Chapter 11 Work System Design Discussion.pptx

TOPICS
✔ Designing a Work System
✔ Job Design
✔ Methods Analysis
✔ The Work Environment
✔ Work Measurement
✔ Setting Standard Times
✔ Compensation
✔ Learning Curves
✔ Work System Design Within Om: How It All
Fits Together
✔ Work System Design Across The Organization
✔ The Supply Chain Link
✔ Chapter Highlights
2

DESIGNING A WORK SYSTEM
✓ part of the operations strategy
✓ provides the structure for the productivity of the company
✓ Job design ensures that each employee’s duties and
responsibilities are geared toward achieving the organization's
mission.
Work System Includes:
✓ job design
✓ work measurement
✓ worker compensation
4

JOB DESIGN
• It specifies the work activities of an
individual or a group in support of an
organization’s objectives.
• Specifies the contents of the job.
• Answering questions such as:
-What is your description of the job?
-What is the purpose of the job?
-Where is the job done?
-Who does the job?
-What background, training, or skills
does an employee need to do the job?

Technical Feasibility
• The job must be physically and
mentally doable.
• The technical feasibility of a job
is the degree to which an
individual or group of individuals
is physically and mentally able to
do the job. The more demanding
the job, the smaller is the
applicant pool for that job.
• Good job design eliminates
unreasonable requirements and
ensures that any constraining
requirements are necessary to do
the job. This in turn widens the
applicant pool and gives your
company a chance to hire the
best candidates on the market.
Economic Feasibility
• It is the degree to which the value
a job adds and the cost of having
the job done create profit for the
company.
• The cost of the job should be less
than the value it adds.
• If the job as it is designed costs
more than the value it adds, then
it is not economically feasible.
6
THREE ADDITIONAL FACTORS IN JOB DESIGN

Behavioral Feasibility
• It is the degree to which an employee derives intrinsic satisfaction
from doing the job.
• Degree to which the job is intrinsically satisfying to the employee.
• The challenge is to design a job so the worker feels good about
doing the job and adds value by doing it.
Presents 2 Problems:
1. what motivates one worker may not motivate another worker
2. someone has to do the boring jobs
Possible Solution:
• Provide an enjoyable work environment.
7
THREE ADDITIONAL FACTORS IN JOB DESIGN

MACHINES OR PEOPLE?
8
When a company considers the technical, economic,
and behavioral feasibility of job design, a central
question is: Should the job or some part of it be
automated?
❖ Obviously, machines do some things better than
people, whereas people do other things better than
machines.
❖ Using machines versus people is both a tangible
economic decision in job design and a decision
based on intangibles, such as customer acceptance.
❖ If a job is designed for people rather than machines,
the next question is how specialized an employee
should be.

LEVEL OF LABOR SPECIALIZATION
9
❖ The higher the level of specialization, the narrower
is the employee’s scope of expertise.
❖ Specialization is the breadth of the job design.

THE ADVANTAGES AND
DISADVANTAGES OF
SPECIALIZATION IN JOB
DESIGN
10
Specialization from Management’s Perspective
Advantages Disadvantages
Readily available labor Lack of flexibility
Minimal training needed Worker dissatisfaction characterized
by
Reasonable wage cost • High absenteeism
High productivity • High turnover rates
• High scrap rates
• Grievances filed
Specialization from Employee’s Perspective
Advantages Disadvantages
Minimal credentials needed Boredom
Minimal responsibilities Little growth opportunity
Minimal mental effort needed Little control over work
Reasonable wages Little room for initiative
Little intrinsic satisfaction

CHAPTER 11
Operations Management-Work System Design
(continuation)

Table of Contents
 Eliminating Employee Boredom
 Team Approaches to Job Design
 Links to Practice: The SCO Group
 The Alternative Workplace
 Links to Practice: AT&T

Eliminating Employee Boredom
Companies use job design to reduce worker boredom.
 Three main approaches:
1. Job Enlargement (Expanding the scope of Work)
- Giving employees more tasks at the same level to make their work more
varied and interesting.
2. Job Enrichment (Adding more responsibilities)
- Giving employees more control, decision-making power, and responsibility
over their work.
3. Job Rotation ((Switching Roles to Gain Experience)
- Moving employees between different roles or departments to learn new
skills and increase engagement.

Team Approaches to Job Design
Teams can be used instead of individuals for assignments.
 Three types of employee teams:
1. Problem-Solving Teams: Identify and analyze
workplace issues.
2. Special-Purpose Teams: Focus on major company
challenges.
3. Self-Directed Teams: Empowered teams managing
their own tasks.

Links to Practice: The SCO Group
 The SCO Group implemented self-directed work teams.
 Workers previously blamed shifts for defects.
 Self-directed teams improved communication, reduced defects, and
enhanced productivity.
 Cross-training increased flexibility and skillsets among employees.
Key Takeaway:
By shifting to a self-directed team model, the SCO Group created
a more collaborative, accountable, and skilled workforce, which
helped reduce errors and improve efficiency.

The Alternative Workplace
 Alternative workplaces reduce costs and increase
flexibility.
 Moves work to the worker instead of the worker to the
office.
 Eliminates unnecessary office expenses and increases
efficiency.
 Employees report higher satisfaction and productivity.
The Alternative Workplace is a concept where work is structured
in non-traditional settings instead of a fixed office. This approach
allows businesses and employees to have more flexibility, cost
savings, and efficiency improvements.
Key Points:

Conclusion & Takeaways
 Job Design Strategies: Implementing job enlargement,
enrichment, and rotation can reduce employee boredom and
improve job satisfaction.
 Team-Based Approaches: Problem-solving teams, special-purpose
teams, and self-directed teams enhance collaboration, efficiency,
and innovation.
 Case Studies: The SCO Group successfully used self-directed teams
to improve communication, reduce defects, and increase
flexibility.
 Alternative Workplaces: Companies like AT&T and IBM have
adopted telecommuting, hotelling, and desk-sharing to increase
flexibility, cut costs, and boost productivity.
 Operations Management Impact: Efficient management of
processes, resources, and teams leads to better performance,
quality, and competitive advantage.
 Future Considerations: Organizations should embrace modern
workplace strategies to enhance employee engagement,
adaptability, and overall business success.

© Wiley 2010 19
Chapter 11 – Work System
Design
Operations Management
by
R. Dan Reid & Nada R. Sanders
4th Edition © Wiley 2010

© Wiley 2010 20
Learning Objectives
 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

© Wiley 2010 21
Work Measurement
 Work Measurement helps determine
how long it should take to do a job
 Involves determining Standard Time
 Standard time: the length of time a
qualified worker, using appropriate
processes and tools to complete a specific
job, allowing time for personal fatigue, and
unavoidable delays

© Wiley 2010 22
Work Measurement
 Standard time is used in:
 Costing the labor component of products
 Tracking employee performance
 Scheduling & planning required resources

© Wiley 2010 23
Setting Standard Times
Step 1: Choose the specific job to be studied
Step 2: Tell the worker whose job you will be studying
Step 3: Break the job into easily recognizable units
Step 4: Calculate the number of cycles you must 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

© Wiley 2010 24
How to do 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

© Wiley 2010 25
Other Time Factors Used in Calculating
Standard Time
 The normal time (NT) is the mean observed
time multiplied by the performance rating
factor (PRF)
 The PRF is a subjective estimate of a worker’s
pace relative to a normal work pace
 The frequency of occurrence (F) is how
often the element must be done each cycle.

© Wiley 2010 26
Other Time Factors Used in Calculating
Standard Time
 The allowance factor (AF) is the amount of time
allowed for personal, fatigue, and unavoidable delays
 Standard Time=normal time x allowance factor,
where:
(NT)(AF)
ST
117.6%
1.176
0.15
1
1
PFD
1
1
AF Worked
Tme








© Wiley 2010 27
Calculating Normal Time and Standard Time at
Pat’s Pizza
 The standard time for preparing a large, hand-tossed pepperoni pizza
is 2.312 minutes. This means that a worker can prepare 207 pizzas in
an 8-hour shift (480 minutes divided by 2.312 minutes)
12
13
14
15
16
17
18
19
20
21
22
A B C D E F
Example 11.4 Calculating Standard Time for a Hand-Tossed Cheese and Pepperoni Pizza
Revised Observed Performance Rating Frequency Normal Time Standard Time
Work Element Time (minutes) Factor (minutes) (minutes)
1. Get ball of dough 0.15 0.90 1 0.135 0.159
2. Flatten dough 0.25 1.00 1 0.250 0.294
3. Spin and toss dough 0.60 0.85 1 0.510 0.600
4. Place dough on counter 0.15 1.10 1 0.165 0.194
5. Pour sauce on formed dough 0.30 1.20 1 0.360 0.423
6. Place grated cheese on top 0.28 1.00 1 0.280 0.329
7. Place pepperoni on sauce 0.28 0.95 1 0.266 0.313
Total Time 1.966 2.312

© Wiley 2010 28
Other Time Study Methods
 Elemental time data establishes standards
based on previously completed time studies,
stored in an organization’s database.
 Predetermined time data (e.g. MTM and MTS) is
a published database element time data used
for establishing standard times
 Reach, grasp, move, engage, insert, turn, etc.
 Work Sampling is a technique for estimating the
proportion of time a worker spends on an
activity

© Wiley 2010 29
Work Sampling Procedures
1. Identify the worker or machine to be sampled
2. Define the activities to be observed
3. Estimate the sample size based on level of accuracy
and confidence level
4. Develop the random observation schedule. Make
observations over a time period that is representative
of normal work conditions
5. Make you observations and record the data. Check to
see whether the estimated sample size remains valid
6. Estimate the proportion of the time spent on the given
activity

Work System Design:
Compensation and
Efficiency
This presentation explores the critical aspects of work system design,
focusing on compensation strategies, incentive plans, and the impact of
learning curves on operational efficiency. We will also examine how work
system design integrates across various organizational functions, from
accounting to human resources, to drive overall performance and cost-
effectiveness.

Time-Based vs. Output-Based Compensation
Time-Based Systems
Employees are compensated based on the number of hours
worked. Compensation is tied to presence at the workplace,
not directly to performance. This system provides a stable
income but may not strongly incentivize productivity.
Output-Based Systems
Also known as incentive or piece-rate systems, these link
employee pay directly to performance. Employees are paid
based on their output, motivating higher productivity. This
system can drive efficiency but requires careful management
to ensure quality.

Group Incentive Plans: Profit Sharing vs. Gain
Sharing
Profit Sharing
Employee bonuses are linked to the company's profitability. A
portion of profits exceeding a minimum return on investment
is allocated to a bonus pool. Individual bonuses are calculated
based on factors like base pay or tenure. Risk: no bonus if
profitability targets aren't met.
Gain Sharing
Focuses on cost reduction and efficiency. Employees share
benefits from improvements in quality and productivity. The
bonus pool is funded by cost savings achieved through
employee-controlled factors. Individual bonuses are
proportional to the gains achieved.

Incentive Plan Trends: Individual vs. Group
1 Individual Incentive Systems
Challenges include undermining teamwork, promoting
short-term thinking, and requiring significant data
collection for performance evaluation. Merit pay may
have no measurable impact on performance.
2 Group Incentive Systems
While the "free-rider" problem exists, it's mitigated by
group pressure. Companies adopting group incentives
often outperform those without, fostering collaboration
and shared goals.

Understanding Learning Curves
The major attributes of a learning curve are that it takes less time
to complete the task each additional time it is done by the same
employee, and the time savings decrease with each additional time
that task is done by that employee. When the number of times the
task is completed doubles, the decrease in time per task affects the
rate of the learning curve.
For example, if a learning curve has an 85 percent learning rate, the
second time the task is done will take 85 percent of the time it took
the first time the task was done. The fourth time the task is done will
take 85 percent of the time it took the second time. The eighth time
will take 85 percent of the time it took the fourth time, and so on.
The formula for calculating the time the task should take is;
T x L” = time required for nth time the task is done.
Where:
T = time needed to complete task the first time
L = learning curve rate
n = number of times the task is doubled
If the first time the task was done, the employee took
twelve labor hours, and the learning rate is 85 percent,
calculate how long the sixteenth time that task is done
should take.
Hours needed for 16th task = 12 X (0.85)⁴ = 6.26 hours

Solution:
a) 120 hrs. x 0.558 = 66.96 hrs.
b) 120 hrs. X 0.475 = 57 hrs.
c) 120 hrs. X 14.331 = 1719.72 hrs.

Work System Design Within OM
Work system design includes job design, methods analysis, and work
measurement. Manufacturing or industrial engineers often do these activities. Job
design determines exactly how the product or service will be done and is linked
directly to product and process design. Based on the type of product (standard or
custom) and its proposed process (mass-producing or producing one at a time), a
company determines the skills set needed by its employees as well as the
necessary equipment.
Method analysis provides a means for evaluating different processes and
materials, thus allowing a company to focus on continuous improvement. This ties
in directly with a company’s total quality management (TQM) focus.
Work measurement techniques allow a company to develop standards to use as a
basis for evaluating the cost and effectiveness of different methods and materials
for building a product or providing a service. These time standards provide a time
estimate to use as a basis for establishing detailed work schedules and for
determining long-term staffing levels.
These time estimates can be used as a basis for making delivery or completion-
time promises to customers.
Standard times are used to develop lead-time estimates, which are inputs for the
MRP (material requirement planning) system as well as the MPS (master
production schedule) process. Work system design provides the means for setting
standards against which to compare new methods, new materials, and new
designs; assures that employees know how to do their job; and provides the
information needed by the company to calculate its costs.

Work System Design Across the Organization
Work system design affects functional areas throughout a
company. Let’s look at why individual functional areas are
concerned with work system design.
Accounting calculates the cost of products manufactured or
services provided. Labor can be a significant portion of the cost of
goods sold, especially in the service industries. Accounting
measures variances between planned product cost and actual
product cost. Accounting also typically measures operational
efficiency, which is based on work standards. Work system design
is an important resource for accounting activities.
Marketing is concerned with work system design because it is the
basis for determining lead time. Accurate work projections enable
marketing to make viable promise dates to customers.
Information systems uses estimates of job duration and
resources in the software for scheduling and tracking operations.
Purchasing handles requests for materials based on a schedule
projected from the work system design. Accurate scheduling
enables cost-effective materials and labor purchasing decisions.
Standard time provides a benchmark for evaluation of new
materials and processes.
Manufacturing responds to effective job design, process analysis,
and work measurement with high levels of performance and on-
time delivery of finished goods.
Human resources uses work sampling to establish and validate
hiring criteria. You can see that work system design involves all
aspects of an organization and has an impact on how well the
organization performs. In many manufacturing companies, job
design and process analysis are both done by a manufacturing or
an industrial engineer. The engineer works with product blueprints
and the workforce to develop job instructions. From these detailed
job instructions, the company can develop time standards. Work
measurement information is often provided by workers as they
complete a job. Accounting may use this information to report the
efficiency of manufacturing operations. In a service organization, an
operations manager or operations analyst may do the job design
and process analysis.
Work system design helps companies understand the total costs of
making a product or providing a service. It allows companies to

Key Takeaways
Strategic Compensation
Choose compensation systems
that align with company goals
and motivate employees
effectively.
Continuous
Improvement
Utilize methods analysis and
work measurement to drive
efficiency and reduce costs.
Cross-Functional Impact
Recognize that work system design affects all areas of the
organization, from accounting to human resources.

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