Myanmar Institute of Education

  MBA Programme   M60109140029  

 

Table of Contents

1   ISSUES FACED BY THE NEW CEO AT SIPRO PLASTICS  ...................................................  2  

2   CENTRALIZATION OR DECENTRALIZATION OF RULES AND PROCEDURES  ..........  3  
3   FORMALITY OR INFORMALITY OF RULES AND PROCEDURES  .....................................  4  
4   RISKS OF ESTABLISHING DIFFERENT PROCEDURES FOR DIFFERENT AREAS  ...  5  
5   RECOMMENDATION  ............................................................................................................................  6  
6   REFERENCE LIST:  ...............................................................................................................................  9  

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Assignment 2_Managing People in Organizations_0914
   
Myanmar Institute of Education   MBA Programme   M60109140029  
 

1 Issues Faced by The New CEO at Sipro Plastics

Sipro Plastics, a manufacturer and assembler of plastics for the toy industry in two decades,
has been famous for its innovative product. When Alina Fatehah took over as chief
executive officer, the company encountered the trouble for the rules and procedures – a
uniform set of rules for all employees established by Alina’s predecessor, Zahari Bakri.
Particularly, research output and manufacturing productivity had gradually declined, hence,
Alina required to emphasize those issues for the company’s efficiency.
Alina discovered that the existing rules and procedures were so mysterious that there were
problems occurred in the workplace although being flexible in some of the systems – the
working time was set as nine hours that employees from all departments could punch in
anytime between 8am and 10am and leave anytime between 5pm and 7pm, the managers
kept monthly employees’ records and annual recommendations to human resources
committee and the employees could take one-hour lunch break at anytime.
In Sipro’s Research and Development (R&D) Department, Alina astonished the researchers,
mostly chemists and engineers with advanced graduate degrees, were not in line with the
staff attendance rule and not being reasonable for monthly evaluation reports as their
innovative ideas or methods might be coming up about more than twice a year. As the
nature of the research and development task different from others’, they might not be
contented with the formalized working hours that every departmental staffs conformed. The
main issue in R&D was the taller hierarchy leading to delay the new ideas launch that it often
took months for the proposal working out.
Alina concluded that she unobserved the strictness of the rules and checked with the
production supervisors in Manufacturing Department. The employees coming work between
8 am and 10 am and having lunch by 11am happened to being inconsistent production plan
since supervisors could not know if they had enough people to run a particular operation. In
addition, Alina found that employee turnover was high in manufacturing department –
especially turnover of the most unskilled workers could not be prevented by the rules set up.
Conclusively, Alina decided to let the department managers plan the formal rules and
procedures for their individual areas. In her proposal, she wanted to see if the department
managers could improve company’s productivity and morale by creating formal procedures
for individual departments without losing the control of the company.

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Assignment 2_Managing People in Organizations_0914
   
Myanmar Institute of Education   MBA Programme   M60109140029  
 

2 Centralization or Decentralization of Rules and Procedures

After classifying the issues faced in Sirpo Plastics, Alina Fatehah proposed to decentralize
the rules and procedures as the improvement of company’s efficiency.
First, in Research and Development (R&D) Department, researchers’ job designs are
different with the others’. They create new products and develop existing ones, and improve
the way in which products are made or the efficiency with which they are made. Sipro’s rules
should be highly decentralized for R&D Department such as the decision-making for the new
product implementation. Decentralization avoids burdening the top managements in terms of
workload and stress and thus reduces the time taken for referring decisions upwards due to
the shorter hierarchy, while centralization restricts the scope of divisional managements to
handle their own affairs in the light of local knowledge, and the lack of autonomy in divisions
that can constrain initiative and entrepreneurship. Thus, Sipro’s R&D should be
decentralized according to these reasons: the knowledge flows in R&D are long time
horizon, its environment is relatively high in terms of the unstable demand products, and the
decisions made are greatly dependent on the expertise rather than job titles. To sum up,
Alina’s proposal of decentralizing the R&D Department rules will be working effectively,
specifically, the decision-making procedures of product research should be highly
decentralized as better, speedier results.
Second, in Manufacturing Department, people’s jobs are routine and follow standard
operating procedures with low variability and high analyzability. In this case, Sipro’s rules
should be centralized for Manufacturing Department such as the state of order with the
recognition of authority. Centralization enforces the closer control of operations and the
uniformity of practices and procedures. Sipro’s Manufacturing should be centralized due to
these reasons: the employees are more comfortable in Manufacturing Department where
their manager confidently gives instructions and makes decisions, and it may also lead to be
more efficient operation for such routine department. Accordingly, Alina’s proposal of
decentralizing the Manufacturing Department rules will not be working effectively and it
should be centralized – the procedures in production must be standardized with advanced
plans and decisions such as the decision-making for the new product projected by R&D.
Thus, it will not be any gap between the production and research for the improvement of
efficiency. However, Alina requires setting the right balance between decentralization and
centralization in Sipro Plastics.

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Assignment 2_Managing People in Organizations_0914
   
Myanmar Institute of Education   MBA Programme   M60109140029  
 

3 Formality or Informality of Rules and Procedures

According to Alina’s decision, department managers set up rules and procedures for their
each department. The proposed procedures of different departments will appear with formal
or informal statements of how particular issues should be dealt with. They affect the way in
which people handle certain matters in organizations. Typical procedures are concerned
with people management on such matters as discipline, grievances, redundancy and equal
opportunities, although procedures can be produced for any aspect of administration, such
as handling customer complaints.
In Sipro, some department managers will produce the formalized procedures which indicate
who is accountable for directing, coordinating and carrying out these activities and define
management hierarchies – the ‘chain of command’ –who is responsible to whom and for
what at each level in organization.
These formalized policies and procedures can be set up in such departments as Marketing
(e.g. what products should be sold, what markets should be developed, what price levels
should be set, what levels of service should be provided for customers), Production (e.g.
make or buy products, how to achieve high quality, what stock levels should be maintained,
outsourcing), Finance (e.g. treatment of depreciation, inflation accounting, capital budgeting,
cash flow) and Human Resources (e.g. pay levels compared with market rates, equal
opportunity, promote from within or external recruitment, work–life balance, security of
employment). They will be expressed formally in manuals, and the departmental managers
require familiarizing themselves with relevant procedures. (Armstrong, 2009)
However, there will be informal rules and procedures in such departments as Research and
Development (R&D) – they have been grown by custom and practice over the years. For
example, researchers and engineers are working as teams – informal groups that have
some affinity for one another. Their progress reviews can take place informally or through an
existing system of team meetings rather than assessing periodically. The manager of R&D
may include the working hour procedure as flexible daily and weekly hours – varying daily or
weekly hours or a combination of both to match the input of hours to achieve the required
output. Such working times may fluctuate between a minimum and a maximum.
Obviously, the rules and procedures of some departments such as Production, Marketing,
Finance and Human Resources will be more formalized and standardized due to their job
descriptions and the nature of functions. Formalization can make employee behavior more
predictable. Whenever a problem at work arises, employees know to turn to a handbook or a
procedure guideline. Thus, employees can respond to problems in a similar way across the
organization; this leads to consistency of behavior. In contrast, the rules and procedures of
Research and Development will be less formalized and more flexible for more innovatively.

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Myanmar Institute of Education   MBA Programme   M60109140029  
 

4 Risks of Establishing Different Procedures for Different Areas

If Sipro Plastics establishes different procedures for different areas, there will be some risks
faced in managing people –meeting the challenge of introducing new methods of working, a
revision to job duties, new management systems or alterations in terms and conditions of
employment. That is because people can find change difficult to accept or to cope with.
Many people resist change; some may accept the need for change but cannot adjust their
behavior to respond to it; and some may welcome change but they are probably in the
minority. There may need some times for employees to acquaint with newly established
procedures. Significantly, there will be some challenges in adjusting different procedures for
different departments; therefore, before implementing them, it will need to give full and early
communication of intentions, possibilities and overall direction to all participants.

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Myanmar Institute of Education   MBA Programme   M60109140029  
 

5 Recommendation
If I were in Alina’s shoes, I would transform Sipro Plastics as a lean organization – lean
production methods are practiced, and as a learning organization together with effective
performance management appraisals to reduce high turnover in Sipro and retain talented
employees.

Lean Production
The term was popularized by (Womack, 1970), but the drive for leaner methods of working
was confined initially to the car industry, as in Toyota, one of the pioneers of lean production,
or more loosely, ‘world-class manufacturing’. Womack and Jones advocate extending the
Toyota approach to the entire enterprise, including paperwork as well as product processes.
Lean production aims to add value by minimizing waste in terms of materials, time, space
and people. Production systems associated with leanness include just-in-time, supply chain
management, material resources planning and zero defects/right first time.
But there is no standard model of what a lean organization looks like. According to research
conducted by (Kinnie, 1996), firms select from a menu the methods that meet their business
needs. These include, other than delayering or the negative approach of downsizing,
positive steps such as team-based work organizations, cross-functional management and
development teams, emphasis on horizontal business processes rather than vertical
structures, and HRM (human resource management) policies aimed at high performance
and commitment including communication programmes and participation in decision-making.

Sipro’s Recommended ‘Lean Organization’

Since Sipro is a manufacturing industry, the aim of this proposal will involve the following
factors: (1) reduced lot sizes, leading to production flexibility (2) arranging production
equipment in the order that people work and value is added instead of grouping by
equipment function (3) controlling parts required in production to enable them to be provided
when and where they are needed for specific tasks. (James, 2001)
To achieve these factors, firstly, Sipro needs to establish ‘Just-in-time’ system – a
philosophy of manufacturing based on planning elimination of all waste and continuous
improvement of productivity. It encompasses the successful execution of all manufacturing
activities required to produce a final product, from design engineering to delivery and
including all stages of conversion from raw material onward. The primary elements of just in
time are to have only the required inventory when needed; to improve quality to zero
defects; to reduce lead times by reducing setup times, queue lengths, and lot sizes; to
incrementally revise the operations themselves; and to accomplish these things at minimum
cost. In the broad sense, it applies to all forms of manufacturing, job shop, and process, as

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Myanmar Institute of Education   MBA Programme   M60109140029  
 

well as repetitive. To sum up, Just-in-time means producing the right products in the needed
quantities at the right time. Secondly, Sipro needs to apply ‘Autonomation’ – autonomous
defect control – refers to preventing the passing of defective units from one step to another.
This avoids the disruptive impact of passed-on defects. With the help of these two
approaches, Sipro can enhance the flexible work force to enable varying the number of
workers with the workload and thereby operating with fewer workers, and encourage
creative thinking of workers to enable improving operations. (Monden, 1983) In addition,
Sipro can adopt other tools such as (1) ‘Kanban’ systems to create links between operations
notifying upstream operations when to move and make production units, smoothing of
production to minimize fluctuations, (2) standardized operations – cycle time, the operations
routine, and quantity of work in process, (3) improved layouts and flexible multifunctional
workers (4) small-group improvement efforts to improve worker satisfaction by offering them
a stake in the improvement effort and (5) visual control systems to encourage a quick
correction to the situation – measures to display what is happening in the operations, e.g.,
prominent display of any conditions causing an interruption of flow – a worker can stop a
production line if defects are being produced.

Sipro’s Recommended Blended learning

Blended learning is defined by Sloman (2003b) as: ‘An approach to training design that
involves the use of a combination of delivery methods and in some cases learning
methodology.’ Schramm (2001) describes it as: ‘The combination of different modes of
delivery that take into account the learner’s environment, motivation and learning styles with
different theoretical approaches. This creates a multi-layered and richer palette of learning
methods.’ Blended learning aims to make the different parts of the learning mix
complementary and mutually supportive in meeting learning needs.
Recognition of the need to blend learning avoids the pitfall of over-reliance on one approach.
It means using conventional instruction, e-learning and self- directed learning as well as
experiential learning. The aim is to inspire and motivate learners over extended periods of
time and through an appropriate mix of inputs and outputs, individual and collaborative
study, formal and informal processes, and a blend of face-to-face and virtual contact. Focus
on the learner is achieved by taking special care to provide them with support and guidance
from their managers, coaches and mentors and to complement this with the provision of e-
learning material.
A blended programme might be planned for an individual using a mix of self- managed
learning activities defined in a personal development plan, e-learning facilities, group action
learning activities, coaching or mentoring, and instruction provided in an in-company course
or externally. General training for groups of people might include e-learning, planned

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Myanmar Institute of Education   MBA Programme   M60109140029  
 

instruction programmes, planned experience, and selected external courses. Within a

training course a complementary mix of different training activities might take place; for
example a skills development course for managers or team leaders might include some
instruction on basic principles but much more time would be spent on case studies,
simulations, role-playing and other exercises.

Sipro’s Recommended Appraisal

Sipro’s process of continuing assessment should be carried out by reference to agreed
objectives and to work, development and improvement plans. Progress reviews can take
place informally or through an existing system of team meetings. Managers should be
encouraged to consider how to accommodate the need for regular dialogue within the
established pattern of briefings, team or group meetings, or project review meetings.
Although performance management is a continuous process, it is still necessary to have a
formal review once or twice yearly. This acts as a focal point for the consideration of key
performance and development issues, provides an opportunity to take stock, and forms the
basis for performance and development planning.

Sipro’s Overall Recommendation

Sipro’s structure should be flexible enough to respond quickly to change, challenge and
uncertainty. Flexibility should be enhanced by the creation of core groups and by using part-
time, temporary and contract workers to handle extra demands. At top management level
and elsewhere, a ‘collegiate’ approach to team operation should be considered in which
people share responsibility and are expected to work with their colleagues in areas outside
their primary function or skill.
Sipro’s people should be clear about their roles as individuals and as members of a team.
They should know what they will be held accountable for and be given every opportunity to
use their abilities in achieving objectives that they have agreed and are committed to. Role
profiles should be used to define key result areas but should not restrict initiative and unduly
limiting responsibility.
Sipro’s authority to make decisions should be delegated as close to the scene of action as
possible. Profit centres should be set up as strategic business units that operate close to
their markets and with a considerable degree of autonomy.
Sipro’s organizations should be ‘flattened’ by stripping out superfluous layers of
management and supervision in order to promote flexibility, facilitate swifter communication,
increase responsiveness, enable people to be given more responsibility as individuals or
teams, and reduce costs.

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Myanmar Institute of Education   MBA Programme   M60109140029  
 

6 Reference List:
Armstrong,  M.  (2009).  Handbook  of  Management  and  Leadership.  London:  Kogan  Page.  
James,  B.  A.  (2001).  Handbook  of  Supply  Chain  Management.  USA:  CRC  Press  LLC.  
Kinnie,  N.  e.  (1996).  The  People  Management  Implications  of  Leaner  Methods  of  Working.  
London:  IPD.  
Monden,  Y.  (1983).  Toyota  production  system.  Institute  of  industrial  engineers  ,  100-­‐110.  
Womack,  J.  &.  (1970).  The  Machine  that  Changes  the  World.  New  York:  Rawson.  
 

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