Week five IO.ppt
Download
Report
Transcript Week five IO.ppt
Io Enterprises
Orientation
Overlake Mining Company
The mines
6 mines
– 250 miners
– 25 support personnel
Profitability
– Correctness of management team decisions
– Compensation (pay and bonuses)
– Training expenditures
Decisions… decisions
Ten scenarios (3 possible responses)
Wage
Bonus
Training
Management report
Scenario feedback
Income statement
– Revenue
– Expenses
– profits
Productivity report
– Key measures
– Company averages
Status report (past, present, future)
The Income Statement
Revenue = contract price (200/ton) x tons
produced
Cost of production = fixed (1,900,000) = wages
and bonuses
Gross margin = difference between production
costs / bonus pay and revenue
Selling expenses = 200,000
Admin expenses = 500,000
Miscellaneous = $150,000 (unless overwise indic)
Contribution to profit = gross margin – total exp
Productivity
Help to monitor and improve productivity
Efficiency of production
Defined as average tons of titanium produced per
quarter per miner (total tons of output/250 miners)
Scenario responses, wages, bonuses, training
affect productivity
Also affected by number of employees available
for work…
Absenteeism
Absent workers are paid wages, but not
bonuses
Absenteeism is reduced by number of
correct responses and training investment
Some absenteeism cannot be avoided.
Status Report
Past
Present
Future
All mines, unless otherwise indicated, are
equally affected by these variables
Scenarios
Ten “people problems”
Based on briefings (written and oral)
Cumulative
Productivity and absenteeism are impacted by
decisions
Sample question
The foreman of one of the mining crews is
adamant about eliminating conflict within her
crew. The production supervisor should inform
this foreman that:
A. She is correct in her view
B. Eliminating conflict is a worthwhile goal but
probably impractical
C. Some conflict within a group is often
constructive
1.
Pay
Range determined by management
– $50/75 per hour; $55-65 recommended
How to maximize profits and pay “fair”
wages?
Pay equity?
– “I heard it through the grapevine…”
Productivity as a function of
pay
Bonuses
Your decision
Range determined by management
– $5-10 per hour
One time incentive money paid in addition to
hourly wages
Impact on morale and sense of equity
Impact of scenario responses and efficaciousness
of bonus on productivity
– Each missed scenario decreases positive impact
Training
Up to $99,999 per period
No training in last period
Effect on productivity
Effect on absenteeism
Decision criteria
Timing
Injuries
Danger!
Scenario responses
Training
Absenteeism: 20% of injured will not return
to work for rest of year… accumulated total
Absenteeism
Scenario responses (compromise
organizational climate)
Pay equity
Injury
Extraneous reasons (including legitimate
illness)
Insurance
Effect of injuries on premiums
– Greater than 13; double premium from
$100,000 to $200,000
See income statement
Profit
Scenario responses correct
Full impact of bonuses
Wages are adequate and equitable
Training expenditures sufficient
Absenteeism/injury controlled
Team Decision Form
Team Name: ______________________________
Period #____,
2086
Team Number:__________
SOLUTIONS: (place a check mark or X next to the most correct response)
1.
A.___
B.___
C.___
2.
A.___
B.___
C.___
3.
A.___
B.___
C.___
4.
A.___
B.___
C.___
5.
A.___
B.___
C.___
PAY?_____ (range $50-$75)
BONUS?___.__ (range %5-$10)
TRAINING?______ (range $0-99,999)
Decision
Collaborative
Decision making
–
– All variables are individual
Wages, bonuses, training
decisions made
collaboratively
Rewards
–
Competitive Model
Decision making
IF all groups score above
cumulative average
FINAL grade increased
by one grade level
(except A+ and F)
groups’ decisions
Rewards
– The group with the highest
cumulative contribution
FINAL grade increased
by 5%