Western Pants: Case Report

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Identification and discussion of Western Pants’ strategic focus

Basis for Competitive advantage

  • Price Legislation: The Company has set a low price ceiling to enhance its competitive advantage in the market.
  • The company operates at break even with the ultimate goal of ensuring that the expenses do not exceed the revenue. The company achieves this by engaging in tight cost management in production plants.
  • Total Quality Management: Quality management is emphasized by the plant and a philosophy of continuous improvement of quality and employee job satisfaction is part of the corporate culture.
  • Diversification: Western Pants produces a diverse set of trousers so as to satisfy the needs of its wide customer base.

Business Mission

The mission of Western Pants is to be the world Leader in production of quality trousers to a wide client base at an affordable price.

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Key success factors arising from its basis for competitive advantage and business mission.

Western Pants has a large and well established customer base which ensures that the company’s products always sell out.

The company has a strong corporate culture which results in enhanced commitment to the organization as well as high motivation by the workforce

The company’s products are preferred by the consumers since the company is committed to total quality management.

There is strong leadership by many of the company’s top management. These leaders are committed to ensuring that their followers fulfill the goals and objectives of the company.

Since Western Pants places emphasis on employee job satisfaction, there is a low rate of Employee Turnover. Low turnover is desirable since it results in increased organizational performance and a reduction in the costs that arise when a firm losses skilled works and has to hire and retrain their replacements (Egan, Yang & Bartlett 2004).

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Western Pants engages in various efforts to motivate its employees. Motivation is desirable since it highly motivated workers exhibit higher productivity which is good for the company.

Role of Performance Measures and Rewards

A directional influence on behaviour

Performance measures are set such that they encourage the employees to undertake particular actions which are valued by the company (Sashkin 2003). The annual production output budget measure influences the managers to reach targets which are in line with the goals of the company. A reward is given for managers who reach these goals.

A motivational influence on behaviour

Motivation can be defined as the process of “arousing, directing and maintaining behavior towards a goal” (Martocchio 2005). Performance measures and rewards motivate the employees to engage in activities that enable them to reach the set performance targets. Performance targets encourage the manager to set goals which the employees then work to achieve. Goal setting brings about clear expectations which result in high performance (Koontz & Weihrich 2006). Employees who have set goals perform higher than those who do not.

Discussion the following

Limitations of Western Pants’ current Performance Measurement and Reward System.

The factors measured

The performance measures are short-term in nature (monthly appraisals) and they are inflexible since they do not consider the prevailing external forces.

None of the factors of performance measured considers the external variables such as market forces.

The performance measure employed by Western Pants is also quantitative in nature meaning that it only deals with the actual units of productions. The work process involved in coming up with these results is ignored.

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The performance targets

The target performances lack a standard of measure and managers only fall on extreme ends of the scale.

A performance matrix is also not given and the measures are stated as favorable/unfavorable and Maximize/minimize. Such targets do not allow for the identification of managers whose performance may have reduced but still managed to remain favorable or increase but not yet reached the favorable mark.

Rewards

The rewards system in Western Pants places too much emphasis on external rewards for work (extrinsic motivation) compared to rewards and motives that are internal to individuals (intrinsic rewards). Frey and Jegen (2001, p.591) states that in the extreme, extrinsic motivation to earn financial rewards ends up undermining or crowding out intrinsic motives by employees.

Dysfunctional Behaviors by Western Pants’ plant managers

The reward system in Western pants has resulted in some dysfunctional behavior which is defined as behavior that is in opposition to the strategic goals of the company. Managers are not pushing for maximum monthly production which is a strategic goal of the company. This is because increased output will result in budgets going up without any monetary rewards being reaped by the manager for the increased responsibilities and requirements. Kondalkar (2002) asserts that individuals are likely to focus narrowly on performance measures and associated rewards to the extent that they do not give adequate attention or effort to other important work that is not rewarded..

Since there is a bonus attached to meeting production budgets, some managers are engaging in practices such as forcing employees to work overtime so as to meet budget costs. The job satisfaction of employees which is a key philosophy of the company is therefore compromised by the need to by managers to maximize their measured performance. This behavior is myopic in nature since while it results in maximization of short term performance, the long term effect on employee happiness and job satisfaction is ignored (Malhotra 2000).

Tom Wick’s, who is the vice president of manufacturing, notes that plant managers have been neglecting the areas of community relations, employee satisfaction and safety records. This has led to more accidents being witnessed in the plants and lower employee satisfaction. The reason behind this is that the company no longer offers bonuses for this performance factors as it did in the past. This can be attributed to the fact that attaching rewards to performance creates expectations for future rewards and if these expectations are not met, then motivation declines.

Managers are also in the habit of manipulating performance measure by hoarding some of their products in months where output was optimal so as to protect themselves from production deficiencies in the future. This was in a bid to beat the production budget process which is one of the factors of performance measured. This action is in line with the expectancy theory which states that people choose certain causes of actions in a bid to “maximize expected pleasure and minimize their expected pain” (Chapman & Hopwood 2007, p.120).

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Changes that can help improve performance measurement and reward system

There are a number of adjustments that can help improve the performance of Western Pant’s system. Reward system should be based on actual performance rather than output. The new plants are bound to have a higher output than the older plants and as such, a system which focuses on output will put the old plants at a disadvantage. Major adjustments need to be made in the performance metrics with distinctions being made between the plant managers and the other management group which includes finance and marketing specialists located at the corporate headquarters.

Performance measures should be matched against the key success factors of Western Pants. For example, the quality of the products should be checked to see if the quality has being affected by output goals. Since the company prides itself in delivering a variety of pant styles to customers, the surveys can be undertaken to see if the product image is being maintained in the market.

Griffin (2007) asserts that the performance measures should be linked to the company strategy. With this in mind, Special attention should be paid to the strategic goals of the company and overall performance should be measured against this goals. Another issue that should be considered is flexibility in setting of performance targets. Flexibility will call for managers to acknowledge that goals may need to be changed to consider external or internal factors. Goals will therefore need to be revised so as to ensure that they are both achievable and challenging to the employees at all times.

Many managers complained about the bonus system being impossible to achieve. While performance measure targets ought to be challenging, they must be deemed achievable. If goals are deemed unachievable by individuals, he/she will not make the effort to meet them. Pynes (2008) confirms that an unclear or unattainable goal will result in unmotivated employees who exhibit poor performance.

References

Chapman, SC & Hopwood, GA 2007, Handbook of management accounting research, Elsevier, Oxford.

Egan, M Yang, B & Bartlett, KR 2004, The Effects of Organizational Learning Culture and Job Satisfaction on Motivation to Transfer Learning and Turnover Intention, Human Resource Development Quarterly, vol. 15, no. 3.

Frey, BS & Jegen R 2001, Motivation Crowding Theory, Journal of Economic Surveys, vol. 15, no.5.

Griffin, RW 2007, Fundamentals of management, Cengage Learning, Boston.

Kondalkar, PF 2002, Organization effectiveness and change management, PHI learning Pvt, New Delhi.

Koontz, H & Weihrich, H 2006, Essentials of management, McGraw-Hill, New York.

Malhotra, Y 2000, Knowledge Management & New Organization Forms: A Framework for Business Model Innovation, Information Resources Management Journal, 13(1), 5-14.

Martocchio, JJ 2005, Research in Personnel and Human Resources Management, Emerald Group Publishing, West Yorkshire.

Pynes, JE 2008, Human resources management for public and nonprofit organizations: A strategic approach, John Wiley and Sons, New Jersey.

Sashkin, G 2003, Leadership that matters: the critical factors for making a difference in people’s lives and organizations’ success, Berrett-Koehler Publishers, California.

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