Echo Electronics

Paul Sanchez is the production manager for Echo Electronics, a small company that makes

and distributes communications equipment. Paulís direct subordinates are the supervisors of the

four production departments in the companyís manufacturing plant. Six months ago, the engi-

neering manager at Echo Electronics proposed a plan to install new computerized workstations

to increase productivity in the plant. It seemed to be a good idea to Paul, and he welcomed the

change. The CEO also approved the plan, and the new equipment was installed immediately.

Three months later, Paul was surprised and disappointed to find that the expected increase

in productivity did not occur. In fact, productivity and quality actually decreased. The mar-

keting manager told Paul that several of their best customers complained about receiving Echo

equipment that was defective. Paul does not believe that the problem lies with the new worksta-

tions. Technicians from the firm that built the workstations recently checked them and found

that they were operating properly. Paul talked to someone at another company that uses the

workstations, and his contact reported that they were having great success with them.

When Paul discussed the problem with his four production supervisors, he found that they

shared his concern but did not agree among themselves about the cause of the problem. Reasons

given for the decline in performance included poor design of the workstations, inadequate train-

ing of the production workers who operate them, and lack of financial incentives for increasing

productivity. The supervisors also told Paul that the production workers have strong feelings

about the workstations. Morale declined, and two employees quit because they were upset about

the changes made in the way the work is done.

This morning, Paul received a phone call from the CEO who just received the production

figures for last month and was calling to express concern about them. The CEO indicated that

the problem was Paulís to solve, but he must take immediate steps to deal with it. The CEO wants

to know by next week what steps Paul will take to reverse the decline in productivity and product

quality.

SOURCE: Adapted from a case by Timothy R. Hinkin and used with his permission.

Questions

1. What actions could Paul have taken to prevent the problem?

2. What steps should Paul take now to deal with the problem?

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