Victoria Heavy Equipment’s most recent organization has been lacking effective communication practices amongst all of its divisions. The company has been suffering from lack of clear goals in measurable terms, for its divisions. The idea of each division functioning as an independent unit, whether it being cost or profit center, is a remarkable beginning. However, clear goals and key measurable need to be set for each center, which in our case have been overlooked. As a result, many of these centers have over spent, resulting in over expenditures, something we can definitely not afford with anticipated slower market.
Brian Walter Jr. had a great vision of not turning into “bureaucratic, quantitatively, grey-suited manager ... ”, yet the alternative was not clearly specified. Currently, Victoria Heavy Equipment Limited (V. H. E. ) with lower sales and disgruntled workers is a troubled organization. Should decline in sales continue, as we expect due to troubled real state economy, V. H. E. will soon enter the crisis zone. Hard goals set by Brian W. Jr. or any new similar goals set by us will utterly be more difficult to achieve if we fall in crisis zone. My intention is not to change the existing structure of V.
H. E, since I do not see any problems arising form greater autonomy given to division managers and ultimately line workers. However, we have to improve (or create in case of non-existent), communications AND a sense of accountability among divisions. Clear communication and agreement on achievable goals for each individual division is key to raise the moral and motivation among workers and managers. For example, V. H. E can not afford an R&D division that designs something to their liking without any participation from marketing and manufacturing divisions.
I am sure that you are all aware that this has occurred at V. H. E on more than one occasion. Goals and functions of our R&D are obviously not clearly defined. New LTM -1000 crane was developed back in 2006 with a tremendous design cost, yet I don’t see a rise for years prior to 2006 or decline post that year in engineering costs (Refer to Exhibit 1- Engineering expense in appendix). This clearly indicates miscommunication between R&D and Finance. In addition, better communication was required at time of design of LTM-1000 between marketing and ultimately our customers to first of all build what our customers wanted.
Rather than creating a monster that was assumed was what our customers would buy. Second, should there existed an effective communication guidelines between finance, marketing and R&D at the time, we possibly could have convinced LTM 1000’s target customer to foot the bill for some of development and prototype costs. I am quite aware that LTM 1000 was on Brian’s Want-List which could not have been disregarded but with better consultation with other departments, it could have turned into a more sellable product rather than a successful crowd-magnet. First step is to set, agree and emphasize on our hard goals as a team.
These goals are not expected to be too different form the ones set by Brian for V. H. E. After that, each division is expected to present their SWOT or a similar analysis for their individual center. Once these tasks have been completed, each individual center manager and I can set and agree on hard goals for that division along with a specific strategy to reach those goals. For example, the goal of reducing waste, including, high level inventory will be on the hard goals list for all profit centers. Profit sharing plan will be re-written to reward only divisions that have met or exceeded their hard goals.
Likewise, non-performing divisions will be given a chance to explain the reason(s) for which they did not meet their set hard goals. However, should the trend continue for these particular divisions, new strategy and possibly tangible targets will be developed as a last change for them to meet their targets. Second step is to develop a clear communication protocol among divisions. Rather than attempting to re-invent the wheel, V. H. E. can take advantage of some existing procedures such as AIAG (Automotive Industry Action Group) procedures and protocol, currently implemented by many OEMs (Original Equipment Manufacturer).
These protocols will help V. H. E. gain better communication practices among manufacturing, R&D, finance, and other divisions. In order to provide workers with a means for more effective communication, third party conducted employee opinion surveys must also be used to empower workers to voice their concerns. These surveys must also result in potential soft goals for division managers to be held accountable for. Putting my fourteen years of managerial experiences into work, I am sure I can turn Victoria Heavy Equipment Limited around to achieve hard goals set by Brian, and turn this company around to operate in desired quadrant zone again.