B628 TMA – Spring 2019 –LYPage 4
Faculty of Business Studies
Arab Open University
Organizations and People
B628
Tutor Monitoring Assignment
Spring 2019
QUESTIONS
Question 1: Poor Frank problem
Frank is a director in charge of special operations in a $300 million training services of a publishing company (Nickols, 2016). He is expected to register people to attend seminars and arrange for conference facilities with a customer support base of over 50 programs (Nickols, 2016). The problem facing Frank is that he is required to prepare a budget and he is forced to increase the rate charges for his division by about 20%. This triggers dissatisfaction from his customers, and remedial action is required. This is a major cost-crunch because his operation has just been moved from cheap quarters to expensive facilities. Whereas the change is good for his company for the future, its immediate cost implication from space has increased by two folds. This is complicated by the loss of about 20% of work in the previous year (Nickols, 2016). Reduction of staff is one of his strategy to minimize the cost implication and preference for using less expensive agency staff that are cheaper. As such, the fixed expenses within Frank division have increased, and there is an urgent need to distribute to a much smaller base in the productive hours. It implies that Frank must charge an extra cost to ensure that he is able to recover expenses incurred in work performed within his division. He is faced with a dilemma on the best course of action that befits the situation.
The first concern in dealing with the situation in the case study is to determine whether the problem is bounded or unbounded. Every manager or director must critically evaluate the complexity of a problem so as to ascertain the amount of time it will take to solve. Importantly, a bounded problem is usually small scale that is properly defined and uncomplicated. Contrarily, unbounded problems are largescale in nature, poorly defined and messy while providing solutions. Therefore, a problem can either be bounded or unbounded based on its size and degree of uncertainty (Goldsmith, 2001).
The Size of a problem is demonstrated by the length of solving the issue; unbounded tasks will take a longer time to solve compared to bounded problems. Additionally, size covers the number of people and the quantity of resources that will be required in performing the task and number of people affected by the outcome. Unbounded tasks involve and affect many people within the organization compared to the bounded problem (Goldsmith, 2001). In this regard, the decision by Poor Frank to increase charge rates for its division is likely to affect many people and involve the majority of its customers. This means it is an unbounded problem.
Relating to the degree of uncertainty, unbounded problems require comprehensive time thinking on the best course of action. In fact, unbounded problems require the leader to figure out themselves through considering their aims, information required from and whom and when deciding on acceptable results or outcomes and time to accomplish the implementation. Frank proposes an increase of rate charges with the aim of leveraging the deficit from lost hours in the previous year. Its aim is clear, but he is considering the outcomes as well because his division is losing customers. This indicates that the problem he is facing at his division is unbounded (Goldsmith, 2001).
Unbounded problems are complex and involve a lot of people in considering the best suitable solutions to the problems (West & Turner, 2014). This is a major problem because every person will present their side of the problem and cause a lot of disagreements in reaching a consensus. Franks is faced with a similar problem that is likely to affect his objectives because of high feelings of increasing the rate charges. Undertaking a pre-constraining approach to assemble important persons to specify the scope and problem is ideal. It offers a boundary upon which the solutions and problems can be evaluated. Frank was able to solve this problem by contacting his budget analyst. His task was to compare actual charges for programs against the original budget prepared at the start of the year. The revelations showed that some programs are at budget or under-budgeted. Secondly, he contacted two-line managers whose divisions were over-budgeted and discovered that they have had an increase in volumes that have surpassed costs increases in terms of percentages. Also, he considered his customers who suggested a reduction of staff to minimize expenses. Through setting the boundaries clear, Frank established that reducing staff was not an admissible solution. Through the consultations, he identified that several retirements and postings made to other divisions were already a solution he had used to achieve a 19% reduction of its regular staff (Nickols, 2016). Therefore, a further reduction would not provide any positive impact. This was the main reason he opted to reduced fixed expenses. Through setting a boundary, Frank was able to determine the scope and effects of possible solutions to his main concern.
Unbounded problems are faced with a high level of uncertainty. It is important that th3e process of problem-solving should consider reduction of uncertainty to give the best solution. According to theoretical materials, reduction of uncertainty is a three-stage process involving identification, investigation, and intervention (Goldsmith, 2001). Identification is the first stage where a leader suspects a problem. Frank, concludes that there is a problem after the customer decreased to 20% from the previous year’s revenue (Nickols, 2016). He identified that loss of work and increased space charges following a shift to an expensive facility were the main elements creating the problem in his division. He conclusively makes a decision to investigate the problem and propose a good solution. In this regard, he contacted his budget analyst to develop a mathematical model for analyzing operations relating to the determination of charges for programs. This data for three years formed the baseline for Frank to evaluate the impact of rate charges.
The second stage of the investigation is performed to identify the causes of the problem to the organization (West & Turner, 2014). Using the arithmetic model to determine the existence of a problem, Frank was able to identify that the allocations category was the most affected in the company. Here, he correctly identified the problem and its implications to space charges and load dollars that were relied on determining the load rate. In particular, he was able to identify that the load rate index was not the major cause of the problem, but rather a secondary concern. Importantly, program managers are inclusive of charges to the programs as opposed to the rates.
Lastly, intervention is the last stage in the problem cycle to decide on an appropriate solution to the problem that has been established. In an unbound problem, interventions cannot be made by a single individual or manger, but instead should focus on consensus, commitment, cooperation, assessment, review, and consideration of resources. In applying this, Frank evaluated that a load rate could increase by a factor of even 10, but the productivity which is increased by a specific amount means that hours would decrease and the charges will remain the same. For instance, he provided an example that 100 hours being paid $10 for every hour is similar to 10 hours being paid $100 for a single hour (Nickols, 2016). This leads Frank to seek consensus with his budget analyst and two-line managers. After the findings, Frank has already limited replacement of vacant positions left vacant from retirements. Here, he had already achieved a 19% reduction of fixed expenses (Nickols, 2016). This was the basis upon which he did not adopt a decision to reduce his staff, because it could not create any meaningful impact on the organization. Therefore, Frank successfully applied the reduction of uncertainty to solve the unbounded problem he was facing at his organization.
Question 2: Framework for selecting a decision
The kind of decision you make as a manager is dependent on the nature of organization and level of responsibility. Several parameters should be used to properly analyze the best solutions that can be applied to a particular business problem. In particular, the 3Cs is a framework that properly guides a manager or a leader to make an informed choice of a solution to a problem. This include; Choices, criteria, and constraints (Bradac, 2001). Choices and criteria can easily be applied, but constraints can be a complex part of the framework for analysis. Designing a solution to a problem is an easy undertaking for any leader or stakeholders presented by a situation. For example, it was easy for customers to propose a reduction of staff for Frank as opposed to increasing rate charges, but this would not yield any meaningful impact considering the extent of the problem. There are several constraints that are presented by a solution to the prevailing problem.
The case of Frank presents direct solutions that can be adopted from the onset. For instance, shifting to a new expensive office space can be attributed as a major problem in the case. Ideally, a solution can be to move back to the old facility that is not expensive. Secondly, Frank can choose to move into a new inexpensive facility. Also, Frank can propose to move out and find more work to fill the gap created by work that has been lost. However, these are solutions that seem easy to propose than to actually implement it. All the possible solutions have constraints to the extent to which Frank can apply them in his case. Firstly, it takes considerably a longer period of time to obtain new business. Secondly, Frank is a director in a costs center, and this limits his movement to another location other than proposed by the corporate management.
Additionally, Frank customers are also located in the new facility meaning that if he chooses to move to a new facility, then these group of customers will be left behind. This is not acceptable for the future of the business. These constraints leave Frank with a single option of increasing the rates because it is not clear what other factors affect the satisfaction of his customers apart of higher rate charges. Application of three Cs of the framework is important because it enables a leader to identify the solution that best offers a positive impact on existing constraints in an organization (Bradac, 2001).
Considering the constraints provided in the obvious solutions, it is important to develop a consensus regarding the state of the problem. It is obvious from the case that perceptions and expectations are different from one individual to another within the same organization. Also, the perceptions can vary based on the requirements and nature of the divisions within an organization. Here, a division can see a problem in a proposed solution, but this can be an ideal state for another division within the organization. As was the case in the case study, problem-solving is a controversial political endeavor. This informs the reason why Frank was forced to develop census only relating to the definition of the problem that he needed to address. If Frank failed to undertake this activity, his proposal and strategies to minimize the problem were likely to be affected by side-tracks and failure (Bradac, 2001). Frank would not obtain any meaningful solution through complaining and protesting the move to move to new facilities to his rate charges. Contrarily, it is possible that his move can pose serious rebellion from a section of stakeholders complaining about the spiral effect of his increased rates to his customers and the financial ability of the company in the future.
Commitment to the solved state is another import aspect in selecting a suitable solution for a leader. Frank is working within a complex system where changes in one aspect have other impacts on other elements within the organization. For instance, increasing the rate charges imply that the customers will be forced to pay more. Also, a decision to shift to a new facility means that the cost of space will increase, and its effect of fixed expenses is that it will also increase. The effects occur to divisions or units where they were not earlier anticipated by the solution. For example, corporate management never imagined moving to a new facility would lead to loss of work (Bradac, 2001).
Whereas Implementing of a solution requires making of changes within the organization It is important for the responsible person to develop a commitment to his solution through establishing consensus to the general understanding of the problem (Bradac, 2001). In the case of Frank, he has the option of allowing some work to be reassigned to his division. This is likely to create a beneficial effect for expanding his base in the productive measure of hours, and it will properly lower his charge rates to satisfy his concerned customers. Practically, the 10% increase in the rate changes proposed by Frank must be in such a way that they are lower compared to the present rates. Also, the new rates must be lower than the rates in the division where he intends to transfer additional work. Ideally, a fundamental solution relies on moving the cost burden from programs that are currently supported to new ones, but it is highly unlikely that this will achieve any meaningful impact because no commitment will be developed to implementing of the solution (Bradac, 2001). It will end up with failure.
Frank has a role to specifically design a plan of action to achieve a suitable solution path. This requires convincing other members of the organization on the positive impact of the solution (West & Turner, 2014). For instance, in the case of Frank, increasing the charge rates is a reliable solution compared to other options faced with numerous constraints. As such, Frank is expected to set a plan of action to allocate duties to different people to ensure that the objective is obtained. Considering the complexity of the problem, contingency planning is a good basis that can be used to manage the situation. Basically, the main concern is to convince his boss and the vice president that it is worthy to spend $225, 000 for developing internal chargebacks (Nickols, 2016).
Using the framework, Frank can position his argument and claim that expenditure is necessary as an experiment that will yield tremendous payoff from saving costs currently being incurred in the large divisions. Here, it is possible to convince his boss that it makes an economic sense compared to costs of the space it occupies which is simply unaffordable. Another support from the consolidation of work activities through adopting a vertical filling system that has a huge potential of resulting in a huge payoff that is realistic. However, there are still two main problems that stand on his way. Firstly, convincing the corporate to provide the $20,000 purchase simply as a capital expenditure that was not originally factored in the budget (Nickols, 2016). Secondly, there is a problem in obtaining the facilities of the division to willingly accept to physically move to his new facility. Therefore, the best solution is to develop a consensus to allow questions to be asked and provide answers to create a necessity. Frank is tasked with providing additional explanation and justification before any alterations can be made on the priorities. The baseline is to create sense on the part of his line managers so that they can buy the idea and support its implementation to solve the impending problem (Bradac, 2001).
References
Nickols, F. (2016). Solving Business Problems: The Case of Poor Frank. Retrieved from https://nickols.us/poor_frank.pdf
Bradac, J. J. (2001). Theory Comparison: Uncertainty Reduction, ProblematicIntegration, Uncertainty Management, and Other Curious Constructs. Journal of Communication,51(3), 456
West, Richard; Turner, Lynn (2014). Introducing Communication Theory Analysis and Application. London: McGraw-Hill Education.
Goldsmith, D, J. (2001). A Normative Approach to the Study of Uncertainty and Communication. Journal of Communication, 514- 533