WORK SYSTEM

DESIGN
OPERATION MANAGEMENT
 DESIGNING A WORK SYSTEM

• First, a company determines its objectives, and then it develops an

operations strategy to achieve those objectives. Part of the operations
strategy is designing a work system, which provides the structure for
the productivity of the company. The work system includes job design,
work measurement, and worker compensation. The company
determines the purpose of each job, what the job consists of, and the
cost of the employees to do the job. A job must add value and enable
the company to achieve its objectives.
 JOB DESIGN

Job design specifies the work

activities of an individual or a
group in support of an
organization’s objectives. You
design a job by answering Let’s look at three additional
questions such as: What is your factors in job design: technical
description of the job? What is feasibility, economic feasibility,
the purpose of the job? Where is and behavioral feasibility.
the job done? Who does the job?
What background, training, or
skills does an employee need to
do the job?
 TECHNICAL FEASIBILITY

Good job design eliminates

unreasonable requirements
The degree to which an
and ensures that any
individual or group of
constraining requirements
individuals is physically and
are necessary to do the job.
mentally able to do the job.
This in turn widens the
The more demanding the job,
applicant pool and gives your
the smaller is the applicant
company a chance to hire the
pool for that job.
best candidates on the
market.
 ECONOMIC FEASIBILITY

• The degree to which the value a job adds and the cost of having the job
done create profit for the company. If the job as it is designed costs
more than the value it adds, then it is not economically feasible.
 BEHAVIORAL FEASIBILITY

• The degree to which an employee derives intrinsic satisfaction from

doing the job. The challenge is to design a job so the worker feels good
about doing the job and adds value by doing it. This presents two
problems. First, what motivates one worker may not motivate another
worker. Second, someone has to do the boring jobs. One solution is to
provide an enjoyable work environment.
 MACHINES OR PEOPLE?

When a company considers

the technical, economic, and
behavioral feasibility of job
Using machines versus
design, a central question is:
people is both a tangible
Should the job or some part
economic decision in job
of it be automated?
design and a decision based
Obviously, machines do
on intangibles, such as
some things better than
customer acceptance.
people, whereas people do
other things better than
machines.
 LEVEL OF LABOR SPECIALIZATION

• The higher the level of specialization, the narrower is the employee’s

scope of expertise. The professions—medicine, law, academics—are
highly specialized; however, some low-level assembly or service jobs
are also specialized.
 ELIMINATING EMPLOYEE BOREDOM

Job rotation exposes a worker to other

jobs in the work system. Rotation
Job enrichment is the vertical allows workers to see how the output
expansion of a job. The job designer from their previous assignment is used
Job enlargement is the horizontal
adds worker responsibility for work later in the production or service
expansion of a job. The job designer
planning and/or inspection. This allows process. Workers see more of the big
adds other related tasks to the job so
the worker some control over the picture and have a better overall
the worker produces a portion of the
workload in terms of scheduling— understanding of the work system. In
final product that he or she can
although not in terms of how much addition, they acquire more skills that
recognize.
work to do—and instills a sense of may increase their value to the
pride in the worker. company. Job rotation provides more
flexibility for the company, as its
workers have upgraded skills.
 TEAM
APPROACHES TO PROBLEM-SOLVING
TEAMS ARE SMALL
GROUPS OF
SPECIAL-PURPOSE
TEAMS ADDRESS
ISSUES OF MAJOR
SELF-DIRECTED OR
SELF-MANAGED
TEAMS ARE

JOB DESIGN EMPLOYEES WHO

MEET TO IDENTIFY,
ANALYZE, AND
SIGNIFICANCE TO
THE COMPANY.
THEY ARE OFTEN
DESIGNED TO
ACHIEVE A HIGH
LEVEL OF
SOLVE SHORT-TERM, EMPLOYEE
OPERATIONAL SPECIAL TASK INVOLVEMENT AND
PROBLEMS. FORCES WITH A AN INTEGRATED
EMPLOYEES FOCUSED TEAM APPROACH.
TYPICALLY AGENDA. A SELF-DIRECTED
VOLUNTEER TO MEMBERS OF TEAM IS A GROUP
PARTICIPATE IN SPECIAL-PURPOSE OF PEOPLE
PROBLEM-SOLVING TEAMS TYPICALLY WORKING
TEAMS, AND TEAM REPRESENT TOGETHER IN
MEMBERS ARE SEVERAL THEIR OWN WAYS
TRAINED IN FUNCTIONAL TOWARD A
PROBLEM-SOLVING AREAS FOR AN COMMON GOAL
TECHNIQUES AND OVERALL VIEW OF THAT THE TEAM
DATA COLLECTION. THE PROBLEM. HAS DEFINED.
 • The alternative workplace is a
combination of nontraditional work
practices, settings, and locations that
supplements traditional offices. The
THE alternative workplace moves the work
ALTERNATIVE to the worker rather than the worker
WORKPLACE to the work.
• Companies have begun using
alternative workplaces for the
benefits they afford in terms of cost
reduction, productivity, and flexibility.
 • The study of how a job is done. Whereas job design shows the
structure of the job and names the tasks within the structure,
methods analysis details the tasks and how to do them.

• Methods analysis is used by companies when developing new

products or services and for improving the efficiency of methods
currently in use.

• Methods analysis consists of the following steps:

• 1. Identify the operation to be analyzed.

METHODS
• 2. Gather all relevant information about the operation, including
tools, materials, and procedures.

ANALYSIS • 3. Talk with employees who use the operation or have used similar
operations. They may have suggestions for improving it.

• 4. Chart the operation, whether you are analyzing an existing

operation or a new operation.

• 5. Evaluate each step in the existing operation or proposed new

operation. Does the step add value? Does it only add cost?

• 6. Revise the existing or new operation as needed.

• 7. Put the revised or new operation into effect, then follow up on the
changes or new operation. Do your changes to the existing operation
improve it? Does your new operation add to the company’s overall
operations?
 • Concern for worker safety brought
about the enactment in 1970 of the
Occupational Safety and Health Act
(OSHA), which created the
Occupational Safety and Health
Administration. The law was
designed to ensure that all workers
THE WORK have healthy and safe working
ENVIRONMENT conditions. It mandates specific
safety conditions that are inspected
randomly by OSHA inspectors.
Violations can result in warnings,
fines, and/or court imposed
shutdowns. The law requires the
company to ensure a safe working
environment for its employees.
 WORK MEASUREMENT

The standard time is the time

The third component in work it should take a qualified
system design, work operator, working at a
measurement, is a way of sustainable pace and using
determining how long it the appropriate tools and
should take to do a job. Work process, to do the job. The
measurement techniques are standard time is the
used to set a standard time sustainable time it takes to
for a specific job. do either a whole job or a
portion or element of a job.
 • When costing a product, a company
includes labor in the total cost estimate.
Instead of timing the labor to build single
units, companies typically use a standard
labor cost. To do this, they multiply the
standard labor time by a given hourly labor
cost to determine the direct labor content
of a product.
COSTING
• Standard times allow companies to
evaluate new-product proposals, the use of
new materials and equipment, new
processes or techniques for building a
product, and individual operator
proficiency. The standard time provides a
benchmark for companies to use when
evaluating other alternatives.
 • If the standard time shows that
a worker should produce 96
units per eight-hour shift, a
supervisor can then track the
worker’s performance and see
PERFORMANCE whether that worker is matching
the standard time. If a worker
fails to match the standard
time, the company should
provide training to improve the
worker’s performance.
 PLANNING

This information allows you to

make workload forecasts, plan
the labor needed, and schedule
Standard times also help a
work. If you know how long a job
company to plan. If you know
should take, you know how long
how long it takes to do a job and
your resources will be busy with
how often that job is repeated,
that job before you can start the
you can plan your workload from
next job. With this knowledge
that job.
you can schedule jobs and
promise viable delivery dates to
your customers.
 • Among the commonly used
processes for setting standard
times are the time study,
elemental time data,
SETTING
predetermined time data, and
STANDARD TIMES work sampling. The time study
dates back to Frederick Winslow
Taylor in the late nineteenth
century.
 • The time study sets a standard time
based on timed observations of one
employee taken over a number of
HOW TO DO A
cycles. A cycle includes all the
TIME STUDY elements of the job. This standard
time is applied to all workers doing
the job.
• Performance Rating Factor This section deals with
setting a normalized standard time based on observed
times. The observed work pace may be average,
above average, or below average. As the time-study
analyst, you must make a judgment about the work
pace of the observed worker in terms of how far from
the average it is. This is a factor of 1.0 called the
performance rating factor.

• Frequency of Occurrence One other factor to consider

when calculating the time standard is the frequency of
occurrence (F) for each work element. We expect most
elements to be done every cycle, so they would have
a frequency of occurrence equal to 1. However, some
elements are not done each cycle, so we adjust the
frequency accordingly

• Allowance Factor Personal time, fatigue, and

unavoidable delays affect how much an employee can
produce during the day. There are two methods used
to convert the job’s normal time into the job’s
standard time.
 • After your company performs
and validates time studies, it
stores those accepted time
studies in an elemental time
database for possible future
use. Many jobs consist of the
ELEMENTAL TIME same work elements.
DATA
 • A large database of valid work
element times. One commonly used
system is methods-time
PREDETERMINED measurement (MTM), which was
TIME DATA developed in the 1940s. The tables
used in MTM deal with basic
elemental motions and associated
times.
 • A method used for estimating the
proportion of time that an employee
or machine spends on different work
WORK activities. Work sampling does not
SAMPLING provide a standard time for an
activity, but instead provides an
estimate of what portion of the day a
worker uses for that activity.
 COMPENSATION

Worker compensation is the third part of work system design.

Companies need to develop compensation systems that reinforce
the behaviors needed to meet the company’s objectives.

Compensation systems are typically based either on time spent

working or on output generated.
 • Time-based compensation
systems are normally used
when measuring output per
employee is not applicable—
say, for managers,
administrative support staff,
TIME-BASED and some direct laborers.
SYSTEMS
 OUTPUT-BASED SYSTEMS

Output-based (incentive) systems, or

piece-rate systems, or commission
systems can be linked to Frederick
These incentive systems can be
Taylor’s theory that humans are
designed to compensate either the
economically motivated. These
individual or an entire group of
systems reward workers for their
employees. Individual incentive plans
output. The more the worker
typically provide a base salary for the
produces, the more the worker earns.
employee, plus a bonus for output
The assumption is that some workers
achieved above the standard.
are motivated by money and produce
more when pay is linked to
performance.
 • Group incentive plans are designed to reward
employees when the company achieves certain
performance objectives. Two methods are profit
sharing and gain sharing.

• Profit Sharing One variation of profit sharing places

half the profits in excess of the minimum return on
investment into a bonus pool for employees.
GROUP Individual bonuses can then be based on an
employee’s base pay, on the percentage of time
INCENTIVE during the past year the employee worked for the
PLANS company, or on similar arrangements.

• Gain Sharing Gain sharing emphasizes the costs of

output rather than profit levels. With this plan,
employees share the benefits of quality and
productivity improvements made during the year.
The pool of money for the bonuses comes from the
cost items under the control of employees. The
individual bonuses should represent an appropriate
share of the gains.
 • Despite a trend toward using individual incentive
systems, there are a number of disadvantages.
Such systems have been shown to undermine
teamwork and give employees a short-term focus.
A study of 20 Social Security Administration offices
showed that an individual merit pay system had no
effect on worker performance. This finding tells us
that individual incentive plans need significantly

INCENTIVE more data collection by management than time-

based systems.
PLAN TRENDS • Some evidence suggests that group incentive
systems suffer from the “free-rider” problem. The
free-rider is the person who does not do his or her
fair share but is still rewarded by the work of the
group. Still, the extent of free-riding is modest,
most likely because of group pressure. Overall,
companies using group incentive systems tend to
outperform companies that do not use such
systems.
 • An important factor in calculating labor
times is the learning effect. We all can
recall a new task or job that took a long
time to finish the first time we tried.
However, each subsequent time we did the
task, it took less time. This is the basis of
learning curve theory.
LEARNING • The major attributes of a learning curve
CURVES are that it takes less time to complete the
task each additional time it is done by the
same employee, and the time savings
decrease with each additional time that
task is done by that employee. When the
number of times the task is completed
doubles, the decrease in time per task
affects the rate of the learning curve.
WORK SYSTEM DESIGN WITHIN OM: HOW IT ALL FITS
TOGETHER
Work system design includes job design, methods analysis, and work measurement.
Manufacturing or industrial engineers often do these activities. Job design determines
exactly how the product or service will be done and is linked directly to product and process
design. Based on the type of product (standard or custom) and its proposed process (mass-
producing or producing one at a time), a company determines the skills set needed by its
employees as well as the necessary equipment.
Method analysis provides a means for evaluating different processes and materials, thus
allowing a company to focus on continuous improvement. This ties in directly with a
company’s total quality
Work measurement management
techniques allow a(TQM) focus.
company to develop standards to use as a basis for
evaluating the cost and effectiveness of different methods and materials for building a
product or providing a service. These time standards provide a time estimate to use as a
basis for establishing detailed work schedules and for determining long-term staffing levels.
These time estimates can be used as a basis for making delivery or completion-time
promises to customers. Standard times are used to develop lead-time estimates, which are
inputs for the MRP (material requirement planning) system as well as the MPS (master
production
Work system schedule) process.the means for setting standards against which to compare
design provides
new methods, new materials, and new designs; assures that employees know how to do
their job; and provides the information needed by the company to calculate its costs.
 • Accounting calculates the cost of products manufactured or services provided. Labor
can be a significant portion of the cost of goods sold, especially in the service
industries. Accounting measures variances between planned product cost and actual
product cost. Accounting also typically measures operational efficiency, which is
based on work standards. Work system design is an important resource for
accounting activities.

• Marketing is concerned with work system design because it is the basis for
determining lead time. Accurate work projections enable marketing to make viable

WORK SYSTEM
promise dates to customers.

• Information systems uses estimates of job duration and resources in the software for

DESIGN
scheduling and tracking operations. Purchasing handles requests for materials based
on a schedule projected from the work system design. Accurate scheduling enables
cost-effective materials and labor purchasing decisions. Standard time provides a

ACROSS THE benchmark for evaluation of new materials and processes. Manufacturing responds
to effective job design, process analysis, and work measurement with high levels of
performance and on-time delivery of finished goods.

ORGANIZATIO • Human resources uses work sampling to establish and validate hiring criteria. You

N
can see that work system design involves all aspects of an organization and has an
impact on how well the organization performs. In many manufacturing companies,
job design and process analysis are both done by a manufacturing or an industrial
engineer. The engineer works with product blueprints and the workforce to develop
job instructions. From these detailed job instructions, the company can develop time
standards. Work measurement information is often provided by workers as they
complete a job. Accounting may use this information to report the efficiency of
manufacturing operations. In a service organization, an operations manager or
operations analyst may do the job design and process analysis. Work system design
helps companies understand the total costs of making a product or providing a
service. It allows companies to evaluate their product or service line and view the
bottom line for each product or service.