Operations Management and Human Resources Essentials

Posted on Apr 1, 2025 in Business Administration and Management (BAM)

Operations Management: Core Principles

Manufacturing vs. Production vs. Operations

• Manufacturing: Activities making tangible products.
• Production: Same as manufacturing.
• Operations: Activities making tangible and intangible products.

The Transformation Process

The transformation process converts inputs into outputs:

• Inputs: Labor, money, materials, energy.
• Outputs: Goods, services, ideas.
• Transformation occurs through one or more processes.

Operations Management in Service Businesses

• Services need different transformation processes.
• Services need high customer contact.
• Ideal service provider: high-tech and high-touch.
• Service output is intangible and perishable.

Characteristics of Services

• Intangibility: Concerts, sports events.
• Inseparability: Chiropractor visits, air travel, vet services.
• Perishability: Seats at a presentation.
• Customization: Haircuts, legal services, tax consultation.
• Customer Contact: Restaurants, retail stores.

Nature and Consumption of Output

• Services need more customer contact.
• Service performance occurs at consumption.

Uniformity of Inputs

• Service providers have less control over resource variability.
• Services are more customized.

Uniformity of Output

The human element in services means each service differs.

Labor Required

Services are labor-intensive due to high customer contact.

Measurement of Productivity

Service intangibility makes measurement harder.

Planning and Designing Operations Systems

Planning the Product

• Determine consumer wants via marketing research.
• Product development is lengthy and expensive.
  • Some firms develop products jointly.
• Create a workable design and transformation process.
  • Research and development.

Designing Operations Processes

• Standardization: Identical, interchangeable components.
  • Cheaper than custom designs.
• Modular Design: Self-contained units combined or interchanged.
  • Failure means replacing the entire component.

Planning Capacity

• Capacity: Maximum load an organizational unit can carry.
• Unit of measure: worker, machine, department, plant.
• Capacity stated in inputs or outputs.
• Operations managers plan for capacity needs:
  • Too low: unmet demand, lost customers.
  • Too high: higher operating costs.

Planning Facilities

• Facility location is significant due to high costs.
• Location factors:
  • Proximity to market.
  • Raw materials, transportation, power, labor.
  • Climate, community.
  • Taxes, inducements.

Sustainability and Manufacturing

• Sustainability: Long-term well-being of the natural environment.
• Sustainability is important to stakeholders and consumers.
• Green products via green operations are the future.

Managing the Supply Chain

Supply Chain Management

• Integrate all parts of the distribution system to satisfy customers.
  • Procurement.
  • Logistics:
    • Inbound logistics.
    • Outbound logistics.
    • Third-party logistics.
• Operations are the most visible part of the supply chain.

Procurement

Procurement is buying materials needed by the organization.

• Obtain desired quality at the lowest cost.
• Companies may make components more efficiently.
• Leasing is an option.
• Decisions depend on cost, availability, and supplier reliability.

Managing Inventory

• Inventory: Raw materials, components, completed products.
  • Finished-goods inventory.
  • Work-in-process inventory.
  • Raw materials inventory.
• Inventory control:
  • Economic order quantity model.
  • Just-in-time inventory management.
  • Material-requirements planning.
• Outsourcing: Contracting tasks to independent companies.
  • Globalization requires faster, balanced resources.
  • Linked with competitive advantage.
  • May raise negative public opinion.
• Routing:
  • Sequencing operations.
  • Sequence depends on product specifications.
• Scheduling:
  • Assigning tasks to departments, machines, workers.
• Program Evaluation and Review Technique (PERT):
  • Identifies major activities.
  • Arranges them in sequence.
  • Determines the critical path:
    • Longest time from start to finish.
  • Estimates time for each event.

Managing Quality

Quality: Meeting customer demands and requirements.

• Determining quality is difficult due to customer perceptions.
• Quality is hard to measure for services.
  • Define measurable quality characteristics.

Quality Control

Maintaining established quality standards.

Total Quality Management

Commitment to quality in all areas.

• Benchmarking.

Statistical Process Control

Analyzing production process information to pinpoint quality problems.

Inspection

• Reveals if a product meets standards.
• Finished items determine quality level.
• Work-in-process finds defects for corrections.

Sampling

• Testing a sample to pass a batch.
• Risk of incorrect conclusions.
• Used when tests are destructive.
• Some items need 100% sampling.

Integrating Operations and Supply Chain Management

• Managing partners is important.
• Firms adopt a Global Supplier Code of Conduct.
• Supply chain and procurement managers collaborate.
• Regularly audit suppliers.

Human Relations: Understanding People at Work

Human Relations

• Study of individual and group behavior in organizations.
  • Motivating employees to achieve objectives.

Motivation

• Inner drive toward a goal.
  • Goal: satisfying a need.
  • Need: difference between actual and desired state.

Morale

• Employee’s attitude toward job, employer, colleagues.
• High morale leads to:
  • High productivity.
  • High returns to stakeholders.

Employee Loyalty

Low morale leads to:

• High absenteeism.
• High employee turnover.

Intrinsic and Extrinsic Rewards

Both contribute to motivation.

Intrinsic Rewards

Personal satisfaction from attaining a goal.

Extrinsic Rewards

Benefits and recognition from someone else.

Retaining Good Employees

1. Offer training and mentoring.
2. Create a positive culture.
3. Build credibility through communication.
4. Blend compensation, benefits, recognition.
5. Encourage referrals, internal recruiting.
6. Give coaching and feedback.
7. Provide growth opportunities.
8. Create work/life balance.
9. Foster trust in leadership.
10. Make employees feel valued.

Historical Perspectives on Employee Motivation

Classical Theory of Motivation

Money is the sole motivator.

Time and motion studies:

• Frederick W. Taylor, Frank and Lillian Gilbreth.
• Analyzed tasks to improve productivity.
• Applied scientific principles to management.

Taylor’s ideas still in practice:

• Financial incentives for productivity.

Theories of Employee Motivation

Maslow’s Hierarchy of Needs

• Physiological needs.
• Security needs.
• Social needs.
• Esteem needs.
• Self-actualization needs.

McGregor’s Theory X

Traditional view of management:

1. People dislike work.
2. Workers must be coerced.
3. Workers avoid responsibility.

McGregor’s Theory Y

Humanistic view of management:

1. Work is natural.
2. People exercise self-direction.
3. Commitment brings personal reward.
4. People accept responsibility.
5. Organizations underutilize employee potential.

Theory Z

• • Physiological needs.
  • Security needs.
  • Social needs.
  • Esteem needs.
  • Self-actualization needs.

Equity Theory

• Contribution depends on fairness of rewards.
• Equity is subjective.
• Inequity may lead to unethical behavior.

Expectancy Theory

• Motivation depends on wanting something and the likelihood of getting it.

Goal-Setting Theory

• Impact of setting goals on performance.
• Management by objectives (MBO).

Strategies for Motivating Employees

Behavior Modification

• Changing behavior by relating consequences to behavior.

Reinforcement Theory

• Rewarded behavior is repeated.
• Punished behavior is eliminated.
• Rewarding is more effective.

Job Design

• Managers improve motivation through job design.
• Job rotation.
• Job enlargement.
• Job enrichment.

Benefits of Job Rotation

• Exposure to diverse viewpoints.
• Motivating lifelong learning.
• Preparing for leadership.
• Building skills.
• Supporting recruitment.
• Boosting productivity.
• Retaining employees.

Flexible Scheduling Strategies

• Flextime.
• Compressed workweek.
• Job sharing.
• Part-time work.
• Remote work.

Importance of Motivational Strategies

• Fosters loyalty.
• Boosts productivity.
• Influences pay, promotion, job design, training.
• Employees are motivated by:
  • Relationships with supervisors.
  • Their jobs.
  • Organization characteristics.

Human Resource Management: Building a Strong Workforce

Human Resource Management (HRM)

• Activities determining human resource needs.
• Acquiring, training, compensating people.
• Called personnel management.
• Workforce is diverse.
• Maximize satisfaction while meeting objectives.

Recruiting and Selecting New Employees

Recruiting

• Forming a pool of qualified applicants.
  • Internal sources.
  • External sources.
• Headhunters for managerial positions.

Selection

• Collecting information to make hiring decisions.
  • Application.
  • Interview.
  • Testing.
  • Reference checking.

Top 10 Interview Questions

1. Tell me about yourself.
2. What are your weaknesses?
3. What are your strengths?
4. Where do you see yourself in 5 years?
5. Why should I hire you?
6. How did you learn about the opening?
7. Why do you want the job?
8. What is your biggest achievement?
9. Tell me about a time a coworker got angry.
10. Describe your dream job.

Top 10 Résumé Lies

1. College attended.
2. Language fluency.
3. Academic degree.
4. Major.
5. GPA.
6. Work history.
7. Awards.
8. Minor.
9. Projects.
10. Job title.

Legal Issues in Recruiting and Selecting

• Legal constraints in recruitment and selection.
• Charter of Rights and Freedoms:
  • Equal treatment under the law.
• Canadian Human Rights Act:
  • Equal opportunities for employment.
• Employment Equity Act.

Developing the Workforce

Orientation

• Familiarizes new employees with the company.
  • Building tour.
  • Introductions.
  • Manuals and policies.
  • Socializing into the company culture.

Training and Development

• Training:
  • On-the-job training.
  • Classroom training.
• Development.

Assessing Performance

• Difficult task for managers.
• Crucial because it:
  • Gives feedback.
  • Determines compensation.
  • Generates information about training.
• Appraisals may be objective or subjective.
  • Objective appraisals are quantifiable.
  • Subjective appraisal is the ranking system.
  • 360-degree feedback system.
• Discuss results with employees.

Turnover

Employees quit or are fired and must be replaced.

Promotion

Advancement to a higher-level job.

Transfer

Move to another job at the same level.

Separations

• Employees resign, retire, are terminated, or laid off.
  • Employees fired fairly, for just cause only.
  • Problems documented in work records.
• Minimize losses due to separations.
  • Recruiting and training is expensive.
  • Strategies to reduce turnover.

Compensating the Workforce

Wage/Salary Survey

• Pay and benefits are a substantial expense.
• Compensation determined through a wage/salary survey.
  • Tells how much comparable firms are paying.

Financial Compensation

• Wages.
• Commission.
• Salary.
• Bonuses.
• Profit sharing.

Benefits

• Nonfinancial compensation.
  • CPP, Worker’s Compensation, and EI.
  • Health and dental plans.
• Fringe benefits.
• Soft benefits.
• Cafeteria benefit plans.

Managing Unionized Employees

Labor Unions

• Employee organizations for better pay and conditions.
• Canada has a 28.8 percent unionization rate.
• Union growth has slowed.
• HRM dictated by union contracts.

Collective Bargaining

Negotiation between management and unions.

Labor Contract

Formal document between union and management.

• Cost-of-living escalator (COLA) clause.
• Givebacks.

Resolving Disputes

Labor tactics:

• Picketing.
• Strikes.
• Boycotts.

Management tactics:

• Lockout.
• Strikebreakers.

Outside Resolution

• Conciliation.
• Mediation.
• Arbitration:
  • Compulsory arbitration.

The Importance of Workforce Diversity

Diversity

Participation of different ages, genders, races, ethnicities, nationalities, and abilities.

Characteristics of Diversity

• Primary characteristics:
  • Inborn and unchangeable.
• Secondary characteristics:
  • Can be changed.

Why Is Diversity Important?

• Canadian workforce is diverse.
• Improve HRM programs to recruit diverse employees.
• Companies that value diverse employees experience less conflict.
• Diversity impacts financial performance.

Employment Equity

The Benefits of Workforce Diversity

1. More productive use of human resources.
2. Reduced conflict.
3. More productive relationships.
4. Increased commitment.
5. Increased innovation.
6. Increased ability to serve diverse customers.

The Benefits of Workforce Diversity

• More productive use of human resources.
• Reduced conflict.
• More productive relationships.
• Increased commitment.
• Increased innovation.
• Increased ability to serve diverse customers.