2020 BA MOD 5 DB

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Chapter 11 – Work System
Design

Operations Management

R. Dan Reid & Nada R. Sanders

Welcome to Chapter 11 – Work System Design. In this session, we’ll be evaluated the different ways in which the work place is monitored, how job criteria is developed, when you know to turn to automation, when specialization is important and how worker’s compensation systems are set-up.

Learning Objectives

Describe the elements of work system design and the objectives of each element
Describe relevant job design issues
Describe methods analysis
Understand the importance of work measurement
Describe how to do a time study
Describe how to do work sampling
Develop standard times
Show how to use work standards
Describe compensation plans
Describe learning curves

The learning objectives to be reviewed are:

Describe the elements of work system design and the objectives of each element.
Describe relevant job design issues.
Describe methods analysis
Understand the importance of work measurements
Describe how to do a time study
Describe how to do work sampling
Develop standard times
Show how to use work standards
Describe compensation plans
Describe learning curves

Work System Design

Designing a work system is part of developing an operations strategy
The work system includes:
Job design
Work measurements
Worker compensation

An important part of operations strategy is designing a work system. This provides the structure for the productivity of the company.

The work system includes job design, work measurements and worker compensation. The company determines the purpose of each job, what the job consists of, and the cost of the employees to do the job. A job must add value and enable the company to achieve its objectives.

Job Design

Jobs are designed by answering questions like:
What is the job’s description?
What is the purpose of the job?
Where is the job done?
Who does the job?
What background, training, or skills are required to do the job?

We’ll first evaluate job design. There are several questions that can be asked when designing a job.

What is the job’s description?
What is the purpose of the job?
Where is the job done?
Who does the job?
What background, training, or skills are required to do the job?

Once these questions are answered, the result will be a sound idea of what this position will be all about.

Additional Job Design Factors

Technical feasibility:
Whether the job is within physical & mental capabilities of the workforce
Economic feasibility:
Whether the cost of performing the job is less than the value it adds
Behavioral feasibility:
Whether the job is intrinsically satisfying

There are additional job design factors that need to be considered as well.

First, what is the technical feasibility of the work needing completed. When evaluating the core competency of the workforce, is it within their physical and mental capabilities?

Second, does it make sense from an economic perspective to do this work. There is a chance the cost of performing the job is less than the value it adds.

Third, will it benefit the workforce from a behavior standpoint. Is the job intrinsically satisfying?

Should the Job Be Automated?

Safety & risk of injury to workers
Repetitive nature of the task (monotonous?)
Degree of precision required
Complexity of the task
Need for empathy, compassion, or other emotional elements
Need for personal customer relationships

In high volume manufacturing environments, the question ‘should the job be automated’ is frequently asked. There are a series of questions a company can evaluate in an attempt to feel comfortable with their decision.

First, does the job present a safety or risk of injury to the workers doing the job today? Automation has helped in a number of areas on automotive assembly lines where safety concerns were high.

Second, is the job one that is repetitive in nature? Is it something that would require a low-sophisticated piece of equipment that would save the company money over a period of time?

Third, what is the degree of precision required to complete the task? Automation typically can provide a more consistent product when precision is critical in the function of the product.

Fourth, how complex is the task? There are a number of complex jobs that make sense to have a skilled person complete rather than an automated piece of equipment. This is usually determined depending on the actual task being completed.

Fifth, is there need for empathy, compassion or other emotional elements? As we know, automation is not going to provide you with any of that. The personal touch of an individual is the only way to fulfill that need.

Lastly, is there a need for personal customer relationships? I’m sure we all have our opinions when being answered on a phone call by a long list of options ranging from the numbers 1-9. Many times we wish to talk to someone. There are other times when touchtone works fine. Again, it has a lot to do with what is trying to be accomplished and does it meet the needs of the customer.

Specialization: Management’s View

Advantages:

Readily available labor
Minimal training required
Reasonable wages costs
High productivity

Disadvantages:

High absenteeism
High turnover rates
High scrap rates
High number of employee grievances filed

The higher the level of specialization, the narrower is the employee’s scope of the expertise. The professions of medicine, law, and academics are highly specialized; however, some low-level assembly or service jobs are also specialized.

When evaluating specialization, it can be viewed from two perspectives – from the manager’s seat and from the employee’s seat.

On this slide you find the advantages and disadvantages from a management view.

Specialization: Employee’s View

Advantages:

Minimal credentials required
Minimal responsibilities
Minimal mental effort needed
Reasonable wages

Disadvantages:

Boredom
Little growth opportunity
Little control over work
Little room for initiative
Little intrinsic satisfaction

This slide shows the advantages and disadvantages of specialization from a employee’s view. Note the different perspectives an employee has compared to the manager shown on the previous slide.

Eliminating Employee Boredom

Job enlargement
Horizontal expansion of the job by increasing the scope of the work assigned, e.g. two person assembly cells replacing a four person assembly line
Job enrichment
Vertical expansion of the job by increased worker responsibility
Adding work planning or inspection to a routine assembly task
Job rotation
Shifting of cross trained workers to other tasks
Broadens understanding and can reduce fatigue

Companies that choose highly specialized job design have several options for reducing worker boredom, including job enlargement, job enrichment, and job rotation.

Job enlargement is the horizontal expansion of the job by increasing the scope of the work assigned. This would provide more variety in the type of work being completed and give the employee more areas to focus on.

Job enrichment is the vertical expansion of the job by increasing the worker’s responsibility. This could be adding any type of additional responsibility the worker didn’t do in the past including adding work planning or inspection to a routine assembly task.

Job rotation is shifting workers to different jobs to increase their understanding of the total process. This broadens the employee’s perspective and can actually reduce fatigue. They acquire more skills that may increase their value to the company.

Job Design with Work Teams

Problem-solving teams:
Small groups, trained in problem-solving techniques. Used to identify, analyze, & propose solutions to workplace problems
Special-purpose task forces:
Highly-focused, short-term teams with a focused agenda (often cross-functional)
Self-directed or self-managed teams:
Team members work through consensus to plan, manage, & control their assigned work flow

Most of what has been discussed so far has been from the individual standpoint. Let’s now take a look from a team perspective. Problem-solving teams, special-purpose task forces and self-directed teams are three different kinds of employee teams we’ll look at.

Problem-solving teams are small groups of employees and supervisors trained in problem-solving techniques who meet to analyze, identify, and propose solutions to workplace problems. The purpose of these teams are to use the employee’s knowledge of operational procedures since management can’t know as much about the detailed operations as the employees do who work with it everyday. They may meet as often as once a week.

Special-purpose teams are highly focused, short-term teams addressing issues important to management and labor. They address issues of major significance to the company. They are often short-term, special task forces with a focused agenda and typically represent several functional areas that have a broad overall view of the corporation.

Self-directed or self-managed teams are integrated teams empowered to control portions of their process. They are designed to achieve a high level of employee involvement. Their purpose is to allow the people most knowledgeable about the process to control the work flow. This approach also allows employees to develop a sense of ownership and pride in their work.

Alternative Workplaces

Alternative workplaces are made possible by

technologies like email, e-networks, cell phones, & video conferencing. Current situation:

More than 30 million employees work in alternative workspaces
A survey at IBM reveals that 87% of alternative workplace employees believe their effectiveness has increased significantly
Sun Microsystems gives many of its designers the option to work at home
GE sales people work from home and hotel offices

One area that continues to grow is the option of alternative workplaces. This concept is a combination of nontraditional work practices, settings and locations that supplements traditional offices. It brings work to the worker rather than the worker to the workplace. This has been made possible by technologies such as email, e-networks, cell phones and video conferencing.

Many companies believe alternative workplaces have given them benefits of cost reductions, productivity improvements and flexibility to employees to assist them in balancing family and work.

Methods Analysis

A detailed step-by-step analysis of how a given job is performed
Can distinguish between value-added & non-value-added steps
Analysis can revise the procedure to improve productivity
After improvement, must revise the new standard operating procedure
Follow-up to insure that changes actually improve the operation

One approach a company uses to detail out a job is through methods analysis. This is the study of how a job is done. Job design, which we spoke about earlier, shows the structure of the job and names the tasks within the structure while methods analysis details the tasks and how to do them.

It’s an excellent tool to distinguish value-added and non-value added steps. The results of using this method is the revision of procedures to improve productivity and the revision of new standard operating procedures. Methods analysis is also used by companies when developing new products or services.

Methods Analysis at FEAT Company: The methods analyst has been asked to review the transformer wiring operation because of past quality problems from poor solder joints. The solder operation sequence and the workstation layout are shown below.

Picks up wire in left hand and moves it to the terminal

Simultaneously picks up solder iron in right hand and moves to the terminal

Solders wire to terminal and replaces solder iron in holder

Solders terminal #1, then

#2 - #6, going right to left

This is an example on how the methods analysis can work. Note the order in which the operation is completed. The objective is to solve the quality problems due to poor solder joints.

The entire example is found on pages 400-401 in Example 11.1

Importance of the Work Environment

Working conditions can effect worker productivity, product quality, and worker safety
Temperature, ventilation, noise, and lighting are all factors in work system design
Congress passed OSHA in 1970 to mandate specific safety conditions that must be met

We have so far discussed job design and methods analysis. We also, however, need to understand the effect of working conditions on worker productivity, product quality, and worker safety.

Factors such as temperature, ventilation, noise, and lighting are all factors that can have an effect on productivity in an operations. Employees typically work at their highest levels when these four items are controlled and remain consistent. Due to some concern in these areas, Congress passed the Occupational Safety and Health Act (OSHA) in 1970 to mandate specific safety conditions that must be met. The law was designed to ensure that all workers have healthy and safe working conditions.

Work Measurement

Standard time:
The length of time a qualified worker, using appropriate tools & procedures, will take to complete a job
Standard time is used in:
Costing the labor component of products
Tracking employee performance
Scheduling & planning required resources

The second component in work system design is work measurement, which determines how long it should take to do a job. It is used to set standard time. Standard time is the length of time it should take a qualified worker using appropriate processes and tools to complete a specific job allowing time for personal, fatigue, and unavoidable delays. It’s based on a qualified operator working at a sustainable pace.

There are three primary reasons why it’s important to establish and track standard time. First, standard time is used in costing the labor components of products. Accounting counts on this information to establish pricing for customers. Second, it’s used to track employee performance. Standard time provides a baseline for managers and supervisors to use in completing employee performance appraisals. Third, standard time is used in scheduling and planning the required resources. It provides the means to understand how much product can be completed per hour and how much the scheduling group should release to the floor to be completed.

Setting Standard Times

Step 1: Choose the specific job to be studied
Step 2: Inform the worker of the study
Step 3: Break the job into distinguishable elements
Step 4: Calculate the number of cycles to observe
Step 5: Time each element, record data & rate the

worker’s performance

Step 6: Compute the normal time
Step 7: Compute the standard time

When going about the process of setting standard times, following are the typical steps that are followed:

Choose the specific job to be studied.
Inform the worker of the study. Be sensitive to how the employee will feel as you time their performance.
Break the job into distinguishable elements. Each element should have a clear starting and ending point.
Calculate the number of cycles to observe. The formula for determining the number of observations needed is found on the next slide.
Time each element, record data, and rate the worker’s performance.
Compute the normal time
Compute the standard time

Doing a Time Study

When making a time study several decisions are made to assure desired results:
# of observations to make
Desired level of accuracy
Desired level of confidence for the estimated standard time
Desired accuracy level is typically expressed as a % of the mean observed times
In next column is a formula for determining the number of observations needed

n: number of observations
z: provides desired statistical confidence (e.g.: 1.96 for 95%)
s: observed standard deviation in time required to complete the task element
a: desired accuracy or precision
x-bar: the mean observed time to complete the task

This slide represents the steps and calculations used in determining the number of observations needed to provide a good time study.

Pat’s Pizza Place: Pat hires an analyst to determine a standard time to prepare a large pepperoni and cheese pizza. He takes 10 observations of the 7 elements and calculates the mean time and the standard deviation per element. He must then calculate the # of observations to be within 5% of the true mean 95% of the time.

The analyst must calculate the observations for each element to determine how many additional observations must be taken. The maximum number of 25 (in this case) for element #7 means that an additional 15 observations must be made and then the observed times are revised.

This example can be found on pages 405-408 in the textbook. It demonstrates how an individual would use standard deviation, mean observed time and # of observations to come up with a revised observed time.

Work Sampling Procedure

Identify the worker or machine to be sampled
Define the activities to be observed
Estimate the sample size based on level of accuracy and confidence level
Develop the random observation schedule. Make observations over a time period that is representative of normal work conditions
Observe, record data, and check to see if the estimated sample size remains valid
Estimate the proportion of the time spent on the given activity

Work sampling is a method used for estimating the proportion of time that an employee or machine spends on different work activities. Work sampling does not provide a standard time for an activity but instead provides an estimate of what portion of a day a worker uses for that activity. For example, a company may use work sampling to determine what proportion of the day a machine is used for rush jobs or is idle. You do not time activities for work sampling. Instead, you make random observations and note the kind of activity.

This slide provides the steps an individual would take to complete this procedure.

Work Sampling Example: We are interested in estimating the proportion of time spent by secretaries arranging and scheduling travel. We are considering the possibility of bringing an on site travel agency to free up secretaries from this time consuming task. We estimate that the proportion might be as high as .50.

Step 1 – We need to estimate the number of observations needed to provide an estimate with 97% confidence (z=2.17), and the resulting estimate will be within 5% of its true value. We use

Step 2 – Based on the first 30 observations the secretary was making travel reservations 6 times (6 out of 30 observations = 0.2). With this new estimate, recalculate the sample size needed .

Final Step – After making the 302 observations, the secretary was making reservations 60 times or 19.9%. This estimate can now be used to make the decision on savings that might result by consolidating this task with an in house travel agency

Shown is an example of work sampling. The entire example can be found on pages 411-412 in the textbook.

Worker Compensation Systems

Compensation is the third part of work system design
Time-based plans (day pay) versus output-based systems (incentive pay)
Group incentive plans: profit sharing & gain sharing
Plans put part of a worker’s salary at risk
Does the compensation system undermine teamwork?
Does plan prevent free-riders not doing their fair share?
Does the incentive plan encourage workers to support the long-term health of the organization?

The third component of work system design is worker compensation systems.

Compensation systems are typically based on either time spent working or on output generated. Time-based systems compensate the employee according to the number of hours worked during the pay period while the output-based (incentive) system link employee pay to performance. Employees on incentive systems are paid based on their output and not on the number of hours they work.

Group incentive plans are designed to reward employees when the company achieves certain performance objectives. Two methods are profit sharing and gain sharing. Profit sharing rewards employees when certain profitability levels are achieved by the company while gain sharing emphasizes the costs of outputs such as improvements in quality and productivity.

There have been some concerns raised with incentive plans:

Does the compensation system undermine teamwork?
Does the plan prevent free-riders not doing their fair share?
Does the incentive plan encourage workers to support the long-term health of the organization?

Although these questions have been raised, overall, companies using group incentive systems tend to outperform companies that do not use such systems.

Learning Curves

When the number of times the task is repeated doubles, the time per task reduces as shown in the graph
With an 85% learning curve rate, the 2nd time a task is done will take 85% of the 1st time.
The 4th time will take 85% of the 2nd
If an employee took 12 hours to complete an initial task, how long will the 16th time take (4th doubling)

T x Ln = time required to perform a task the nth time

T = the time required to perform the task the first time

L = the rate of learning

n = the number of times the task has doubled

The last item covered in this chapter is how to build in the effects of learning curves. We all can recall a new task or job that took a long time to finish the first time we tried. We noticed, however, that each time we completed it we were able to do it more efficiently and it took less time. This is the basis of the learning curve theory. People learn from doing a task and get quicker each time they repeat that task.

Note the data that builds this curve. When the number of times the task is repeated doubles, the time per task reduces as shown in the graph. With an 85% learning curve rate, the 2nd time a task is done will take 85% of the 1st time. The 4th time will take 85% of the 2nd time and so on.

Chapter 11 Highlights

Work system design involves job design, work measurements, and worker compensation.
Relevant job design issues include design feasibility, the choice of human or machine, the use of teams, and the location where the work is to be done.
Methods or process analysis is concerned with how the employee does the job and is used to make improvements.
Work measurement is used to determine standard times and are usually based on time studies. Standard times are used for product costing, process evaluations, and for planning workloads and staffing.

Following are the highlights of Chapter 11 – Work System Design

Work system design involves job design, work measurements, and worker compensation.
Relevant job design issues include design feasibility, the choice of human or machine, the use of teams, and the location where the work is to be done.
Methods or process analysis is concerned with how the employee does the job and is used to make improvements.
Work measurement is used to determine standard times and are usually based on time studies. Standard times are used for product costing, process evaluations, and for planning workloads and staffing.

Chapter 11 Highlights (Continued)

Doing a time study requires breaking the job into work elements and determining the number of observations.
Work sampling involves random observations of a worker to determine the proportion of time spent on each activity.
Worker compensation systems are time-based or output based and can be based on individual or group performance.
Learning curves show the rate of learning that occurs when an employee repeats the same task over time.

Doing a time study requires breaking the job into work elements and determining the number of observations.
Work sampling involves random observations of a worker to determine the proportion of time spent on each activity.
Worker compensation systems are time-based or output based and can be based on individual or group performance.
Learning curves show the rate of learning that occurs when an employee repeats the same task over time.

This concludes the sections we will be covering in BA2000 Operations Management. My hope is your knowledge in this area of business has improved and expanded and has given you a better understanding of how an operation is run.