments and realize value creation and the sustainable increasing. As value creation is a starting point of value management, so the main characteristic of dividend policy based on value management is to pay attention to creating firm¡¯s value and increasing it to realize the maximum of enterprise value, and promote enterprise's long-term development when consider the dividend policy.
2. Focus on the enterprise¡¯s long-term sustainable development Dividend policy based on value management focus on enterprise's long-term sustainable development, but does not pay attention to enterprise's short-term state excessively. For example£¬in order to realize stable long-term maximizing of the enterprise value, sometimes we have to sacrifice temporary interests and take the temporary stock price drops easy. Because on long terms, so long as enterprises have developed, the stock price will drop in a short time, but will rise eventually. If enterprises only emphasize the short-term spurt of the stock prices, and ignore the ups and downs later on, the temporary rise will be managed improperly by wrong management, the scale atrophy and low benefit. So the dividend policy will conform to enterprise's goal in the long-term, the short-term contradiction is common. So, our every dividend decision, every dividend policy does not demand to make enterprise's stock price highest, but to make enterprise value maximum, and we only need to do is to realize the long-term financial goal. In addition, we should make the dividend policy of in terms of not only the stock price or the income determinants but also the overall situation of enterprise. In order to create enterprise's value, we must improve the profitability and strengthen the development ability in the future, in other words, we must strengthen the sustainable development ability, since enterprises with perfect prospects have the most powerful developmental potentiality of creating value. Dividend policy that regards the idea of value management and sustainable development as guidelines with overall perspective and long-term characteristic could realize enterprise's long-term sustainable development.
3. Coordinate with company's management decisionDividend policy based on value management can coordinate with every sub-decision and help to realize the overall management decision of enterprise. The function of the dividend policy£¬fundamentally speaking, is to serve the overall management decision and offer the essential condition for decision making, and what¡¯s more, it can coordinate with other investment and financing decision to accelerate the decision making. The adjustment of enterprise's investment decision will impact future profits, while the dividend policy will also be affected by the future business performance and financial situation. When the expectation is good and is thought to be keeping continuously in the future, the enterprise will adopt more positive dividend policy, and vice versa. So it¡¯s important to make the policy cooperate with enterprise's investment decision. Some factors, such as the arrangement and adjustment of decision of financing will influence the dividend policy, the ability of financing outside the company will inevitably influence the proportion of retained earnings, the state of development of enterprises will also influence on the financing channels, all these will be reflected by the undistributed profit, then influence enterprise's dividend policy. So we should make dividend policy coordinate with every sub-decision, which is the only way to realize the business decision and analyze the strategy that can create biggest value for enterprise. Enterprises must analyze from many angles about enterprise's reality and predict while carrying on the dividend policy, and then select a best scheme that can meet the demand of not only the development but also investors. So, enterprises should not study the dividend distribution with the financial angle only, we also have to consider the whole enterprise to make enterprise's dividend policy concert with enterprise's business decision.4. Optimize the capital structureThe dividend policy based on value management can realize the optimization of capital structure. The way granting dividend directly influences enterprise¡¯s capital structure, and a good dividend policy contributes to improving the structure of the capital and makes it reasonable. If the total debt ratio of company is too high, we should reserve more dividend or increase the capital stock to improve the capital structure, strengthen its leverage, reduce the financial risk; On the contrary, we should distribute the cash dividend, increase debt and improve financial leverage interests. On the basis of necessary fund for the good capital project, we should arrange the reasonable sum of the surplus and debt according to the best capital structure.
4. The influence of the value management to the dividend policy In practice, we can introduce the value management to the process of the policy making of dividend distribution to make it scientific, reasonable and perspective. According to the traditional dividend distribution policy, the advantages of the one based on value management is that it take the rule of maximizing and increasing the enterprise value. Linking the distribution policy of the dividend to the profit or the EVA can make it consistent with the target of creating value and contribute to realize it. The core of this management system is to set up the management system of dividend distribution based on value, and we could analyzes and make point according to business unit using EVA and profit state which can be distributed. One business unit must have clear value creating decision, and should be sure of the index that is closely linked to with value drivers. We must know that which business unit inside enterprises can create value? Which business unit limits enterprise value creating ability? We should regard it as strip and sell target. Which business unit has the ability of getting cash flows? Which business unit is always consuming enterprise's cash flows? In another words, when business unit¡¯s EVA> 0, it means value creating; otherwise is value damage.There are four kinds of dividend distribution state.
Now let¡¯s state them respectively:
1. Business units can create value and have surplus profitThis is the best situation. In this case, we could promote the business with the surplus undistributed profit, such as increasing the inside investment, purchase other similar or related business. If there is no such project whose expected payback exceeds capital cost to investment, we should distribute the dividend, in another word, return retained earnings to the owner ¡ªThe shareholder of the company who can choose the investment of value creating. There are some method of distributing the retained earnings, such as special cash dividend paying and stock buy-back. The stock buy-back is an effective way for tax avoidance. Improving capital structure, reducing the agent cost and combining with the market effect is all the method to increase enterprise value.
2. Business units can create value but short of distributed profitIn this case, when distributed profit is in short, we must reduce or cancel the distribution of the dividend to the shareholders. In addition, because the strategic operating unit at this moment can create value for company, we should send new equity capital and issue new stock to increase capital. As to these new equity capitals, business unit can increase funds in debt to keep the optimum capital structure.
3. Business units damage value but have surplus profitWe should make it stable before the distributed profit was used up as soon as possible. Part of the surplus profit can be made to improve the Paying rate of dividend and return to shareholders in the form of cash dividend, the others should be used in the rebuilding of business as quickly as possible. The goal is to make the payback of the investment exceed the capital cost. If present capital structure is not optimum or minimum level, we could adjust the capital structure of business unit to reduce average capital cost. One of the considerable tactics is selling the business unit to the one who can manage it better.
4. Business units damage value and short of distributed profitIt is the worst state. Manager should immediately pay attention to the condition and take action to cancel the dividend distribution. If the business unit can't be quickly and thoroughly rebuilt, we should sell it as quickly as we can. Deciding to rebuild thoroughly, we should sell some assets which can increase cashes immediately and keep the scale of business to the state that can survive in a short time. The final purpose is to keep the retained business become one that can create value for the enterprise. If it ¡®s hopeless to carry on quick and successful conversion, we should sell it immediately before it influence the long-term existence of company's other parts.After we get which kind of state the company is in, we could make the dividend distribution policy and company's total management tactics for the concrete company and concrete business unit. In this way , we can make the best dividend distribution policy that take the core of value, regard the maximum of enterprise value as the goal and take enterprise's sustainable development as prerequisite.5. Conclusion Today, as the economy globalizes day by day, the management mode- value management is accepted by enterprises gradually. Operating objective, management idea, decision standard and management style are changing fundamentally, so we have stepped into the era that take value as the foundation and maximum of enterprise value as the goal. The core of the value management is value and the main content is the process of the creating, increasing, realizing and assigning of the value. Value management has put forward the clear task and defines the key goal of management activity: Maximum of enterprise value. Through the activity of creating value, we increase the cash flows of the company and prompt the whole value of enterprises constantly, thus realize the maximum of enterprise value. In order to realize the maximum of enterprise value, it¡¯s necessary to minimize the risk that enterprises face, maximize the cash flows and the ability of continuing operating. The realization of the goal of maximum of enterprise value depends on the effective and scientific financial policy, including company's financial investment and distribution policy. The dividend policy substantially pursue the relationship between dividend and retaining profit, and it is the important decision about the equity distributing and fund operation of the company. Through dividend policy, managers arrange the net profit between the reinvestment and distributing to shareholders, and it¡¯s the way to offer enough fund for the further development and enlarged reproduction.We should make it be advantageous to both the long-term development and the cash flow need of owners. In the modern society, in order to make company's value to the maximum extent, we must strengthen value management to get the maximized income. So, while making the dividend policy, it¡¯s helpful to introduce the value management method and idea. It contributes to regarding value creating as the prerequisite. According to this, we can design an overall, long-term and instructive dividend policy that is based on value management and can promote the long-term sustainable development of enterprises.
======================================================
AS A FINANCE MANAGER, FOR THE DIVIDEND POLICY,I WOULD TAKE INTO CONSIDERATION THE FOLLOWING:-investment decision for the future.-future profit forecast-business performance-cash flow status for the next 3/5 years.-financial situation-capital structure optimization.-fianancial risks-net profit-company's intentions-shareholders' intensions-current stock price-recommendation of the board-strategic planning of the company-liquidity assessment-net cash flow-capital expenditure-debt service-balance sheet.etc etc
=================================
MS-04 question 5
Choose any organization of your choice and find out the investment appraisal methods that the organization follows. Write a detail note on your visit?
The organization, I am familiar with is a
-a large manufacturer/ marketer of safety products-the products are used as
[personal protection safety]
[ industrial safety]-the products are distributed through the distributors as well as sold directly-the products are sold to various industries like mining/fireservices/defence/as well as to various manufacturing companies.-the company employs about 235 people.-the company has the following functional departments
*marketing
*manufacturing
*sales
*finance/ administration
*human resource
*customer service
*distribution
*warehousing/ transportation
*TQM
==============================================
THE INVESTMENT APPROACH.
the investment appraisal method that the organization follows for the NEW PRODUCT INTRODUCTION is:
STEP 1
The appointment of the new product commitee, which includes
1.product manager/
2.marketing manager/
3.sales manager
4.CEO
5.finance manager
6.external consultant.
---------------------------------------------------------------------------
STEP 2
DEVELOPMENT OF THE ''NPD'' PROJECT REPORTwhere ''NPD'' stands for new product development.
----------------------------------------------------------------------
STEP 3
SEARCHING FOR OPPORTUNITYInformation that can help to shape the development of the product plan.
INDUSTRY ANALYSIS
*SALES VOLUME AND TRENDS
By dollar volume and unit sales.
By specific product.
By geographic design.
By customer use pattern.
By manufacturer and marketer.
By buying power.
By distribution channel.
By price.
*BASIC TECHNOLOGY
By parts, raw materials, labor.
By process.
By patent barriers.
By purchasing.
*COMPETITION
By product specifications.
By product volumes.
By market share.
By end‑user.
By trade channel.
*CUSTOMER DEFINITION
By customer use.
By geographic characteristics.
By industry. By pricing effects.
By alternative and substitute products.
By seasonal purchase.
*OTHER FACTORS
Import regulations.
Government regulations.
Economic situations.
---------------------------------------------------
STEP 4
OPPORTUNITY IDENTIFICATION
The process includes:
*Define targets.
*Forecast rough volume and share.
*Perform a risk ratio analysis.
*Conduct a preliminary feasibility study using secondary data and professional expert opinion ‑ no prototypes or no trial runs.
*Assess competitive reactions, exclusivity, regulations, protections and constraints.
*Look at exceptional technical hurdles.
*Consider legal and policy issues.
------------------------------------------------
STEP 5
CONCEPTION
This phase translates market facts into product concepts and customer positioning communication, prior to extensive research and development. The objective is to create and to refine a variety of appropriate product concepts in the form of customer communications, which may then be screened down to a workable number of the most appealing ones that may be carried forward into the prototype modelling phase.
1 . INPUT RESEARCH
This is a backgrounding step, often required where "hands‑on" experience, technical education, patent and literature review, as well as special consultant professionals, are needed for complete understanding of the opportunity area.
2. IDEATION
Ideation is the generation of large quantities of unconstrained possibilities, utilising a variety of stimulus techniques ‑brainstorming, group discussion, etc.
3. IDEA FORMS
This is the shaping of concepts into single‑minded, clear communications. The goal is a clear communication that neither goes beyond nor falls short of a real world summary statement of each concept.
4.PRE‑SCREENING CONCEPTS
Broad‑brush selection methods are applied to eliminate or improve concepts that are difficult to target.
5.SCREENING RESEARCHThis process rates many concepts rapidly ‑ individually and in relationship to each other.-----------------------------------------------------
STEP 6
PROTOTYPE MODELLING
At this phase, preliminary concepts have survived several selection steps. Now it is necessary to bring the narrowed number of proposed new products closer to reality in the form of prototype products and prototype communications. The target customer prospect should see the concept "in the round" as closely as is timely and economically feasible. Prototype modelling accomplishes the development of such stimulus materials.
1 . DESCRIPTORSThis step involves the product category and preliminary brand name development.
2. PROTOTYPES
This covers all aspects of the product and its communications. Included are:Product.Package. Brand name and description. Communications theme development. Prototype of communications. Prototype testing.
-------------------------------------------------
STEP 7
DEVELOPMENT This phase of product development encompasses a number of different activities.
1 . VITRO TRIALSIn‑house double check of the prototype in the research and development.
2. PILOT PRODUCTIONThis involves a small‑scale replication of mass production. It helps to debug the system and devise productions controls, systems and equipment design. it is basic to determining on‑stream cost estimates.
3. SCALING UP (COMMERCIALISATI ON)Manufacturing resources. Marketing factors. Distribution. Service. Financial. Legal.
------------------------------------------
STEP 8
The development of the feasibility report.-first appraisal of the project feasibility / viability.
TARGET
-sales units.-sales dollars.-market share.-gross profit.-net profit.-ROI.
-------------------------------------------
STEP 9
TEST MARKETING
Evaluation of:Awareness, attitude, usage. Distribution. Sales.
-----------------------------------------------
STEP 10
TOTAL APPRAISAL FOR THE INVESTMENT.
and final authorization for the release.
------------------------------------------------
STEP 11
MARKETING PLANNING DEVELOPMENT
The marketing plan should include the following elements:Prototype introduction. Test simulation. Sales and distribution. Creative strategy. Media programme. Trade promotion. PR plans. Start‑up plan. Assessment plan. Expansion plan. Finance and production requirements.-------------------------------------------
STEP 12
MAJOR LAUNCH /INTRODUCTION OF THE PRODUCT
Finally comes the moment of truth ‑ the major introduction.Expanding the sales territory.Close monitoring of performance vs. plan.Evaluating opportunities.
---------------------------------------
LAST STEP FINAL APPRAISAL OF THE INVESTMENT.AT THE END OF THE 12 MONTHS.
against the target set.-sales units.-sales dollars.-market share.-gross profit.-net profit.-ROI.
===============================
The organization, I am familiar with is a
-a large manufacturer/ marketer of safety products-the products are used as
[personal protection safety]
[ industrial safety]-the products are distributed through the distributors as well as sold directly-the products are sold to various industries like mining/fireservices/defence/as well as to various manufacturing companies.-the company employs about 235 people.-the company has the following functional departments
*marketing
*manufacturing
*sales
*finance/ administration
*human resource
*customer service
*distribution
*warehousing/ transportation
*TQM
==============================================
THE INVESTMENT APPROACH.
the investment appraisal method that the organization follows for the NEW PRODUCT INTRODUCTION is:
STEP 1
The appointment of the new product commitee, which includes
1.product manager/
2.marketing manager/
3.sales manager
4.CEO
5.finance manager
6.external consultant.
---------------------------------------------------------------------------
STEP 2
DEVELOPMENT OF THE ''NPD'' PROJECT REPORTwhere ''NPD'' stands for new product development.
----------------------------------------------------------------------
STEP 3
SEARCHING FOR OPPORTUNITYInformation that can help to shape the development of the product plan.
INDUSTRY ANALYSIS
*SALES VOLUME AND TRENDS
By dollar volume and unit sales.
By specific product.
By geographic design.
By customer use pattern.
By manufacturer and marketer.
By buying power.
By distribution channel.
By price.
*BASIC TECHNOLOGY
By parts, raw materials, labor.
By process.
By patent barriers.
By purchasing.
*COMPETITION
By product specifications.
By product volumes.
By market share.
By end‑user.
By trade channel.
*CUSTOMER DEFINITION
By customer use.
By geographic characteristics.
By industry. By pricing effects.
By alternative and substitute products.
By seasonal purchase.
*OTHER FACTORS
Import regulations.
Government regulations.
Economic situations.
---------------------------------------------------
STEP 4
OPPORTUNITY IDENTIFICATION
The process includes:
*Define targets.
*Forecast rough volume and share.
*Perform a risk ratio analysis.
*Conduct a preliminary feasibility study using secondary data and professional expert opinion ‑ no prototypes or no trial runs.
*Assess competitive reactions, exclusivity, regulations, protections and constraints.
*Look at exceptional technical hurdles.
*Consider legal and policy issues.
------------------------------------------------
STEP 5
CONCEPTION
This phase translates market facts into product concepts and customer positioning communication, prior to extensive research and development. The objective is to create and to refine a variety of appropriate product concepts in the form of customer communications, which may then be screened down to a workable number of the most appealing ones that may be carried forward into the prototype modelling phase.
1 . INPUT RESEARCH
This is a backgrounding step, often required where "hands‑on" experience, technical education, patent and literature review, as well as special consultant professionals, are needed for complete understanding of the opportunity area.
2. IDEATION
Ideation is the generation of large quantities of unconstrained possibilities, utilising a variety of stimulus techniques ‑brainstorming, group discussion, etc.
3. IDEA FORMS
This is the shaping of concepts into single‑minded, clear communications. The goal is a clear communication that neither goes beyond nor falls short of a real world summary statement of each concept.
4.PRE‑SCREENING CONCEPTS
Broad‑brush selection methods are applied to eliminate or improve concepts that are difficult to target.
5.SCREENING RESEARCHThis process rates many concepts rapidly ‑ individually and in relationship to each other.-----------------------------------------------------
STEP 6
PROTOTYPE MODELLING
At this phase, preliminary concepts have survived several selection steps. Now it is necessary to bring the narrowed number of proposed new products closer to reality in the form of prototype products and prototype communications. The target customer prospect should see the concept "in the round" as closely as is timely and economically feasible. Prototype modelling accomplishes the development of such stimulus materials.
1 . DESCRIPTORSThis step involves the product category and preliminary brand name development.
2. PROTOTYPES
This covers all aspects of the product and its communications. Included are:Product.Package. Brand name and description. Communications theme development. Prototype of communications. Prototype testing.
-------------------------------------------------
STEP 7
DEVELOPMENT This phase of product development encompasses a number of different activities.
1 . VITRO TRIALSIn‑house double check of the prototype in the research and development.
2. PILOT PRODUCTIONThis involves a small‑scale replication of mass production. It helps to debug the system and devise productions controls, systems and equipment design. it is basic to determining on‑stream cost estimates.
3. SCALING UP (COMMERCIALISATI ON)Manufacturing resources. Marketing factors. Distribution. Service. Financial. Legal.
------------------------------------------
STEP 8
The development of the feasibility report.-first appraisal of the project feasibility / viability.
TARGET
-sales units.-sales dollars.-market share.-gross profit.-net profit.-ROI.
-------------------------------------------
STEP 9
TEST MARKETING
Evaluation of:Awareness, attitude, usage. Distribution. Sales.
-----------------------------------------------
STEP 10
TOTAL APPRAISAL FOR THE INVESTMENT.
and final authorization for the release.
------------------------------------------------
STEP 11
MARKETING PLANNING DEVELOPMENT
The marketing plan should include the following elements:Prototype introduction. Test simulation. Sales and distribution. Creative strategy. Media programme. Trade promotion. PR plans. Start‑up plan. Assessment plan. Expansion plan. Finance and production requirements.-------------------------------------------
STEP 12
MAJOR LAUNCH /INTRODUCTION OF THE PRODUCT
Finally comes the moment of truth ‑ the major introduction.Expanding the sales territory.Close monitoring of performance vs. plan.Evaluating opportunities.
---------------------------------------
LAST STEP FINAL APPRAISAL OF THE INVESTMENT.AT THE END OF THE 12 MONTHS.
against the target set.-sales units.-sales dollars.-market share.-gross profit.-net profit.-ROI.
===============================
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