Last updated: February 21, 2019
Topic: BusinessManufacturing
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Performance management report

 

This Performance Management Report is prepared by the Inspection Section of the Manufacturing Department and for the information of senior management. It covers seven areas of operations of the Section. Included are specific areas that can be improved.

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The details of these seven areas are based on research, investigation, and analysis.

A.        SMART objectives

 

The Inspection Section has adopted the SMART principle as a standard operating guide for the practice of standard operating procedures (SOPs) of the organization. SMART is an acronym derived from the first letters of these terms: S-pecific, M-easurable, A-greed to by those affected, R-ealistic, T-ime specific (Early & Coletti, 1999, p. 3.6). In planning for project activities aimed at producing superior or of high quality products or services, enough information must be available to people involved in the “planning process”—there are “five characteristics” of the process and are spelled out in the term “SMART.” The Inspection Section also practices the four-industry measures which are: (1) Quality, (2) Quantity, (3) Cost, and (4) Time (see Early & Coletti, 1999) along with SMART principles.

The Inspection Section has adopted and applied the principle of “Cost of Quality” or “COQ” (Gryna, 1999) which identifies three classifications of costs associated with quality, namely: (1) cost of quality failures, (2) cost of appraisal, and (3) cost of prevention. The Inspection Section came up with classified sources of costs emanating from workmanship or manufacturing operations.

The principle of “Cost of Quality” is an effective way of identifying the sources of defective products and corresponding costs. For example, a rejected product would entail several costs. One for of cost is the associated cost paid to a person hired to accept the calls of customers who complain and return defective products; another associated cost is the doubling or tripling of materials that make up one unit of a product; if all of these costs were added, they provide management information about the cost of defective products. There is also cost to appraisal in the form of inspection or testing. The Inspection Section sometimes purchases of the services of independent inspection and testing companies that conducts inspections and tests to the finished products of the Section. There is corresponding cost to that because there is a need for the company to produce quality products, that is, products that are not defective. There is also cost to preventing unquality products—that is, products that do not meet specifications. This is a form of investment to the company in form of hiring specific people who do quality assurance to the products.

In preparing quality plans and objectives, the SMART principle is used by the Inspection Section because it provides the requisite details for a specific product to be manufactured.

B.        Practical Steps to encourage team members’ involvement

 

One of the Eight Quality Management principles of the ISO 9000:2000 is “People Involvement.” This principle tells all the central importance of human resource in any organization—be it private or public (ISO, 2000). In “building employee commitment,” Fink (1993, p. 91) writes: “people who are committed to the work itself usually find it intrinsically rewarding, become so absorbed that they lose track of time, take great pride in the quality of their work, think about it even when not on the job, and make constant efforts to improve. They are the employees who do not watch the clock or sit around waiting to be told what to do next. Monetary rewards are important but are secondary to the rewards derived just from doing the work.” Fink (1993, p. 92) suggests the following to managers of people in order to elicit the best in them:

1.       Take a chance on trusting employees to manage themselves even when you are not sure of them. Progress will often be made, and, even when it is not, you will have lost little and learned a great deal.

2.       Let your employees do things their own way even when it is not the way you yourself would do it.

3.       Let your employees make mistakes, but require that they learn from the mistakes and not repeat them. Remember, preventing others from making mistakes removes opportunities for important learning.

4.       Let go of the tendency to control the behavior of your subordinates, even if doing so gives you some anxiety. And don’t hang around biting your nails; it only generates tension in others;

5.       Develop yourself as a role model—make sure your own behavior reflects commitment to your job.

6.       Make your expectations clear, but always remain open to renegotiating them as circumstances change.

 

The middle management of the Inspection Section has practiced the above-mentioned suggestion of Fink and has gotten the staff to think of their own ideas and to try to use them. Consequently, they gave them feelings of being wanted by the company. Relevant questions focused on quality of work were also thrown at them during meetings and they responded favorably by writing their ideas for improvement. The 35%-cost of quality reduction across the board indicated above was the result of a collective team brainstorming session in which every member felt proud and eager to see the results of the team’s plans by the end of 2007.

C.        Identification of individual development needs

 

One of the five main elements of the ISO 9001:2000 standard is “6.0 Resource Management” (ISO, 2000) and the key resource is, again, as mentioned above, the human being. In line with the ISO 9000 standard, the Inspection Section developed an Annual Performance Evaluation Program. The results of the performance evaluation for the year 2006 have been circulated. The highlight of the performance evaluation is that it identified the number of employees falling under a 5-category criteria, namely: (1) Fail (Does Not Meet Expectations), (2) Needs Improvement (Partially Met Expectations), (3) Fully Met Expectations, (4) Exceeded Expectations, and (5) Far Exceeded Expectations. Five personnel were identified needing improvement. These improvement needs are, however, training on how to effectively use new machines acquired by the Section. Personnel falling under this evaluation have been identified in which training and development plan has been prepared, discussed with them, and approved by the Section’s management and with the HR Department. It will be implemented in 2007. The results of the evaluation have been discussed individually with each personnel and were acknowledged by the same. Although two personnel were recommendation for job termination, the rest were appreciative of the training and development plan for personnel.

D.        setting performance objectives and demonstration of ways to achieve fair and objective assessment of performance

 

The Inspection Section has structured performance measurement system that measure four categories, namely: Quality, Cycle time, Cost, and Quantity.

The measure of quality will be made by gathering the customer satisfaction through a structured survey; the measure of cycle/delivery time is measured by the timeliness of delivering finished products as per schedule; the measure of cost will be measured through various variables, like, the number of defects and corresponding amount, rejects, among other; the measure of productivity or output will be measured, too, through the actual count of finished products.

Details of these measurements will be presented in a meeting where it can be explained fully. These four measurement categories are oriented to all personnel of the Section and made clear to them that performance is based on statistics and not on the traditional “tick-mark” method in which a manager (the evaluator) may employ his subjective judgment in evaluating the outputs of his subordinate.

E.        Definition of what constitute poor performance

 

Inspection Section of the Manufacturing Department uses statistical method in assessing and evaluating the individual performances of its workforce. The performance evaluation structure is a 5-scale descriptive matrix with the middle part as the measure of 100% full completion of work expectations. The two extremes indicate either failure to meet expectation or exceeding expectations. Each scale has corresponding form of “reward” and “punishment/penalty.” Individual performance is measured at the end of each month and kept until the performance evaluation at the end of the year arrives. Each time a personnel is evaluated at the end of the month, the Supervisor and Manager of the Section discuss the results of the evaluation among themselves first then calls each employee to discuss with them their individual performance record or achievement at a given time until the end of the fiscal year. This approach has never shown any untoward reaction or behavior from any staff during the entire year of 2006 when it was applied for the first time. This approach was adopted from the concept of Scholtes (1998), wherein he recommends “Performance without Appraisal”—a radical approach using statistical method rather than the traditional “tick-mark” method.

What constitute poor performance are those that slide in the left side of the scale, i.e., less than 100% and the reverse is true for good performers. Measuring performance in this method is very easy, accurate, fair, clear, and avoids ambiguity unlike the traditional “tick-mark” method. When explained to employees, they easily understand it; in fact, they even show eagerness right after the discussion and would ask for a form for them to record their daily/weekly/monthly outputs!

F.        Human resource and grievance management

 

Although grievance discussion is very rare if not almost nil in the Inspection Section, a contingent policy and procedure to handle employee grievances is kept and maintained. It is specific to the Section, however, it is aligned with the corporate policy on grievance which has a broader scope since it includes local and international laws where the company operates. The contingent grievance policy and procedure of the Inspection Section are outlined below in Table 1 (it is derived from the concept forwarded by Noe, Hollenbeck, Gerhart and Wright (2000))

As the Supervising Inspector in my Section, my role in the disciplinary issue is more of a counselor, coach, adviser, and mentor rather than the typical employee-superior who usually takes a judgmental attitude toward his failing or erring subordinate. I play many roles to my subordinates. As a counselor, I become a father-image to my staff; as a coach, I tell them what to do in their job while I watch them as they perform the task; as an adviser, I inform them as much as they need to know about anything that pertains to their work; as a mentor, I model before them what they want or expect to learn from me. I have never issued disciplinary measures to any one of my subordinates in the past 10 years working with them—this is so because there is no reason for them to let do such thing.

Table 1. Inspection Section Grievance Policy and Guidelines and Procedures
Policy:    The management of Inspection Section recognizes the individual employment right of each personnel as prescribed by the local law. Only three (3) kinds of grievance are recognizes by the management and the procedure for initiating each one of them is defined below.

 

Employee-initiated Grievance

 

Step 1

a.        Employee discusses grievance or problem orally with supervisor

b.        Union steward and employee may discuss problem orally with supervisor

c.        Union steward and employee decide: (1) whether problem has been resolved, or (2) if not resolved whether a contract violation has occurred

 

Step 2

a.        Grievance is put in writing and submitted to production superintendent or other designated line manager

b.        Steward and management representative meet and discuss grievance. Management’s response is put in writing. A member of the industrial relations staff maybe consulted at this stage.

 

Step 3

a.        Grievance is appealed to top line management and industrial relations staff representative. Additional local or international union officers may become involved in discussions. Decision is put in writing.

 

Step 4

a.        Union decides on whether to appeal unresolved grievance to arbitration according to procedures specified in its constitution and/or by-laws.

b.        Grievance is appealed for arbitration for binding decision.

 

Discharge Grievance

 

a.        Procedure may begin at Step 2 or Step 3

b.        Time limits between Steps may be shorter to expedite the process.

 

Union or group grievance

 

a.     Union representative initiates grievance at Step 1 or Step 2 on behalf of affected class of workers or union representatives.

 

Copy right. Source: Noe, et. al. (2000, p. 517)
G.        managing, supporting, and assessing performance

 

An independent internal audit team from the Corporate Quality Assurance was requested to conduct quality audits on the operations of the Inspection Section. The results of these audits have been circulated to concerned department including Manufacturing. The internal audit found six (6) minor nonconformities which included non observance of standard operating procedures by not using prescribed forms, for example. Fifteen observations were also raised in said internal audits. The results of the root-cause analyses made by the audit team gathered various reasons for the reported non conformities. One reason was the lack of immediate petty cash (from the Accounting Section of the Finance Department) when supplies were needed. Corresponding corrective and preventive measures or action items have been identified and confirmed by concerned people in the organization particularly the Inspection Section. The closure of these corrective/preventive action items were established not to exceed June 2007.

A general meeting was called by the Head of Manufacturing Department in which the results of the internal audits were discussed with the staff.

The internal quality audits provided both the management of the Inspection Section and its non management staff opportunity to see what is going on the floor shop of the Manufacturing Department that produces quality under water amplifiers known as repeaters. The results of the internal quality audits were acknowledged as part of the performance evaluation of the organization.

The root causes to the non conformities provided the management of the organization opportunity to objectively learn about the needs of the staff which resulted in the communication of the commitment of the organization’s managers to provide full support to needs of the staff. This is in line with the operating principle of the organization to produce quality products for the customers of the company.

References

 

1.      Early, J. F. & Coletti, O. J. (1999). The Quality Planning Process. In Quality Handbook (pp. 3.1-3.50). Juran, J. M. & Godfrey, A. B. (Co-Eds.), Hoogstoel, R. E. & Schilling, E. G. (Associate Eds.) (5th Ed.). New York, NY: McGraw-Hill.

2.      Fink, S. L. (1993). Managing Individual Behavior: Bringing Out the Best in People. In Allan R. Cohen, The Portable MBA in Management (pp. 71-112). New York: John Wiley & Sons, Inc.

3.      Gryna, F. M. (1999). Quality and Cost. In Quality Handbook (pp. 8.1-8.26). Juran, J. M. & Godfrey, A. B. (Co-Eds.), Hoogstoel, R. E. & Schilling, E. G. (Associate Eds.) (5th Ed.). New York, NY: McGraw-Hill.

4.      ISO (2000). ISO 9000:2000 – quality management system fundamentals and vocabulary. Geneva, Switzerland: International Organization for Standardization.

5.      ISO (2000): ISO 9001:2000 – quality management system requirements. Geneva, Switzerland: International Organization for Standardization.

6.      Noe, R. A., Hollenbeck, J. R., Gerhart, B., Wright, P. M. (2000). Human Resource Management Gaining a Competitive Advantage. (3rd ed.). Boston: Irwin McGraw-Hill.

7.      Scholtes, P. R. (1998). The Leader’s Handbook A Guide to Inspiring Your People and Managing Daily Workflow. New York: McGraw-Hill.