Management Practices: A Case Study of Volvo

Introduction

Volvo adopted the systems approach to production management to save itself from the limitations of the traditional approach it incorporated. Proponents of the paradigm regarded administration as an evolutionary and open system of interconnected components known as compartments (Dźwigoł, 2019). The system approach views leadership as a structure or an ordered whole comprised of interconnected sub-systems that form a unified or harmonious whole (Dźwigoł, 2019). The systems methodology is predicated on the premise that everything is inextricably linked and interconnected.

A system comprises connected and dependent components that, when combined, constitute a unified whole. Thus, a system is just an arrangement or collection of items or components that constitute a sophisticated whole (Burggräf et al., 2018). One of the most distinguishing characteristics of this system is it is made of a pyramid of modules. That is, the components that comprise the primary system, and so on (Burggräf et al., 2018). For instance, the globe may be viewed as a system comprised of many national economies.

The very first management component of Volvo’s production system is synergy. Synergy is a term that refers to the partnerships between all sections of the company (Tarba et al., 2019). If each department operated individually, total production would be lower than what they create collectively. For example, suppose the manufacturing and sales units each have their funding and labor divisions. In that case, the framework will be more efficient if both are linked to the institution’s central finance and employees departments. Therefore, this is seen in Volvo’s shift by reconfiguring the workplace into fewer, self-managed units necessitated acquiring new skills by a large proportion of the employees. In addition, Volvo chose to rearrange the manufacturing line to cater to each employee’s unique characteristics.

Second, the administration element of Volvo’s new production methodology is the sub-system. Each component of the larger total is referred to as a sub-system. These components combine to form the corporation as a whole. Each unit is a sub-system of a more extensive network, which is a part of an even complex network (Sirotkina et al., 2018). For instance, a department is a component of an institution that is a unit of an organization, which forms a component of the country’s economy, a global economy module.

Each national economy is built of diverse industries composed of businesses, and a company, of course, maybe regarded as a system constituted of sub-systems such as manufacturing, advertising, finance, and bookkeeping (Sirotkina et al., 2018). Witnessing a string of unsuccessful attempts, Volvo developed a new production line in which separate bands of between 5 and 12 coworkers were typically in charge of the complete assembly of a vehicle, from start to finish. Rather than inspecting and assigning their task, the groups were compensated equally for their physical labor, excluding the supervisor.

Lastly, feedback forms an additional element of the systems approach adopted by Volvo. The feedback process informs the executives whether or not the result is acceptable to the surroundings. The information serves as a response to the institution, allowing for the assessment and, if necessary, correction of business structure. The term feedback refers to the ecosystem’s reaction to a company’s operations (Warmelink et al., 2020).

While the capacity to work autonomously is critical to the new philosophy’s success, collaboration is also required (Warmelink et al., 2020). At Volvo, a culture known as FIKA facilitates contact amongst colleagues. FIKA is a daily small-group gathering in which the team discusses coffee and thoughts, followed by a large-group FIKA on Fridays, during which one employee of the unit is accountable for supplying meals for everyone. By sharing thoughts on the various processes at the company, feedback is obtained on what elements are to be improved hence increasing productivity.

Some of the benefits of the systems approach towards the production management of Volvo as are as discussed herein. First, the systemic approach takes a comprehensive perspective of businesses and places a premium on their adaptability (Teece, 2018). It will improve Volvo’s ability to respond to environmental changes. The institution is examined holistically rather than in its component pieces, permitting it to respond to its environment’s requirements. Choices are made with the organization’s interaction with the atmosphere in mind. Second, it analyzes the system on several levels and connects and combines them to provide a cohesive set of directions (Carter, 2017).

It begins with personal ambitions and progresses to organizational objectives, combining the two and integrating them into the international economy. Lastly, the methodology establishes the basis for the strong collaboration of the firm’s constituents in a specific configuration conducive to achieving its objectives. It is not confined to a single function of the business.

Herzberg’s Motivation-Hygiene Theory

Herzberg’s Theory of Motivation aims to elucidate the source of organizational effectiveness. His two-factor model postulated that job happiness and discontent are governed by two distinct elements: hygiene components or external motivators and intrinsic factors or internal motivators (Holston-Okae & Mushi, 2018). Status, job stability, compensation, and fringe perks are all examples of extrinsic incentives. Leaders need to understand that failing to provide desirable extrinsic motivators will result in worker unhappiness and decreased motivation (Holston-Okae & Mushi, 2018). Intrinsic rewards include difficult labor, acknowledgment, connections, and the possibility of progress (Alshmemri et al., 2017).

Managers must realize that, while these requirements may fall beyond the more conventional concept of what a workspace should supply, they may be crucial to achieving high levels of team effectiveness.

Internal and external motivating factors, according to Herzberg, have an inverse connection. When intrinsic rewards are available, they boost enthusiasm, but external incentives tend to decrease encouragement when they are not (Chiat & Panatik, 2019). Thus, this is related to the fact that personnel have positive ambitions. Extrinsic motivators like income and perks are anticipated; hence, they will not improve motivation while present but will create discontent when absent (Chiat & Panatik, 2019). Intrinsic factors, on the other hand, such as demanding work and advancement opportunities, can act as a reference of additional incentive when they are accessible.

If management wishes to boost employee happiness, they should consider the scope of the job itself, namely the potential for personnel to acquire status, assume responsibility, and achieve self-realization. On the other hand, if the administration seeks to decrease employee unhappiness, it must concentrate on the workplace setting, including policies, processes, monitoring, and labor conditions (Chiat & Panatik, 2019). Executives must consider both sets of employment characteristics to guarantee a contented and productive staff.

Volvo’s system will find it difficult to function effectively considering the current global COVID-19 pandemic using this motivation theory. Volvo’s system’s approach in its production management establishes sub-systems or units of individuals working independently to meet the firm’s objectives. While social spacing initiatives are intended to restrict the virus and benefit human safety, they also present unprecedented hurdles worldwide for businesses and employees. The pandemic’s environment and social distancing strategies have facilitated the emergence of a negative side for many (Tuzovic & Kabadayi, 2018). This epidemic, therefore, will improve the probability that Volvo’s personnel may engage in dysfunctional activities linked with dark-side personality characteristics significantly.

Additionally, due to the restrictions placed by the World Health Organization (WHO) about COVID-19, the system approach would lead to a decrease in production activities of Volvo. Apart from outbreaks and epidemics, natural calamities and political considerations have disrupted industrial and supply networks on a massive scale. For example, the tsunami’s influence on the Japanese automobile industry resulted in the shutdown of Sony, Toyota, and Nissan plants in Japan and the United Kingdom (Okorie et al., 2020). Therefore, Volvo’s systems technique in administration production is not an exemption from the COVID-19 pandemic. Furthermore, the approach lacks a mechanism that stipulates corrective measures in cases of uncertainties, thus reducing its production activities risking closure and collapse.

Implications for Managers of Studying Volvo’s Management Experiences

Organization Culture

Cultural elements permeate every level of leadership in a business, from top to bottom. In essential words, culture refers to the fundamental ideas, attitudes, and norms of conduct that define a community (Altay et al., 2018). The society’s conventions, its members’ self-images, and the characteristics that distinguish it from other societies comprise its cultural values (Altay et al., 2018). Corporate culture alludes to the purpose, aspirations, standards, and principles that underpin a business’s workforce (Elsbach & Stigliani, 2018).

Volvo’s introduction of a new culture, FIKA, enables managers to understand the importance of cultural change in production effectiveness. By adopting the systems approach, issues related to worker absenteeism and low work productivity were eradicated. Firms with an institutional culture are more likely to succeed than those with less framework since they have procedures in place to enhance personnel effectiveness, output, and participation.

Having a solid business culture encourages employees to perform at their best. A workplace environment with a company strategy is purpose-driven and characterized by reasonable objectives. The new strategy adopted by Volvo encourages and stimulates individuals to be more involved in their job responsibilities and relationships with coworkers. Additionally, it results in a high degree of employee involvement, which boosts productivity.

Therefore, managers researching Volvo’s administration experiences understand that a firm’s culture establishes a special bond to a business and its employees, thus fostering a positive environment that is impossible to avoid. As a result, Volvo equipped its workers with the techniques and support necessary to succeed; thus, its overall quality and efficiency levels rose. Executives, therefore, learn that organizational culture affects the system of a company in ways that attract employees with broader skill sets.

Structural Implications

Effective implementation of change needs an understanding of the factors that contribute to structural alterations within a business. Reconfiguring the workplace into fewer, self-managed units necessitated new knowledge by a large proportion of the Volvo employees. The capacity to recognize warning indications of impending corporate change enables an organization to better prepare for it and establish procedures to keep their business growing. Rather than letting these elderly employees leave and substituting them with younger employees, Volvo launched a program to give them jobs in a senior specialist section. Such structural changes are vital for leaders studying Volvo’s management experiences. It sheds light on the importance of retaining older experienced workforce since they lay the foundation for their younger workforce.

Additionally, administrators learn the need for continuous personnel training to keep them up-to-date with the current trends in production management. For example, before its structural change, Volvo witnessed low-quality cars leaving their production lines due to its traditional structure. Managers also learn that weak institutional structures create a befuddling maze of inconsistencies: role ambiguity, poor integration across functions, inability to communicate ideas, and sluggish decision-making add needless difficulty, pressure, and disagreement to supervisors.

Control Systems

An organization’s control systems are made up of practices and methods that assist a corporation in accomplishing its purpose and goals. Controls specify how workers behave and carry out their job responsibilities (Felício et al., 2021). Volvo’s systems approach of management production focuses on the conduct management of its employees. Behavioral administration is involved with the acts that eventually result in outcomes. Numerous practices and regulations, in specific, were employed by Volvo’s human resource executives to codify or govern behavior. Following the implementation of guidelines, company proprietors must monitor and evaluate effectiveness.

Volvo’s systems approach provides feedback and interactions between employees that facilitate the exchange of ideas, hence leading to the attainment of the firm’s goals. Therefore, executives will appreciate the essential role of effective control mechanisms established by Volvo in their respective companies. Supervisors learn that developing an appropriate incentive structure is helpful for successful behavior management, as people tend to concentrate their resources on rewarded activities.

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