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Company overview of Highco Engineers PVT Ltd Company background

5195 words (21 pages) Essay in Management

5/12/16 Management Reference this

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Highco Engineers Pvt. Ltd. (HEPL) is a sheet metal auto components manufacturer, established in the year 1979 in the Adityapur industrial area in Jamshedpur. Jamshedpur was the first industrial city in India. Highco manufactures sheet metal stampings and fabricated assemblies for the automotive Original Equipment Manufacturers’ (OEM’s) in the country. It has seen an average growth rate of 53 % for the last 5 financial years. Equipped with the latest machinery & modern facilities that ensure high quality products, HEPL is a Tier I supplier of air tanks, cabin floor panels, centre bearing brackets for propeller shaft, cross members, deep drawn components, fuel tank, instrument panel, mud guard and wheel arch.

Organizational structure

Highco Engineers Pvt. Limited has five plants across India. Four of them are located in the Adityapur Industrial Area in Jamshedpur and the fifth plant is in Dharwad, Karnataka. However, the central office is located at Adityapur and each of the five plants is treated as a Strategic Business Unit (SBU).

The plant 1 and plant 2 at Adityapur are dedicated to the client Tata Motors. They manufacture components for the trucks of Tata Motors. They have a combined strength of about 300 workers operating in two shifts.

The plant 3 is the plant we have concentrated our study on. They manufacture sheet metal brake components for the client Wabco-TVS. The product line includes Non Pressure Plate Cylinder (Single and Double), Push Rod Assembly and Desecant Container. There are about 150 workers working in 2 shifts in this plant.

The plant 4 at Adityapur manufactures components for Tata Motors’ World Truck. The plant is still at its nascent stage and receives low volume orders only which are taken care by 20 workers.

The Plant at Dharwad manufactures equipments for Telcon. It employs about 30 workers.

In all, the company employs 500 workers out of which 200 are permanent and 300 are contract labors. The hierarchical organization structure at Highco is given below:

TM 3

TM2

TM 4

TM1

All the employees of Highco are divided into 4 groups:

TM1: This group includes the top management including the chief operating officer. The Director is responsible for the overall company whereas the COO takes care of the entire production as a whole. The performance allowance of the employees in this group can vary from Rs 0 to Rs 3500 depending on the grade achieved. Rs 3500 for an ‘A’ grade and Rs 0 for a ‘D’ grade.

TM2: This group includes the 2nd line employees including all plant managers. The performance allowance of the employees in this group can vary from Rs 0 to Rs 2500 depending on the grade achieved. Rs 2500 for an ‘A’ grade and Rs 0 for a ‘D’ grade.

TM3: This group includes the 3rd line employees including in charge of every department. The performance allowance of the employees in this group can vary from Rs 0 to Rs 1500 depending on the grade achieved. Rs 1500 for an ‘A’ grade and Rs 0 for a ‘D’ grade.

TM4: This group includes the 4th line employees including all operators. The performance allowance of the employees in this group can vary from Rs 0 to Rs 800 depending on the grade achieved. Rs 800 for an ‘A’ grade and Rs 0 for a ‘D’ grade

Product Profile

Following is an exhaustive list of all the products that Highco Engineers Pvt. Ltd. Manufactures for all its customers in the four plants:

Customer: HV Axles Ltd.

Customer: Tata Motors Ltd. (Jamshedpur)

Customer: Tata Motors Ltd. (Lucknow)

Oil Catcher

Floor Assembly

Floor Assembly (both left and right side)

Cover Rear Hub

Wheel Arch Assembly

Bumper Member Assembly

Cover Shorter Hub

Substructure Assembly

Tie Member Front Assembly

Front Axle Assembly

TTH Cross Member Assembly with Support

Floor Panel Assembly

Cover Rear Axle Hub

Engine Cross Member

Front Frame Assembly

Cover Rear Big Hub

Reinforcement

Customer: HV Transmissions Ltd.

Hub Cap Front

Rear Floor Assembly

Gear Box Cover Front

Front Brake Assembly Chamber (both left and right side)

Front Cabin Assembly

Cover

Cover Hub Inner

Floor Panel Assembly

 

WABCO-TVS (India) Ltd.

Front Frame Assembly

Push Rod Assembly

Substructure Assembly without Tie

Non Pressure Plate

Substructure Assembly without Support

Cylinder Assembly

Cabin Bracket Front Assembly

Desiccant Container

Frame Assembly Front

COMPETITORS

The company’s HR head considers the following as its main competitors:

• Automech Engineers

• Sandeep Engineers Works

• Utkal Engineers

• Accurate Engineers

Environment: The local auto ancillary industry

Locally, automotive ancillary companies are mostly present in the Adityapur industrial area. All these companies cater primarily to Tata Motors and Tata Cummins. There are about 500 auto components manufacturers who either directly or indirectly acts as suppliers to Tata Motors. About a year back, in November 2008, when Tata Motors stopped production in its heavy vehicle plant, altogether 50 ancillary units, which supplied various parts to Tata Motors and other firms, were shut down, while several others were on the verge of closure. Around 900 ancillary units had to cut their workforce by up to 40 per cent. Most of them started operating in only one shift a day rather than three.

The region is characterized by active industrial associations, like ‘Adityapur Small Industries Association (ASIA)’, and favorable industrial policy. Tata Motors insistence on high quality products makes it mandatory for its ancillaries to adhere to strict quality guidelines in all their products. Most of the ancillary units have 100% capacity utilization. Hence, quality & productivity is the rule of the game. The market could provide opportunities in the near future for catering to foreign majors setting up in India. However, competition is likely to increase. Auto giants could look for global outsourcing.

Major Challenges

Manpower Shortage: According to the top officials at the plant, shortage of machine operators is the biggest reason as to why they cannot meet their monthly targets. Acquiring skilled operators and retaining them is an issue with the plant as the Adityapur Industrial Area has a lot of potential job opportunities for the operators and they go where they get the best wages. Since the sheet metal workshop at Highco requires sufficient manpower to operate all the machines, any shortage in manpower directly affects the production.

Machine Failure: Although not very frequent, but machine failure also causes that particular assembly line or batch production to stop. The time taken to repair the machines is not much since the maintenance engineers are permanent employees of Highco and are present at the plant during all the shifts of production.

Dye Failure: Any dye used in production takes at least 15 days to make. Also it takes a long time to repair any damaged dyes. Improper use of the dye while production can cause damage to it thereby affecting production.

Improper Planning: On some occasions, planning at the end of the officials at Highco goes wrong in the sense that they might produce a particular part in greater numbers by shifting their man power to its production while ignoring the production of some other critical part. Even this leads to the targets not being met. The representative at Highco said that this has happened on a very few occasions till date.

Raw Material Shortage: Since Highco is dependent on only a single vendor, Tata Ryerson for its raw materials, there have been incidences in the past when they faced acute shortage of the raw materials hot rolling sheets which resulted in production to stop altogether.

Employee development: The current performance management system does not lay any emphasis on employee development. Over time the work will get very mundane and the motivation levels will drop. Money can’t be always used as the sole motivator. Also a measurement of employee development will aid promotion decisions. Emphasis on leadership development, communication skill development etc. is important.

ORGANIZATIONAL LEVEL DIAGNOSIS

The organizational level diagnosis was conducted by studying the company’s profile, its mission and statement of objectives. Also a study of the company’s environment was done as well as the industry structure was analyzed.

OUTPUT OrganizationalEffectiveness e.g. Performance, productivity & stakeholder satisfaction

INPUT

General Environment

Industry Structure

DESIGN COMPONENTS Technology

Strategy Structure

HR Systems Measurement Systems

Analysis of Inputs

General Enviroment

The environment of this company is characterized by a number of competitors trying to sustain themselves by capturing the largest share of a limited market. The levels of uncertainty in the market is very high as was seen when Tata Motors shut down its heavy vehicle plant, many auto component units suffered. This is because the market is limited to Tata Motors and Tata Cummins primarily. Also there is great uncertainty in the technological environment as with better technology, these auto majors can easily source their supplies from units which offer better quality products at cheaper prices. The economic environment is uncertain as well but many ancillary units are hoping on the entry of foreign majors so that market expansion can occur.

Industry Structure

The local auto ancillary market is highly competitive with a number of small and large players. These companies supply auto parts primarily to Tata Motors or Tata Cummins. The reliance on just two players for generating sales revenue has led to a highly quality focused set up of processes of manufacturing in these companies. Also the need to satisfy the high quality levels demanded by the Tatas has further made it imperative to have foolproof systems and practices which ensure high quality products. The strategy of these companies is to sustain by means of high productivity and quality. There is intense competition between these players as the market is limited but the number of competitors is many and hence the occurrence of substitute products is very high.

Analysis of the Design Components

Technology

The technology of the processes ensures that a high quality product is produced by the operators. The processes are designed such that there is a high level of interdependence in the manufacturing process. The level of uncertainty is kept to a minimum as the organization has implemented practices of Kaizen, Seiri and Seiton. Through these practices, discipline is built into the system and a spirit of team effort is fostered. Mistakes are corrected immediately and the systems are designed such that there is a high degree of standardization. Hence as the uncertainty is less in the system, the decision making process should be fast. But there are issues which the company faces such as poor communication between departments and hence this hampers the speedy decision making process.

Structure

The formal structure of the organization is based on the function – i.e. either Production or Sales etc. These departments have their own set of duties and responsibilities delineated. However at the same time there is a need for close coordination between the departments to ensure that the processes are aligned and that they result in a high quality product. This needs to occur especially between the Production and Quality Assurance departments. Despite the fact that the responsibilities of the departments are different from one another, there are many parameters which overlap in the performance appraisal form of the personnel in the different departments thus making some parameters irrelevant in nature to a particular department. Hence the integration of the departments ought to be done on the appropriate lines which ensure coordination of activities and not overlap.

Measurement Systems

The measurement systems are not very well defined in the organization. There is no clear channel of information flow. The measurement systems at the employee level need to be improved as the performance management system depends on self appraisal done by the operators but what the organization needs is involvement of the management levels in defining the overall goals of the business and using them as parameters of measurement. This involvement of the management will ensure accurate adherence to performance parameters and strategic objectives.

Human Resource Systems

The organization is in the process of establishing a new performance appraisal system which will implement the MBO system of determining performance levels and creating a rewards system based on the targets achieved at levels of the workforce. Also the organization is trying to implement an ERP system which will ensure complete alignment of all processes and provide more control over them. Previously the employee performance system depended entirely on the self appraisal generated by the employees themselves. The involvement of the management will ensure adherence to strategic objectives.

Strategy

The mission and overall objective of the organization is to offer a high quality product to its buyers and also sustain itself in the long term with a loyal dedicated workforce. Keeping this in mind the organization has implemented practices such as Kaizen etc which involve teamwork, group learning and also ensure the production of a high quality product. The organization is in the process of formalizing its processes and hence wants to implement systems such as ERP which will help greater control over processes and strict adherence to strategic goals.

Intermediate Output – Culture

The culture that is being fostered in the organization is wherein there is a lot of importance given to team work. This is formalized by practices such as Kaizen. Also any error on the part of a particular operator or any success of a specific person is shared between all the employees. This is part of the efforts of the organization to create an environment conducive to learning, cooperation and dedication to the work amongst employees.

Analysis of Outputs

The outputs from the organizational level diagnosis are firstly the overall performance of the organization. This organization was set up in the 70’s and has a number of plants across the Jamshedpur area. However the high growth in sales experienced by the organization before has been dwindling now due to various issues that have emerged in the operations such as employee development and planning etc. The productivity of employees and hence the company will be affected if measures are not taken to correct the issues faced by the employees. Also since the organization relies on a small basket of customers it is very necessary to keep a check on customer needs and ensuring that they do not lose market share to a competitor.

OD INTERVENTIONS

CONFRONTATION MEETING

Reasons for Implementation

One of the main pain points in the organization is the lack of proper coordination between the Production and the Quality Assurance departments. These two departments are absolutely critical in order to ensure the delivery of a high quality product to the customer. The current system is that the Quality department runs quality tests on one sample from a batch of units produced. If the one sample is found to be of good quality then the entire batch is passed. But this has led to some customer complaints and hence there have been suggestions to improvise the processes of conducting the quality testing. These changes have however not been incorporated correctly between the two departments. Both the Production and the QA department refuse to change their methods of operation leading to poor coordination and breakdown of communication between the two critical departments of the organization.

Confrontation meeting offers a speedy resolution to such conflicts and confusions post a change program and the results of the same are evident immediately as the issues are sorted between the members themselves.

7- Step Process

Climate Setting (45 min) – The top management sets the agenda for the meeting. The involvement of the top management generates credibility in the process and ensures the cooperation of all in the proceedings. They emphasize on free and open problem solving.

Information Gathering (1 hour) – In this step, heterogeneous groups are formed between the parties involved of approximately 7-8 people. These groups discuss the major issues at hand, the policies that have created them, the demotivating factors involved etc. All the group members offer their viewpoints on this and try to discuss ways in which the organizational objective can be taken forward and the overall goal be kept in perspective

Information Sharing (1 hour) – The groups come together to share their discussions. An overall summary of the points discussed are created. The overlaps are removed and a concise list of issues and their associated reasons are arrived at.

Group Action Planning (75 min) – The participants are split on the basis of their own natural groups. The groups discuss those precise issues which are pertinent to their department and suggest an action plan to address the same. They also identify specific issues that need to be focused on by the top management.

Organization Action Planning (2 hours) – Each group comes back and shares their views with the rest of the participants. The top management is a part of the discussion and they make note of the issues raised, the action plans suggested and the key focus areas suggested. Each unit then makes a communication plan which summarizes all the issues discussed and addressed for those who have not been a part of the meeting.

Immediate Follow – up by Top team (2-3 hours) – This is a very important step which establishes the credibility of the meeting and the discussions that have taken place. The top management prepares immediate plans to implement some of the action plans and makes commitments to others to review and implement them in the immediate future. This step ensures that the participants involved and the entire organization sees the process as a fruitful one as it has culminated in the implementation of some of their ideas.

Progress Review (2 hours) – This is conducted a few weeks later and involves a review of the progress made on the implementation of the action plans. This ensures that the implementation occurs successfully and that the departments see that their discussions have borne some fruit. This establishes a sense of trust and cooperation amongst members as their suggestions have been implemented and hence they gain a sense of control over their work processes.

GROUP LEVEL DIAGNOSIS

Group level analysis was done for employees belonging to the Production and Quality Assurance departments. Qualitative interviews were conducted amongst the employees belonging to both departments.

DESIGN COMPONENTS Goal clarity

Task identity Team

Functioning

Group composition Group Norms

OUTPUT

Team Effectiveness

INPUT

Organization Design

Analysis of the Design Components

Goal clarity

This involves how the well the group understands its objectives. The Quality assurance department’s goal is to identify any defects in the products and find out if the products are of the required quality specifications which the client required. The department runs quality tests on one sample from a batch of units produced. If the one sample is found to be of good quality then the entire batch is passed. The employees of this department are measured on the basis of the customer complaints and the defects which they have rightly spotted. The analysis revealed that the goals were understood by all members.

In case of the production department, the goal is to meet the production targets specified in the production plan and also ensure quality. The incentive system has a higher weightage for the number of units produced and as a result, quality seems to be taking a backseat with the production department trying to produce more and more. Here, the goal needs to be clearly understood by the employees as the quality focus is missing, which is evident from the increasing number of customer complaints.

Group performance norms:

These are member beliefs about how the group should perform its task and include acceptable levels of performance. According to them, the following are the performance norms on which the two departments function.

Department

Safety

Quality

Delivery

Cost

Morale

Quality assurance

No. of defects

On time delivery

Cost of measuring quality

Absenteeism, punctuality, number of meetings attended

Production

No. of accidents

No. of defects (PPM)

Percentage of successful delivery

Reduction in production cost

Absenteeism, punctuality, number of meetings attended

Task structure

This is concerned with how the group’s work is designed. Task structures vary along two dimensions:

Coordination of member’s efforts

Regulation of their task behavior

In the production department the operators have to perform limited activities. The task performed by one operator does not qualify as one independent unit and generally acts an input to another operator’s job. However, the coordination dimension seems to be very low as there seems to be very little interaction between the workers .As there is a fairly high degree of supervision among the workers, their freedom from external controls like supervisors is low, thus showing low regulation. The situation is no different in case of the quality assurance department.

Both the production and quality assurance team’s task structure include face-to face interaction during the weekly meetings. However, the team members feel that the supervisor is a bit too harsh on them and criticizes all the members for any non-adherence in the group meetings.

.

Group Composition:

Both the departments have a healthy mix of youth and experience. Majority of the group members are localites. All the members appear to have relevant task skills and experience. The head of Production department belongs to a different state and different culture and he admits that these cultural differences are in a way hindering his relationship with the employees. Also since the older people and younger people have different aspirations, there seem to be a lot of differences between the two groups, which was evident when both the groups accused each other of the reason behind the increase in customer complaints.

Group functioning:

How members relate to each other is important in work groups because the quality of relationship can affect task performance. In the quality department, the employees feel that they share a lot of good feelings and support each other. Probably, they are spending little time on task performance, which could be the reason for the increased customer complaints. In case of the production department, the members talk about dissatisfaction in the team meetings, and feel that relationships are strained, but fail to examine the underlying causes.

Analysis of Output:

The overall team effectiveness for the Production and Quality assurance teams is low. If one sample is found to be of good quality then the entire batch is passed. This has led to some customer complaints and hence there have been suggestions to improvise the processes of conducting the quality testing. These changes have however not been incorporated correctly between the two departments. As a result of this, both the Production and the QA department refuse to change their methods of operation leading to poor coordination and breakdown of communication between and within the two critical departments of the organization.

OD INTERVENTIONS:

The following team building intervention is recommended:

Role-negotiation technique:

The above method is recommended as the number of employees in each department is relatively small. This method will ensure that team building takes place and it leads to increased team effectiveness. The following steps need to be followed.

Contract setting

Focus only on behaviors-not feelings

What do you want others to do more / less of, maintain unchanged-or stop doing?

All expectations must be written.

No changes to be made without a quid pro quo following a negotiation

Focal role incumbent describes his expectations of others in the team.

Issue Diagnosis

Individuals think about how their own effectiveness can be improved if others change their work behaviors

Fill out Issue Diagnosis Form for every other person in the group listing what one wants others to do more of, less of, maintain unchanged, or stop doing

Exchange lists with other members

Influence Trade

Two individuals discuss the most important behavior changes they are willing to make on a quid pro quo basis. (“If you do X for me, I will do Y for you”)

Negotiations end when all parties are satisfied with their returns for whatever they are giving.

All agreements must be written down-to enable follow-up.

INDIVIDUAL LEVEL DIAGNOSIS

Individual level analysis was done for employees at level TM4 who are designated as operators. A sample of around 10 workers was taken, and the below interpretation has been done on the basis of the inputs provided by them and their in charge.

OUTPUT Individual Effectiveness job satisfaction, performance, personal development

INPUT

Organization Design

Group Design

Personal Characteristics

DESIGN COMPONENTS Skill Variety

Task identity Autonomy

Task Significance Feedback about results

Analysis of the Design Components

Skill variety

Since the operators are mostly involved in the manufacturing jobs where the tasks and activities performed by them are repetitive, the scope of using various skills is limited. Over time the work will get very mundane and the motivation levels will drop. This is already happening in the company and since no extra incentive in terms of learning and skill usage is given to the workers, they are switching to other companies leading to an increase in attrition rate in the company.

Task identity

Due to the nature of the products that the company manufactures and delivery pressures from the clients; entire process from procurement of raw materials to delivery has been defined and divided into various steps and departments. Even in production department the operators have to perform limited activities. The task performed by one operator does not qualify as one independent unit and generally acts an input to another operator’s job.

The company follows a concept called Seiton, or orderliness, which is all about efficiency.  This step consists of putting everything in an assigned place so that it can be accessed or retrieved quickly, as well as returned in that same place quickly.  If everyone has quick access to an item or materials, work flow becomes efficient, and the worker becomes productive. This example illustrates that even a small work like this is defined step by step to increase the efficiency.

Task significance

The job performed by one person acts as the input for another person hence the time required and the quality of one person’s job affects the final output in a significant way. Due a manufacturing set up the task significance for employees at level TM4 cannot be enhanced hence alternative ways have to be devised to make the employees feel important and required by the company.

The current performance management system does not lay any emphasis on employee development. There is total disregard for employee development causing the work to get mundane over time and giving no scope to move on to higher and more enriching jobs. Although financial measures are really effective at lower levels, it can’t be always used as the sole motivator. Also a measurement of employee development will aid promotion decisions. Emphasis on leadership development, communication skill development etc. is important.

It was also observed that there is no interaction of the module heads with the workers. The workers are not very clear of their long term goals and hence focus only on their immediate tasks. The job of the executives at this level is to motivate the workers and help them identify with the organization which is not happening here.

Autonomy

Since the day to day activities are almost routinized, the scope of autonomy does not exist at the lower level. Still, people at incharge level and superintendent level are allowed to suggest changes in the existing system.

An example where a department was given autonomy to improvise upon an existing process was in the quality department. The quality department has taken up some initiatives to improve the quality of the products. One of them was the initiation of CAPA (Corrective and Preventive Action) in order to foresee and prevent problems in future. Cross functional teams were formed for this purpose and the employees suggestions were considered and implemented.

Feedback

As of now the workers don’t get feedback on their performance and the workers are put to trainings only when they join the organization or when there is any change in the machines or processes. There is no provision for workers to get feedback on their personal development and apply for further trainings. Instead the feedback for the department as a whole is given. The monitoring takes place through review meetings and the feedback is also given in these meetings itself to the managers about their respective departments. In the current scenario where everyone looks for development opportunities along with the existing job, lack for trainings and development initiatives on part of the organization could be detrimental to the organization in the long term.

To solve such issues, a biannual feedback by the immediate supervisor to look at the development of the employee as a whole i.e. to decide training needs and identify areas for development can be carried out. They could also identify the workers personal development needs and incorporate them as and when feasible. The results of this feedback cum appraisal session can be used to identify candidates for promotion.

Along with the feedback from immediate supervisor the module heads can also be trained to take some future oriented steps to improve the performance, motivation and retention level of TM4 level workers.

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