Let organisations come up with a plan to out-source management so that use of self-management teams can be increased. This will lead to higher return on investments for owners of the business. This will be in line with the basic business principle that the aim of good business is to ensure that the interests of the owners are upheld.
Currently it is estimated that for every 10 workers there is one supervisor or manager to lead them. The remuneration cost of one manager is equivalent to the cost of three workers on average. Usually managers are required so that they can ensure that controls are working to safeguard the interests of shareholders. The cost of management is quite significant to the businesses.
The following solutions to the problem above can be addressed by the following actions and activities:
- Create self-managing teams to carry out the work without the use of a manager
- Where minimal supervision or external leader is required, that leadership shall be out-sourced just as call centre jobs can be out-sourced.
In order to make the above actions work, the following activities would have to happen as outlined below:
- Ensure that when a self-managing team is formed, clear goals and targets to be met are outlined. This means that if the team is expected to make 20,000 electric bulbs per day, then that would have to be the goal.
- Quality – The team would have to make sure that there are no manufacturing faults. This shall be positively re-enforced by rewarding zero defects such as extra pay or a reward of their choice capped to a specific amount. A flexible reward system here would be encouraged following an example of a Canadian firm that was rewarding workers to a value of $1000 per person per year. When the firm decided to ask what reward the workers wanted, they fancied leather jackets which were costing the company around $400 per worker. In this way the company not only saved resources but also improved worker motivation by meeting their specific needs.
- Further to setting quality targets, a safe working culture would need to be put in place and rewarding those teams exhibiting health and safety behaviours and let the teams themselves manage the reward system. The result would be that a safe working environment would be established leading to higher profitability and even lower insurance premium as the levels of risk minimises.
- All production and financial information shall be made available to all workers so that they understand what impact their actions have on the performance of the organisation.
- Let the workers raise and approve purchase orders for inputs such as spares to repair equipment. This will also include getting the workers to approve receipts of goods which they ordered. While there will be freedom in purchasing items which enable the firm to improve productivity, there will also be some responsibility by making the team accountable for their area costs such that the workers raising a purchase order and approving it will be accountable to his team members by seeing that the costs are reasonable while there is no bureaucracy in approving work related requirements.
- Skills and training programmes would be put in place and supported financially by the owners of the business. Furthermore, team members would be responsible to identifying the skills that need to be honed in order to improve high quality of skills and then also recommending other team members to trained in a certain skill area that would uplift the entire team competency.
- Where some form of external leadership to the team is required, that leadership would have to be out sourced just as call centre jobs have been out sourced from South Asian countries. This is not a bad thing for New Zealand in the long run. Simply put, the transfer of call centre jobs to third world countries frees up resources for New Zealand to deploy in high value activities while providing employment in less developed countries. Similarly, management can be out sourced to assist with co-ordinating self- managed teams with the wider organisation.
The expected impact would mean lower costs for business leading to high profitability. Since the businesses would make cost savings by managing without managers, the proceeds would be used to motivate teams by paying them more leading to improved quality and even higher productivity.
There would be less absenteeism from work as team members would most likely be more loyal to the team than to a boss representing an organisation.
All these advantages would improve the return on investment by the business owners.
According to an article by Gary Hamel, The Big Idea, Let’s Fire All Managers published in the December 2011 Harvard Business Review, his thoughts relating to free market economy tends to make sense that if markets were left to regulate themselves according to economists, then it may be reasonable that managing people should be eliminated and let workers regulate themselves.
- Clearly identify goals
- Set peformance targets and associated rewards
- Out-source external leadership if needed