Azam Detergent Company has experienced low production rates over the recent past. Stakeholder analysis reports show that the problems are caused by the use of obsolete technology with regular break downs, understaffing as well as poor staff remuneration. Employee turnover rates have worsened the problem to the degree that the company is likely to be closed down. A low production problem has implicated negatively on the company in that it cannot settle its bills as well as paying workers. The stakeholders most affected with the problem are consumers, suppliers, employees, the owner, and the government. The first solution implemented was the hiring of new equipment to aid in production. This was not successful because the workers had downed their tools; hence the technology could not be put to use despite its being paid for. New proposals have been developed by the stakeholders: Purchase of new equipment, an increment in employee remuneration as well as training programs for the staff. All the stakeholders will benefit from the new proposals. Evaluation will be conducted to establish the degree to which the problem has been solved. Volumes of production, net company revenue as well as employee appraisal will be carried out to evaluate the change caused by the new move. In coping up with the organizational changes, the firm will have to develop some strategies to ensure its sustainability: Having internal and external auditors to assess the financial position of the firm, creating technology department to foresee the working machines and repairing them when need arises as well as carrying out employee training programs on regular bases. All the strategies are aimed to ensure the progress of the firm.
Project Proposal for Solving Low Production Problem in Azam Detergent Company
1.1 Purpose of Statement
The low productivity problem facing Azam Detergent Company has negatively impacted on its growth. The proposal explains the mechanisms that are proposed by different stakeholders in solving the problem. Suggestions on dealing with the technology component that has been confirmed to affect the company will be outlined negatively. The paper furthermore discusses the approach that the stakeholders propose to address claims raised by employees concerning their pay. Lastly, proposals will give a detailed proposal by stakeholders on how the understaffing problem will be solved so that the productivity of the company may be restored.
Azam Detergent Company over the recent past has lost its glory in terms of high productivity. The year’s sales volume from the production department report indicates a decline of 25% as compared to that experienced last year. This has affected the company significantly in a number of ways. Firstly, the company lacks enough funds to pay employees salaries and wages. This has caused a multiplier effect since some of the employees have failed to turn up for jobs further lowering production. A notable example is in 2018 with a turnover rate of 63%. Secondly, the company has been unable to pay for electricity, water and maintenance bills. The water company has disconnected its water supply to the company affecting its smooth operation. The power company, on the other hand, has threatened to disconnect its power supply due to the accumulation of debts. Addressing lower productivity problem needs to be immediately done, failure to which the company will close down.
Figure 1.1 Trends in Sales volume of Azam Detergent Company
Figure 1.2 Employer turnover rate
The company noted a decline in productivity in the company in 2015. The cause of the problem was reported to be low pay for employees as well as long working hours. Stakeholders gave various proposals. The management agreed to raise employees’ salary by 12.5% as well as reducing working hours from 10 hours to 12hours. The implementation of proposals saw the company’s production rise in 2016. A drastic change, however, has been seen in the level of production from 2017. From stakeholder analysis, a number of factors have been raised to have caused a decline in production. Firstly, the use of obsolete technology in the production process has been implicated to be the primary cause. Employees in the production department are said to have complained for a while on the breakdown of machines regularly as well as difficulties in their usage as a result of worn out parts. This has caused some of the work being done manually leading to low production as well as poor quality products. Secondly, it was observed that employees lost their morale after their allowances were reduced to cater for the increasing needs of the company. As a result, there was a numerous number of employee turnover. Different stakeholders on solving the problem gave a number of proposals. Firstly, a section of stakeholders agreed that the company should consider hiring an appropriate technology for a while to be used in bringing the production to its proper level after which the company will purchase its equipment. Secondly, it was agreed that employees should work and allow the organization time to strategize so that new salary and wage adjustment should be made from the start of the following next year 2020.
Figure 1.3: Previous proposals for problem solution
The first solutions to the problem were not practical since the company hired a technology but failed to meet employees’ needs. Though one of the proposals was implemented, it did not bear the expected performance. This is because the company spent a significant amount of money paying for the hired equipment, leaving very little for its operations. The poor performance of the company was still witnessed. Stakeholders agreed on different suggestions after carrying out a second analysis. Firstly, a majority of stakeholders agreed that employees should be motivated to enhance their morale in working. The management agreed to implement pay increase, allowances and paid leaves immediately. Secondly, it was reported that hiring of new equipment for the company was cost-effective as compared to the use of hired equipment which was not sustainable yet very costly. It was noticed from the onset when the production went down that the company was understaffed. Most of the employees, therefore, did more than one role in a day leading to exhaustion, poor health and absenteeism the following day. To aid in improved performance, one major proposal was made by the stakeholders. It was agreed that the staffing process should be done where each departmental head is to confirm the inadequacies in terms of employee requirement for adequate filling of the positions. Lastly, the stakeholders in the human resource department proposed for regular training of staff involved in the production process. This will aid in the acquisition of more skills relevant for improved productivity.
1.5 Stakeholder Analysis and Benefits
The effects of a problem within a company affect not just the company owner but also other stakeholders linked to that firm. For instance, the low productivity crisis in Azam Detergent Company affects the owner, employees, managers, suppliers, government, and consumers in a number of ways. Firstly, the owner incurs losses which generally affect the other operations such as payment of bills and other liabilities. The employees firm fails to pay employees due to inadequate funds. This makes them live under miserable conditions as well as an inability to pay their debts. Suppliers are also affected since they lack the market in which to sell their products. This brings a multiplier effect on them since they fail to pay their debts as well as their employees. The government is also greatly affected. The failure of the firm means no generation of revenue in the form of taxes to the government leading to retardation in national development. Lastly, consumers are affected in a number of ways. Firstly, they have no access to quality and adequate detergents making them spend so much on substandard products. Secondly, low production in a firm may lead to disequilibrium in the forces of demand and supply in the economy. A scarcity of detergent products will create high demand and high prices thus setting in inflation that also affects not only consumers but the nation as a whole.
Figure 1.4 Stakeholders affected by the problem
A solution of the company problem will bring a number of benefits to the affected stakeholders. Firstly, employees will significantly benefit in several ways; there will be reduced workload as a result of staffing in the company. This will enable employees to perform activities that promote good health. Increased employee salary will aid in work morale leading to great performance. Training programs for staff development will aid in the acquisition of skills on the part of employees thus increasing their competency. Lastly, reduced workload and working hours will have a great impact on staff’s families. The availability of time will allow adequate interaction of employees with their families hence building family bonds. Secondly, the solution of the problem will generate more revenue to the firm enabling the owner to pay bills as well as salaries. Thirdly, the satisfaction of staff’s needs will create a positive relationship between the owner and the employees thus building an environment of friendship and teamwork that will aid in more progress of the firm. Also, suppliers will be assured of a market for their products thus avoiding losses as well as being in a position to pay their bills. Consumers will have access to adequate products of high quality as a result of the installation of new equipment in the firm. The company will sell its products at stable prices due to reduced forces of demand and supply that come with scarcity thus making consumers save on the extra costs. Lastly, the government will benefit through the generation of revenue from the firm. This will aid in national development. The firm will also employ a number of jobless people as a result of its expansion resulting in a reduction in criminal activities.
1.6 Change of Management Plan
The management of the firm has to utilize various strategies in its operations to aid in the sustainability of the organizational changes. Firstly to enhance the good operation of the firm, there must be a close and regular monitoring of the finance department to ensure that the firm is on a good financial track. This will ensure that there are enough funds at all times to aid in the smooth running of the organizations. To adopt this strategy, there should be both internal and external auditors as well as financial advisors who will be tasked with identifying gaps in financial management and raising the alarm promptly to address the issue. Secondly, the company will start up an employee, and employer dialogue forums to enable the managers to know the challenges faced by staff for corrective action to be taken before the downing of tools by the employees as seen in the past. Thirdly, the firm will purchase a new technology as well as putting mechanisms in place of ensuring its regular mantaianance after break down. This, therefore, means that the management has to expand its departments and have a technology department which shall oversee and address any issue arising from equipment within the company. Lastly, the employee development program should not be a one-day event of solving a problem.It should be done regularly to aid in the acquisition of more skills which will help in the continued growth of the firm. This changes in managing plan call upon the company management to be flexible to changes and open to accommodate new ideas which will not only aid in the company’s growth but also individuals’ progress.
1.7 Evaluating Success
Every solution must have evaluation criteria which will aid in establishing the degree of its effectiveness. Different measures will be used to evaluate the effects of solving the problem. Firstly, the production department will have to establish a trend in production levels after the purchase and installation of the new technology. The figures obtained will be compared with the figure before the arrival of equipment to establish if there is a positive or negative variance in production. Secondly, performance appraisal will be done to evaluate employees’ performance after adjustments in the remuneration. Similarly, the staff performance evaluation will identify the degree to which the employees are incorporating the skills gained in training in their roles. Thirdly, the net income of the firm will be established and compared with the previous years to find out the implications of the new changes in the growth of the firm. One main goal for a firm is to serve the community. This is done through the creation of job opportunities as well as involvement in the installation of community projects (Asad, Haider & Fatima, 2018). The number of people employed by the firm after implementation of the new changes will be established to measure the extent to which the firm supports community development and nation building. Lastly, to measure the quality of the firm’s products, consumer interviews will be done to establish the taste they have on the products. This will help in evaluating the role of new technology and worker skills in the development of acceptable products in the market.
The stakeholders have to make different steps towards the implementation of the proposed solution. Market analysis has to be done to establish the quality and type of equipment that the company will purchase. In doing this, the stakeholders have to consider the cost-effective aspect of the technology as well as its durability. This will enable them to bring in a technology that is affordable and able to serve the firm for long. Also, in implementing the employee motivation aspect, there must be wide consultation on the pay increase margin so that consideration should not be on employee satisfaction but also for the benefit of the firm. The firm has to establish how much increment it can offer while the employees have to establish their expectations so that the two parties can reach asn agreement. Lastly, the HR department has to assess the relevant skills vital in the production process to ensure that employees get the right skills required in the production process.
Asad, M., Haider, S. H., & Fatima, M. (2018). Corporate social responsibility, business ethics, and labor laws: A qualitative study on SMEs in Sialkot. Journal of Legal, Ethical and Regulatory Issues, 21(3), 1-7.