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Tuesday, July 20, 2021

Motivation Theories - Maslow’s Hierarchy of Needs Theory Herzberg’s Two-Factor Theory Expectancy theory Equity Theory Goal-setting theory- Motivational Factors Influencing The Productivity Role Of Motivation In Higher Productivity Motivational Strategies To Encourage Productivity

 Introduction to Motivation

Motivation Defined

Motivational Theories & Research

Maslow’s Hierarchy of Needs Theory
Herzberg’s Two-Factor Theory
Expectancy theory
Equity Theory
Goal-setting theory

Motivational Factors Influencing The Productivity

Role Of Motivation In Higher Productivity

Motivational Strategies To Encourage Productivity

Introduction to Motivation

At one time, employees were considered just another input into the production of goods and services. What perhaps changed this way of thinking about employees was research, referred to as the Hawthorne Studies, conducted by Elton Mayo from 1924 to 1932 (Dickson, 1973). This study found employees are not motivated solely by money and employee behavior is linked to their attitudes (Dickson, 1973). The Hawthorne Studies began the human relations approach to management, whereby the needs and motivation of employees become the primary focus of managers (Bedeian, 1993).

Motivation involves a constellation of beliefs, perceptions, values, interests, and actions that are all closely related. As a result, various approaches to motivation can focus on cognitive behaviors (such as monitoring and strategy use), non-cognitive aspects (such as perceptions, beliefs, and attitudes), or both. For example, Gottfried (1990) defines academic motivation as “enjoyment of school learning characterized by a mastery orientation; curiosity; persistence; task-endogeny; and the learning of challenging, difficult, and novel tasks” (p. 525). On the other hand, Turner (1995) considers motivation to be synonymous with cognitive engagement, which he defines as “voluntary uses of high-level self-regulated learning strategies, such as paying attention, connection, planning, and monitoring” (p. 413).

Motivation Defined

Many contemporary authors have also defined the concept of motivation. Motivation has been defined as: the psychological process that gives behavior purpose and direction (Kreitner, 1995); a predisposition to behave in a purposive manner to achieve specific, unmet needs (Buford, Bedeian, & Lindner, 1995); an internal drive to satisfy an unsatisfied need (Higgins, 1994); and the will to achieve (Bedeian, 1993). For this paper, motivation is operationally defined as the inner force that drives individuals to accomplish personal and organizational goals.

Motivation refers to “the reasons underlying behavior” (Guay et al., 2010, p. 712). Paraphrasing Gredler, Broussard and Garrison (2004) broadly define motivation as “the attribute that moves us to do or not to do something” (p. 106). Intrinsic motivation is motivation that is animated by personal enjoyment, interest, or pleasure. As Deci et al. (1999) observe, “intrinsic motivation energizes and sustains activities through the spontaneous satisfactions inherent in effective volitional action. It is manifest in behaviors such as play, exploration, and challenge seeking that people often do for external rewards” (p. 658). Researchers often contrast intrinsic motivation with extrinsic motivation, which is motivation governed by reinforcement contingencies. Traditionally, educators consider intrinsic motivation to be more desirable and to result in better learning outcomes than extrinsic motivation (Deci et al., 1999).

Motivational Theories & Research

Maslow’s Hierarchy of Needs Theory

It is one of the most well known motivational theories. Abraham Maslow’s theory identifies five levels of hierarchical needs that every individual attempts to accomplish or conquer throughout one’s life. The needs start with the physiological (hunger, thirst, shelter) and then move upward in a pyramid shape through safety, social, and esteem needs, to the ultimate need for self-actualization. This final need for self-actualization is defined as one’s desire and striving towards maximum personal potential. The pyramid shape to the theory is intended to show that some needs are more important that others and must be satisfied before the other needs can serve as motivators (Schermerhorn, 2003). Maslow argued that lower level needs had to be satisfied before the next higher level need would motivate employees. “According to Maslow, once a lower-level need has been largely satisfied, its impact on behavior diminishes” (Hunsaker, 2005). One of the difficulties with using this theory to analyze organizations is that although it may appear very easy to implement, it is difficult to relate this distinct five-level hierarchy within an organization. Many times when this theory has been used, the results show that the needs that contribute to motivation more heavily vary according to the level of the individual, the size of the organization, and even the geographic location of the company.

McClelland’s Need Theory

It explores the idea that there are three major “needs” that one will acquire over their lifetime as a result of the experiences in their careers or in their own personal lives (Schermerhorn, 2003).  McClelland believed that in order to understand human behavior and how an individual can be motivated, you must first understand their needs and inclinations. The Need for Achievement encompasses the desire to do better, to solve problems, and to master complex tasks. The Need for Affiliation is the desire for friendly and warm relations with others. These are often those passive individuals that try to avoid conflict at all times, even when it might be necessary to fulfill a task. Finally, the Need for Power is the desire to control others and influence their behavior. This is the need that carried a fairly negative connotation; however it has been proven that successful, well-respected managers often lean towards those power need tendencies. Managers who possess the Need for Power tendencies in combination with the Need for Achievement can also be very effective managers. A manager with both characteristics would not only try to oversee the situation or environment, but also is continually looking for ways to improve the current situation and is not afraid to take on difficult projects or leadership roles. This theory may be very useful in an organization as a predictor of future managers or project leaders; however it limits the results to only three categories. In reality, all three of the needs established in this theory define an individual’s personality, which need tends to show itself in certain situations could be used as the predictor. Managers should use this theory to identify the needs within themselves, their coworkers and subordinates to create work environments that are responsive to those need characteristics (Schermerhorn, 2003).

Herzberg’s Two-Factor Theory

This theory divides motivation and job satisfaction into two groups of factors known as the motivation factors and hygiene factors. According to Frederick Herzberg, “the motivating factors are the six ‘job content’ factors that include achievement, recognition, work itself, responsibility, advancement, and possibility of growth. Hygiene factors are the ‘job context’ factors, which include company policy, supervision, relationship with supervision, work conditions, relationship with peers, salary, personal life, relationship with subordinates, status, and job security” (Ruthankoon, 2003). Basically the theory differentiates the factors between intrinsic motivators and extrinsic motivators. The intrinsic motivators, known as the job content factors, define things that the people actually do in their work; their responsibility and achievements. These factors are the ones that can contribute a great deal to the level of job satisfaction an employee feels at work. The job context factors, on the other hand, are the extrinsic factors that someone as an employee does not have much control over; they relate more to the environment in which people work than to the nature of the work itself (Schermerhorn, 2003). Herzberg identifies these factors as the sources for job dissatisfaction. “Hertzberg reasoned that because the factors causing satisfaction are different from those causing dissatisfaction, the two feelings cannot simply be treated as opposites of one another. The opposite of satisfaction is not dissatisfaction, but rather, no satisfaction. Similarly, the opposite of dissatisfaction is no dissatisfaction. While at first glance this distinction between the two opposites may sound like a play on words, Herzberg argued that there are two distinct human needs portrayed” (“Herzberg’s Motivation-Hygiene Theory,” 2002). Therefore, the basic premise of the Two-Factor Theory is that if an employer or manager is trying to increase job satisfaction and ultimately job performance for an employee or coworker, they need to address those factors that affect one’s job satisfaction. The most direct approach is to work on the intrinsic, job content factors. Giving the employee encouragement and recognition helps them to feel more valued  within the company, as well as giving a sense of achievement and responsibility. Herzberg says, that “the only way to motivate the employee is to give him [her] challenging work in which he [she] can assume responsibility” (Leach, 2000). If the employee does not feel some responsibility associated with a certain task or department, he/she will not feel like their work is worthwhile. Also “people must believe that they are capable of attaining a goal before they will commit serious energy [or motivation] to it” (Hunsaker, 2005). Therefore, it is important to include your employees in the decision making and at times the job assignment or delegation. This will help the employee to feel more responsibility and in turn a higher level of motivation. On the other hand, employers need to consider the level of job dissatisfaction among their employees as well. To directly approach the issue of dissatisfaction in the work place and to try and revitalize the environment a bit, employers need to focus on the hygiene or job context factors. For example if an employer brings in an ergonomic expert to alter the workstations in some way or change up some of the work teams, they might decide to turn the individual’s desk to face a certain direction or change something as little as the height of the employees’ chair, or position or style of the keyboard and computer monitor. In the two-factor theory, job satisfaction and job dissatisfaction are totally separate dimensions. Therefore, when trying to improve a factor that effects job dissatisfaction, an extrinsic factor, such as the working conditions, this will not alter the employees perception of whether they are satisfied with their work; it will only prevent them from being dissatisfied (Schermerhorn, 2003). 

The following is a brief explanation of the factors and how they might apply to the work environment. All of the factors, both motivation and hygiene, can have positive and negative attributes; however, both will have an effect on the employee satisfaction or dissatisfaction none the less. The following is a glance at each of the motivation factors according to Herzberg.

Achievement

An example of positive achievement might be if an employee completes a task or project before the deadline and receives high reviews on the result, the satisfaction the employee feels would increase. However, if that same individual is unable to finish the project in time, or feels rushed and is unable to do the job well, the satisfaction level may decrease.

Recognition

When the employee receives the acknowledgement they deserve for a job well done, the satisfaction will increase. If the employees work is overlooked or criticized it will have the opposite effect.

Work itself

This involves the employees’ perception of whether the work is too difficult or challenging, too easy, boring or interesting.

Responsibility

This involves the degree of freedom an employee has to make their own decisions and implement their own ideas. The more liberty to take on that responsibility 9 the more inclined the employee may be to work harder on the project, and be more satisfied with the result.

Advancement

This refers to the expected or unexpected possibility of promotion. An example of negative advancement would be if an employee did not receive an expected promotion or demotion.

Possibility of Growth

This motivation factor includes the chance one might have for advancement within the company. This could also include the opportunity to learn a new skill or trade. When the possibility/opportunity for growth is lacking or if the employee has reached the peak or glass ceiling, as it is sometimes referred to, this could have a negative effect on the satisfaction the employee feels with their job and position.

The following are the hygiene factors, which work in the same way with positive or negative attributes; however these factors can only have an effect on the dissatisfaction one feels.

Company Policy or Administration

An employee’s perception of whether the policies in place are good or bad or fair or not, changes the level of dissatisfaction that employee will feel.

Personal or Working Relationships

This is those relationships one engages in with their supervisors, peers, and subordinates. How someone feels about the interaction and discussions that take place within the work environment can also effect dissatisfaction.

Working conditions

This includes the physical surroundings that one works within, such as the facilities or location.

Salary

This factor is fairly simple, the increase or decrease of wage or salary effects the dissatisfaction within a company a great deal.

Personal Life

Although people try to separate the two, work and personal life, it is inevitable that one will affect the other. Feeling a Job Security. This is a pretty significant factor. The sense of job security within a position or organization as a whole relates to the dissatisfaction as well. (Ruthankoon, 2003)

Expectancy theory

According to expectancy theory, employees choose to invest effort in courses of action by weighing their relative utilities—i.e., their probabilities of achieving desired outcomes (Vroom, 1964). Effort is a function of three beliefs:

Expectancy (effort will lead to performance),

Instrumentality (performance will lead to outcomes), and

Valence (these outcomes are important or valued).

These beliefs are thought to interactively influence effort, such that if any one of the beliefs is missing, the course of action will not be selected (Porter & Lawler, 1968). Without expectancy beliefs, employees feel that effort is futile; without instrumentality and valence beliefs, employees question whether

performance is worth the effort. Critically, expectancy theory is designed to account for the within-person decisions that employees make about whether, where, and how to invest their time and energy, rather than for differences in effort between employees. Expectancy theory has been tested in many studies, but is more often used as an organizing framework for generating and testing context-specific hypotheses. For example, researchers have applied expectancy theory to guide the development of models to explain variations in DUI arrests among police officers (Mastrofski, Ritti, & Snipes, 1994), efforts by middle managers to champion issues for senior executives to pursue (Ashford, Rothbard, Piderit, & Dutton, 1998), home runs hit by major league baseball players (Harder, 1991), and strategic decisions in competitive markets (Chen & Miller, 1994). In a meta-analysis of 77 studies, Van Eerde and Thierry (1996) found that expectancy, instrumentality, and valence beliefs were better predictors of psychological indicators of motivation (intentions and preferences) than of behavioral indicators (performance, effort, and choices), which may be an artifact of common method and source biases. Supporting one fundamental tenet of the theory, they found that expectancy, instrumentality, and valence beliefs were more accurate predictors of within-person than between-person differences in criteria. However, they found that the multiplicative model explained little variance over and above the additive model. This may be an artifact of the low reliability of multiplicative measures. Moreover, the meta-analysis provided little information about causality, as most studies have been correlational rather than experimental. Nevertheless, the overall results suggest that expectancy, instrumentality, and valence beliefs do take a valuable step toward explaining variance in. Research on expectancy theory has generated several controversies and unanswered questions. In light of evidence that expectancy, instrumentality, and valence beliefs leave considerable variance in motivation unexplained (Van Eerde & Thierry, 1996), it is critical to understand other forces that influence motivation. The theory of planned behavior (Ajzen, 1991) takes a productive step in this direction. According to this theory, planned actions are directly caused by intentions as micro-mediators of the belief-behavior relationship. Intentions are in turn a function of perceived behavioral control over the behavior, attitudes toward the behavior, and subjective norms about the behavior. Comparing the planned behavior and expectancy theories reveals both similarities and useful distinctions. Perceived behavioral control, which is akin to self-efficacy (Bandura, 1977) , corresponds to expectancy beliefs, as both describe employees’ judgments about whether they are capable of performing if they expend effort. Attitudes, which capture the extent to which an employee evaluates the behavior favorably, appear to overlap with both instrumentality and valence beliefs, which—in tandem—connote that the behavior will lead to favorable outcomes. Moving beyond expectancy theory, the theory of planned behavior adds subjective norms, or social expectations and pressure to engage in the behavior. The underlying premise is that employees derive utility not only from personal outcomes, but also from social rewards that convey approval, respect, and community and social punishments that convey disapproval, disrespect, and alienation. In a meta-analysis of 185 studies, Armitage and Conner (2001) found that perceived behavioral control, attitudes, subjective norms, and intentions combined to explain 27% of the variance in behaviors (31% when self-reported and 21% when objectively measured or observer-rated) and 39% of the variance in intentions. Both subjective norms and intentions explained unique variance in behaviors after accounting for perceived behavioral control and attitudes, which highlights the potential value of including these two psychological constructs to expand the predictive validity of expectancy theory. A second limitation of expectancy theory is that it is often viewed as overly calculative (Ashford et al., 1998; Mitchell & Daniels, 2003; Staw, 1984). Although the theory is reasonably effective in predicting motivation and behavior, it creates a caricature of how employees actually make decisions and experience motivation. With the possible exceptions of mathematicians, engineers, financial analysts, and economists, rarely have we seen an employee sit down and calculate the probabilities of effort leading to performance and performance leading to outcomes and the utility of these outcomes. It would be even more uncommon for an employee to perform these calculations for multiple possible courses of action. With this limitation in mind, scholars have begun to incorporate “hot” affective components into expectancy theory (Seo, Barrett, & Bartunek, 2004). For example, Erez and Isen (2002) demonstrated that positive affect can increase expectancy, instrumentality, and valence beliefs, but only under task conditions that are supportive of these beliefs (e.g., working on a task in which performance is based on effort rather than chance). This research takes a step toward capturing the real-time, affect-laden processes through which expectancy, instrumentality, and valence judgments are made (see also Seo et al., 2004). Expectancy theory has also been criticized for failing to specify the nature and sources of variations in employees’ beliefs and judgments. Employees can attach valence not only to outcomes of performance, but also to effort and performance as ends in and of themselves. For example, Eisenberger’s (1992) theory of learned industriousness explains how, when employees are rewarded for effort over time, hard work can take on secondary reward properties, such that employees naturally enjoy the very experiencing of expending effort. In addition, employees tend to view performance as a reward in and of itself when they are growth-oriented (Hackman & Oldham, 1976), conscientious (Grant, 2008b), and achievement-motivated (McClelland, 1961), suggesting that they will place valence on performance even when there are no external outcomes attached to it. Finally, expectancy theory falls short of explaining how employees update and change their beliefs over time (Mitchell & Biglan, 1971). For example, valence beliefs can change as employees realize that their actual satisfaction with an outcome is different (e.g., lower or higher) than the satisfaction that they anticipated (e.g., Wilson & Gilbert, 2005). As an endogenous process theory (Katzell & Thompson, 1990), the focus has been on identifying the key psychological forces that guide decisions about effort and understanding their consequences, rather than specifying their causes or fluctuations. Despite these limitations, expectancy theory is appealing in its theoretical parsimony and its applications to diagnosing and resolving motivational problems in organizations, and thus remains a popular and widely-used theory.

Equity Theory

 Equity theory (Adams, 1963, 1965) takes a step toward placing motivation more squarely in a social context. The central assumption of equity theory is that employees are motivated when their inputs (e.g., effort, knowledge, skill, loyalty) are matched by outcomes (e.g., pay, bonuses, benefits, recognition), which creates a sense of equity or fairness. When outcomes do not match inputs, the resulting perceptions of inequity lead to distress, which motivates employees to take action to reduce it. When employees feel under-rewarded, they may restore perceived equity by reducing their inputs (slacking off), attempting to reduce others’ inputs (convincing coworkers to do less work, or sabotaging their efforts to be productive), seeking to increase their outcomes (asking for a raise or vacation time), or aiming to decrease coworkers’ outcomes (asking them to take a pay cut or lobbying the boss to standardize salaries). When employees feel over-rewarded, they may restore perceived equity by increasing their inputs (working harder) or reducing their outcomes (requesting a pay cut or redistributing their salaries to coworkers). How do employees make judgments of equity? To evaluate input-outcome ratios, employees can make a range of comparisons (Adams, 1963, 1965). One set of comparisons is between outcomes and inputs such as effort (the time and energy that I invested), ability (my knowledge, skills, and talents), seniority (my tenure and loyalty). Another set of comparisons is of the input-outcome ratios to other input-outcome ratios, including my own past input-outcome ratios (what I have received elsewhere or before, relative to my contributions) and others’ input outcome ratios (are mine appropriate in light of the ratios of similar others?). This last comparison, the social comparison, is often viewed as the central theoretical insight offered by equity theory (Weick, 1966): even when employees receive outcomes that match their inputs, their motivation can suffer when they perceive others as maintaining more favorable input outcome ratios. For example, studies have shown that higher pay dispersion—the disparity in compensation between the highest-paid and lowest-paid employees in an organization—predicts greater manager and employee turnover (Bloom & Michel, 2002), lower job satisfaction, productivity, and collaboration (Pfeiffer & Langton, 1993), and in major league baseball teams, fewer runs scored, more runs given up by pitchers, and more losses (Bloom, 1999). Equity assumes that both under-rewarding employees and over-rewarding employees can be detrimental to motivation. Although research has consistently shown negative motivational and behavioral effects of under-reward inequity, evidence reveals mixed results about the consequences of over-reward inequity: some employees appear to decrease their motivation, others increase it, and still others show no significant changes (Ambrose & Kulik, 1999). One approach to resolving these conflicting findings has involved understanding individual differences in equity sensitivity. Huseman, Hatfield, and Miles (1987) proposed that employees can be classified into one of three categories of equity preferences: benevolent (preferring a lower outcome/input ratio than comparison others), equity sensitive (preferring an equal outcome/input ratio to comparison others), and entitled (preferring a higher outcome/input ratio than comparison others). Accordingly, under-reward inequity leads to higher motivation among benevolent employees than equity sensitive and entitled employees (Miles, Hatfield, &  Huseman, 1989). While benevolent employees are willing to work hard even when they receive lower outcomes than others, equity sensitive and entitled employees find this distressing. A key controversy in work motivation research concerns competing predictions between equity and expectancy theories in situations characterized by the combination of perceived under-reward inequity (Harder, 1991). According to equity theory, when instrumentality is high, employees who feel under-rewarded will be distressed by perceived inequity, and may reduce their effort in order to create a more appropriate balance between their inputs and outcomes. On the other hand, expectancy theory predicts that when instrumentality is high, employees who feel under-rewarded will be motivated to achieve higher performance, as they are confident that this will result in the rewards they feel they deserve. Harder (1991) provided a theoretical and empirical resolution of this controversy in a study of major league baseball free agents. He found that under low instrumentality, negative performance effects of inequity were visible, but under high instrumentality, individuals maintained their performance: “individuals faced with inequitable under reward will choose the avenue of decreased performance to the extent that it does not affect future rewards. If decreasing performance will adversely affect future rewards, then alternative avenues for restoring equity will be undertaken” (Harder, 1991, p. 463-464). Another issue facing equity theory concerns how organizations and employees handle inconsistencies in equity that emerge between different types of comparisons. For example, when pay dispersion is high, star performers making self-comparisons perceive high equity, but average and low performers making social comparisons may perceive low equity. In general, research suggests that in some circumstances, the costs of perceived inequity among the latter group can outweigh the benefits of perceived equity among the former group (Bloom, 1999). However, this research has yet to identify conditions under which organizations can create Work Motivation 10 favorable perceptions of equity for different groups of employees. One practical solution, pay secrecy, appears to be a mixed bag, as employees often view it as a signal of inequity and resist by going out of their way to publicize their salaries (Colella, Paetzold, Zardkoohi, & Wesson, 2007).

Goal-setting theory

One criticism of both expectancy and equity theories is that they focus primarily on psychological processes involved in work motivation, providing little explicit theory and guidance for explaining the role of contextual forces (Katzell & Thompson, 1990). Goal-setting theory overcomes these limitations by focusing on the motivational effects of goals, or targets for action. Extensive research has shown that difficult, specific goals motivate high performance by focusing attention, increasing effort and persistence, and encouraging the development of novel task strategies (Locke & Latham, 1990). For instance, classic studies showed that setting specific, difficult goals—relative to “do your best,” easy, or no goals—for 36 truck drivers transporting logs led them to increase from 60% to 90% of legal allowable weight, saving the company approximately $250,000 in less than a year (for a review, see Locke & Latham, 2002). In another study, Latham and Saari (1982) gave 39 truck drivers the goal of enhancing the number of daily trips that they took to the mill, which yielded 15% average daily increases in trips, and saved the company approximately $2.7 million in less than four months. Difficult, specific goals are most likely to produce these effects when employees are committed to them, when they receive feedback, and when tasks are simple rather than complex. Without commitment, employees question whether it is worthwhile to work toward difficult goals. Without feedback, employees cannot gauge their progress and adjust effort, persistence, and task strategies accordingly. When tasks are simple, effort is a key determinant of performance, but when tasks are complex, ability and task strategies become more influential, reducing the performance effects of goal-setting as a motivational technique (Locke & Latham, 2002). At first glance, the principle of difficult goals motivating higher performance than easy goals appears to conflict with expectancy theory. From an expectancy theory standpoint, easy goals yield greater effort-to-performance expectancy beliefs, and thus greater motivation and performance, than difficult goals. Researchers have resolved this tension by showing that when goal difficulty is held constant, higher expectancy beliefs are associated with higher performance, but when goal difficulty varies, more difficult goals are linked with higher performance, as the attention, effort, persistence, and task strategy benefits of difficult goals appear to outweigh the costs of lower expectancy beliefs (Locke, Motowidlo, & Bobko, 1986). Furthermore, expectancy beliefs moderate the effects of goal difficulty on performance, such that setting difficult goals only motivates employees to take action if they believe such action has the potential to achieve the goals (Locke & Latham, 2002). As goal-setting theory gained prominence, scholars began to raise concerns about managers using goals as manipulative tools, and expressed growing interest in understanding the motivational effects of goals that were self-set by employees. This yielded a major controversy emerged about whether participation in goal-setting increases motivation and performance. Holding goal difficulty constant, studies by Latham and colleagues showed null effects of participation, whereas studies by Erez and colleagues identified significant benefits. The authors collaborated, with Locke as a mediator (not a moderator), to jointly design experiments to resolve the dispute. They discovered that the effects of participation in goal-setting depend on goal commitment. When the purpose of the goals is clear, participation offers little benefit, but when the purpose is unclear, allowing employees to participate serves the function of increasing goal commitment, and thereby motivates higher performance (Latham, Erez, & Locke, 1988). Subsequent studies suggested that participation may achieve these benefits not only through motivational mechanisms, but also through cognitive mechanisms of enabling employees to share information about task strategies and building self-efficacy (Locke & Latham, 2002). Moreover, employees who have high self-efficacy with respect to assigned goals tend to set higher goals, experience greater goal commitment, choose better task strategies, and maintain goal pursuit in the face of negative feedback (Locke & Latham, 2002). Of course, if employees’ goals are not aligned with organizational goals, goal-setting can reduce rather than increase performance (Locke & Latham, 2002). This raises important ethical issues, as employees can take shortcuts to achieve goals that violate important moral and legal standards. For example, Schweitzer, Ordoñez, and Douma (2004) conducted a laboratory experiment showing that when participants had unmet goals, they were more likely to cheat by overstating their productivity than when they were simply asked to do their best. These effects were observed for goals with and without monetary incentives, and were particularly pronounced when participants narrowly missed goal accomplishment (Schweitzer et al., 2004). A heated debate has ensued about whether goal-setting theory adequately addresses and accounts for these and other risks of goal-setting, such as tunnel vision, stress, reduced learning and intrinsic motivation, and excessive risk-taking and competition (Ordoñez, Schweitzer, Galinsky, & Bazerman, 2009a, 2009b; Latham & Locke, 2009; Locke & Latham, 2009). We are sympathetic to the arguments of both sides. On one hand, goal-setting theorists have acknowledged many of these risks, and demonstrating that goals can increase unethical behavior is consistent with a premise of goal-setting theory that when employees are committed to goals, they will be motivated to discover and create task strategies for achieving them (Locke & Latham, 2002). On the other hand, although much is known about the motivation and performance effects of goalsetting, substantially less theory and research has addressed the conditions under which goals are more versus less likely to encourage unethical behavior and other unintended consequences (e.g., Barsky, 2008). This represents an important direction for future research: scholars should systematically build and test theories about the factors that amplify and mitigate the negative effects of goal-setting.

MOTIVATIONAL FACTORSINFLUENCING THE PRODUCTIVITY

 1. Intrinsic/Extrinsic Motivation

 Recently reported a study where intrinsic motivation strengthened the relationship between prosocial motivation and employee outcomes such as persistence, productivity and performance. Grant claims that employees experience prosocial motivation as more autonomous when intrinsic motivation is high because intrinsically motivated employees feel that performing well is beneficial to their own self-selected goals, as they enjoy their work and value the outcome of helping others. Drawing on concepts from research on prosocial personality, prosocial motivation should be pleasure based rather than pressure-based, because employees feel volition, autonomy and free choice in their efforts to benefit others by way of in-role and extra-role work performance when prosocial motivation is accompanied by intrinsic motivation. When intrinsic motivation is low, however, employees will experience prosocial motivation as more controlled because they do not enjoy their work or benefiting others through their work. Then, prosocial motivation will be better characterised as pressure-based and involving ought representations, and possibly result in stress and role overload and other psychological costs that may impede or diminish any positive effects on work performance.

Extrinsic motivation is also important in performance of workers. Extrinsic motivation like pay, wages, bonus and other incentives play a significant role in productivity of workers.

2.Cognition

Cognitive theories of motivation, on the other hand, suggest that our experiences generate internal cognitions (such as desires and beliefs). These cognitions, in turn, determine current performance (e.g., Clark, 1998; Ford, 1992; Maslow, 1954; Vroom, 1964). However, the question arises: Where do cognitions come from? They are the results of past interactions with our environment. For these cognitions to be useful, they must relate to the person’s environment. We call people whose cognitions are not related to their environment, maladjusted, neurotic, or schizophrenic. We learn from our past experiences that we can successfully perform in some environments and not so successful in others. Behavior analysis postulates that the ultimate sources of our behavior, including verbal statements such as beliefs, wishes, or desires, can ultimately be traced to the consequences of our behavior in (past and) current environments. Cognitions are nothing more than our ability to describe particular reinforcement contingencies of our own behavior based on our own past experiences (Mawhinney & Mawhinney, 1982).

3.Environment

 Recent models of work motivation are addressing the role of the environment as one determinant of behavior. For example, Keller (1999) performance factors model includes antecedents and consequences as influences on performance. Locke and Latham’s (1990) goal setting theory centers on goals as antecedents and feedback as consequences of performance. This focus on empirical events makes goal setting theory one of the more practical cognitive theories of motivation that exists today. In summary, conceptualizing motivation as an internal construct places the causes of behavior inside the person. The environment provides the backdrop against which motivational mechanisms and processes determine appropriate courses of action. These internal events are difficult to observe and measure which can lead to a number of independent models of the causes of behavior. Furthermore, when behavior or performance does not meet societal or work standards, we tend to assume that something is wrong with the person, rather than looking for deficits in the person’s environment. Behavior analysis attempts to explain behavior and performance by understanding the context in which it occurs.

Role of Motivation in Higher Productivity

It is a truism that employees are an organization’s most valuable assets. This highlights the importance of understanding the theory and application of motivation to manage human resources (Amar, 2004). One then wonders what the basic prerequisites of workers’ productivity are. Although this question cannot be answered with a definite statement, but among other factors, motivation is important for enhancing level of job commitment of workers, which invariably leads to a higher productivity of the workers. It is then necessary for motivation of the workers in organization to be enhanced in order to increase productivity. Productivity literarily means the rate of power to produce, but productivity from the management or economic point of view is the ratio of what is produced to what is required to produce it. Usually, this ratio is in the form of an average; expressing the total output of some category of goods divided by the total input of, say labour or raw material. In principle, any input can be used as the denominator of the productivity ratio. One can speak of the productivity of land, labour, capital or sub-categories of any of these factors of production. Simply put, productivity is the act of producing or bringing into being commodities of great value or adding to the wealth of the world. It can be used to measure the index of growth, efficiency, economic standard etc. On the other hand, motivation is a word that is rather cumbersome to define in a meaningful manner. Adams and Jacobson (1964) suggest that motivation deals with all the conditions that are responsible for variation in the intensity, quality and direction of behaviour. From an organization point of view, motivation deals with everything that a manager knows or can use to influence the direction and rate of individual’s behaviour towards commitment. An overwhelming amount of energy is expended in trying to get people to do what we want them to do. We all have a task to motivate ourselves to do what we think we should do. It is widely believed that when a worker is highly motivated, this goes a long way in improving organizational productivity, effectiveness and efficiency. Against this background it is necessary to look for a way through which the morale of workers can be improved which will at the end, enhance job commitment with an improvement on the standard of living of people, and increase in wealth of individuals and development of the society. This study is therefore designed to find out the link between the extent to which various motivation strategies encourages the workers to improve their job commitment and increase their productive capacity. The relationship between motivation and productivity is more substantial than simply a psychological connection.

(A) Gender Differences

It is found in research that women were mainly motivated by other factors in the workplace not by job role itself and had fewer primary needs met at work. Women were also more dissatisfied in their job than men.

(B) Age Differences

The research indicated that the older generation was more productive than their younger colleagues. However, research in other fields has suggested that research productivity declines with age (Over, 1982; Over, 1988), and that there is a negative association between age and scientific productivity and creativity (Cole, 1979).

(C) Caring Responsibilities

It is investigated in that those with no dependants spent more hours on work, and consequently had higher counts than their colleagues with caring responsibilities. Those with dependants were far less interested in work for its own sake, had less satisfaction from working as output was less important and felt less need of work in order to succeed.

(D) Hours Spent on Work:

The results of researches clearly indicate that those that spent more hours on work were mostly those that were motivated by their job role, and had greater job satisfaction than those spending less time on work (either because they were not motivated by their job role or because their job role did not permit it).

(E) Sources of Motivation

It is indicated in research that the majority of workers are primarily motivated by their job role rather than workplace or extra workplace factors. Interestingly, those that were motivated by factors external to workplace had lower job satisfaction. Perhaps not surprisingly, those that were primarily motivated by the job role had a higher output than those with other sources of motivation. The research also showed that having one’s primary needs met at work was key to job satisfaction and the higher the job satisfaction level, the higher the output.

MOTIVATIONAL STRATEGIESTO ENCOURAGE PRODUCTIVITY

Pay-for-performance incentives are often utilized in the private sector to encourage competition among and within team, but such a model may not be directly applicable to the public sector, as resources are often tighter, and money may not be the primary source of motivation for those with an ethos of public service. Research suggests that individuals are motivated to perform well when the work is meaningful and individuals believe they have responsibility for the outcomes of their assigned tasks.  Following  suggestions may help to improve productivity among workers.

1.Promote Challenges and Accomplishments

Specific and challenging goals can lead to higher levels of performance, productivity, and creativity which in turn are linked with an overall stronger commitment to the organization (Perry, Mesch, & Paarlberg, 2006). We propose developing challenging goals and timelines together with employees. By setting goals, employees obtain a clear strategy for their own professional development, which creates greater satisfaction and motivation (Ambrose & Kulik, 1999). Goals should be challenging but also attainable. Complex and abstract goals may lead to decreased work performance and negatively impact employee morale. Accomplishing goals that challenge employee creativity and problem-solving skills can improve performance, enhance employee self confidence, and improve job satisfaction which can outweigh a one-time monetary award (Perry, Mesch, & Paarlberg, 2006). Goal setting should be followed by regular and thorough feedback given by supervisors on employee’s goal achievements.

2.Create Organizational Learning Opportunities

Goal setting should be challenging and achievable, goals can also promote learning opportunities. Organizations can integrate learning opportunities through setting goals that allow employees to engage in problem solving and knowledge acquisition. We have found that merit pay and pay-for performance systems yield little positive results on employee performance or learning opportunities, yet a system of progressively giving employees more complex tasks can stimulate employee learning and consistently improve employee performance. Organizational learning opportunities can also challenge an employee to think more expansively about their own personal goals (Perry, Mesch, & Paarlberg, 2006).

3.Utilize Group Incentives as Well as Individual Incentives

 Organizational learning and employee personal growth are impacted by the incentives offered in the work environment. It is recommended, implementing a variety of awards such as team awards, individual recognition based on extraordinary performance, and rewards for all employees for their achieved goals. In order to strengthen teamwork, praise employees for performance that benefits the team. Awarding only a few people with rewards might be counterproductive. According to Bob Behn, some hard working employees might feel treated unfairly and lose their work spirit or develop resentments to other employees and the team (Behn, 2000).

4.Rethink Job Design

Incentives are just one method used to promote motivation in the work environment, another method is job design. It is advised, implementing a job design in an organization in which employees rotate job positions (if possible), gain more responsibility over their work and resources, and engage in trainings and organizational learning opportunities. Research has shown that job design is a central element in motivation. Employees work better if they are involved in the organizations decision-making process, and if they have control over their own professional development (Ambrose & Kulik, 1999). Jobs designed with a sense of challenge and task significance can facilitate a sense of meaningfulness, leading to better work performance and personal growth in the work setting (Perry, Mesch, & Paarlberg, 2006).

5.Use Positive Reinforcement

There is little research showing a significant relationship between merit-pay and performance, yet motivating factors such as job design and positive reinforcement has improved employee performance (Perry, Mesch, & Paarlberg, 2006). It is strongly suggested, using positive reinforcement as a key tool for motivation. The latest research about motivation in the public sector has shown that traditional approaches, such as incentive pay systems, do not lead to more motivation or better performance on the job.

6.Promote a Healthy Work Environment:

 Organizational practices that motivate employees and improve performance may be ineffective if little attention is paid to the working environment. It is recommend, eliminating dissatisfactory work conditions. Create an environment which your employees feel is fair and safe. Install motivators such as acknowledgment, responsibility, and learning opportunity to improve the employees’ performance. There are two elements, crucial for motivated workers: the absence of dissatisfaction about the work environment and salary, which creates a neutral attitude towards work, followed by motivators to generate extrinsic and intrinsic motivation. Contingent upon above suggestions, success requires a comprehensive strategy implemented thoughtfully. By working together, it can build a highly motivated and empowered team of talented, top performing professionals.

References:

Dickson, W. J. (1973). Hawthorne experiments. In C. Heyel (ed.), The encyclopedia of management, 2nd ed. (pp. 298-302). New York: Van Nostrand Reinhold.

Kovach, K. A. (1987). What motivates employees? Workers and supervisors give different answers. Business Horizons, 30. 58-65.

Kreitner, R. (1995). Management (6th ed.). Boston: Houghton Mifflin Company.

Vroom, V. H. (1964). Work and motivation. New York: Wiley.

Maslow, A. H. (1943). A theory of human motivation. Psychological Review, July 1943. 370-396.

Skinner, B. F. (1953). Science and Human Behavior. New York: Free Press.

Ball, Dr. J. (2003). Understanding Herzberg’s Motivation Theory. Retrieved 20 February 2005. http://www.accaglobal.com/publications/studentaccountant/1010721

Schermerhorn, J.R., Hunt, J.G., & Osborn, R.N. (2003). Organizational Behavior: Instructor’s Resource Guide. (8th ed.) Hoboken, NJ: John Wiley & Sons, Inc.

Hunsaker, P.L. (2005). Management: A Skills Approach. (2nd ed.) Upper Saddle River, NJ: Pearson Prentice Hall.

Salancik, G. R., & Pfeffer, J. (1978). A social information processing approach to job attitudes and task design. Administrative Science Quarterly, 23, 224-253.

Adler, P. S., & Chen, C. X. (2009). Beyond intrinsic motivation: On the nature of individual motivation in large-scale collaborative creativity. Social Science Research Network. Accessed on April 2, 2010 at http://ssrn.com/ abstract=1471341

Bunderson, J. S., & Thompson, J. A. (2009). The call of the wild: Zookeepers, callings, and the double-edged sword of deeply meaningful work. Administrative Science Quarterly, 54, 32-57.

Campbell, D.J., & Pritchard, R. (1976). Motivation theory in industrial and organizational psychology. In M.D. Dunnette (Ed.), Handbook of industrial and organizational psychology (pp. 63-130). Chicago: Rand McNally.

Campion, M. A., & McClelland, C. L. (1993). Follow-up and extension of the interdisciplinary costs and benefits of enlarged jobs. Journal of Applied Psychology, 78, 339-351.

Chen, G., Kanfer, R., DeShon, R. P., Mathieu, J. E., & Kozlowski, S. W. J. (2009). The motivating potential of teams: Test and extension of Chen & Kanfer’s (2006) cross-level model of motivation in teams. Organizational Behavior and Human Decision Processes, 110, 45-55.

Mawhinney, T. C. and Mawhinney, R. R. (1982). Operant Terms and Concepts Applied to Industry. In O’Brien, R. M., Dickinson, A. M. and Rosow, M. P. (Eds.), Industrial behaviour modification: A management handbook (115- 134). New York: Pergamon Press.

Locke, E. A. and Latham, G. P. (1990). A Theory of Goal Setting and Task Performance. Englewood Cliffs, NJ: PrenticeHall.

Keller, J. M. (1999). Motivational Systems. In Stolovitch, H. D. and Keeps, E. J. (Eds.), Handbook of human performance technology: Improving individual and organizational performance worldwide (2nd ed.; 373-394)

Adams, J. S. (1965). Inequity in Social Exchange. In L. Berkowitz (Ed.). Advances in experimental social psychology, 2, 267-299. New York: Academic Press

Adams, U.S. and Jacobson, P.R. (1964). Effect of wage inequalities on work quality. Journal of Abnormal and Social Psychology, 3(4), 12- 25

 Amar, A. (2004). Motivating knowledge workers to innovate: A model integrating motivation dynamics and antecedents. European Journal of InnovationManagement, 7(2), 89-101

 Ambrose, Maureen, L. and Kulik, C. T. (1999). Old friends, new faces: Motivation. Research in the 1990s. Journal of Management, 25(3), 231-292

Over, R. (1982). Does research productivity decline with age? Higher Education, 11(5), 511-520

Over, R. (1988). Does scholarly impact decline with age? Scientometrics, 13(5-6), 215-233

Cole, S. (1979). Age and scientific performance. The American Journal of Sociology, 84(4), 958-977

Cole, J. (1971). Measuring the quality of sociological research: Problems in the use of the science citation in

Patterson, M., Warr, P. and West, M. (2004). The organizational climate and company productivity: The role of employee affect and employee level. Journal of Occupational and Organizational Psychology, 77(2), 193- 216(24)

 

McClelland’s Need Theory Maslow’s Hierarchy of Needs Theory Herzberg’s Two-Factor Theory Expectancy theory Equity Theory Goal-setting theory Introduction to Motivation Motivation Defined Motivational Theories & Research Motivational Factors Influencing the Productivity Role of Motivation in Higher Productivity Motivational Strategies to Encourage Productivity http://rblacademy.com/


Wednesday, July 14, 2021

Operational function of Amul Case study solution, Amul Supply chain, Amul Production Process, Core challenges faced by Operation functions at Amul, Issues related to managing third parties service providers of Amul, Strategies to be implemented to improve operational efficiency of Amul

 In this assignment you are asked to assume the role of a manager in the operations function of the organisation that you work for (or one with which you are otherwise familiar).

In the last top management meeting the outgoing CEO requested that you write a report (of no more than 2,500 words) introducing the operations function to the incoming CEO, who is new to the organisation. She has specifically requested that you include the following three parts in your report:

Part 1

An overview of operational activities, including:

  1. the type of good or service that the company provides (including a summary of the order qualifiers and order winners of those goods/services and the related operations strategy)
  2. the production process of that good or service
  3. the key performance objectives of operations
  4. and a brief overview of the supply chain network and/or any key business processes that are outsourced.

Part 2

An explanation of how the operations function collaborates with other business functions (such as human resources, sales & marketing, or financial management) to improve efficiency and customer service. Add examples for clarity.

Part 3

A summary of the core challenges that the operations function faces (and why) and, based on that summary, a proposal for one improvement accompanied by a strategy for the implementation of that improvement.


Case Study Solution

GCMMF

Established in the year 1973, with a motive to help poor farmers to get good return on milk they sell, Gujarat Cooperation Milk Marketing Federation Limited has now become the largest food product marketing organisation in India having an annual turnover of 4.8 billion dollar (2018-19). It procures approximately 23 million liter milk per day from 18700 village milk cooperative societies, 18 member unions covering 33 districts and 3.6 million milk producer members. (Source:Amul website).Popularly known as Amul, its operations is managed by 61 sales office and it has a network of 10000 dealers and 10, 00,000 retailers making it one of the largest operational networks in India. Product range of Amul includes milk, milk powder, ghee, butter, cheese, Pizza cheese, Ice cream, Paneer, chocolates, health beverages and traditional Indian sweets. (Source: Amul website). It is also largest exporter of dairy products selling its products in USA, Singapore, Gulf countries, Philippines, Japan, China & Australia. (Source:Amul website). Amul follows an umbrella branding strategy. It uses a common brand name ‘Amul” for all categories of products it deals in. Amul's sub-brands include variants such as Amulspray, Amulspree, Amulya and Nutramul. The edible oil products are grouped around Dhara and Lokdhara, mineral water is sold under the Jal Dhara brand while fruit drinks bear the Safal name. (Source:Amul website).


Production process of Amul

Milk Reception

Milk receipt process is done in Amul 3 Process and reception lab. Raw Milk brought in from trucks is unloaded, tested and processed. Milk from Amul 2 is brought here in cans . Three reception points are available to unload milk from tankers. Each reception line is equipped with centrifugal pumps having a capacity of 30000 LPH, Air decompressor to remove air from milk, filters, pre heat exchange chiller and raw milk silo that is used to store milk.

Amul 3 Milk Pasteurization Process

Pasteurization process follows following sequential steps:

From Raw milk tankers, milk flows to chiller for cooling. There is a raw milk buffer tank where milk gets stored. From Raw milk buffer tank it is stored in milk silo and from there milk goes to pasteurization tank to complete pasteurization of milk. After that it goes to regeneration section to separate cream from pasteurized milk. cream separation section consist of two parts, one of skimmed milk section and other of cream buffer tank. From cream separation section to skimmed milk section, milk is heated at 80 degree Celsius and then stored in milk silo. Skimmed milk after pasteurization is issued to powder section,

Milk Powder Section has two units one for skimmed milk pasteurisation and other for whole milk pasteurization. After proportionate mixing in milk storage tank, pasteurized standard milk is converted into milk powder, sent to Amul 2 section, or transported via rail or road tanker to distributors. From cream separation unit, cream is sent to cream buffer tank where it is pasteurized at 80 degree Celsius and then transferred to Cream Balance tank. Afterwards it is issued to butter section unit.

Amul 3 Milk Dispatch

Milk processed at Amul is sent to different sections such as Amul 2 for pouch packaging, Flavoured milk section, Milk Powder section, butter section, ghee section L& T section and transferred to different dairies.



Amul 2 Milk receipt process

Amul 2 receives milk in cans at RMRD. Both cow and buffalo milk marked with separate colour is received in morning and evening. Two reception lines are available. Cans are verified for sour or curdled milk. After that milk is added to weighing tank. Empty cans are shifted to washer. Samples are collected for checking fat and SNF calculations. After that it is sent to Amul 3 section for further processing. Milk at Amul 2 is also used for producing butter milk which is packed at packaging department.

Milk Pouch Packaging section

Pouch packaging sections deal with packaging of milk into pouches. 3 packing machines having two identical heads for packaging, each head drawing heat sealable polythene sheet from distinct separate roll which is supplied with milk to be packed from overhead tank by gravity.

Separator vessel separates excess fat from milk, which is used to manufacture butter. Butter is manufactured using fresh cream of milk. Coloured salt is added with cream to make butter Cream from Milk 3 and Milk 2 section is brought to Butter section where they are pasteurized at 90 degree Celsius and then cooled to 10 degree Celsius. After that it is rotated in pipe for 20 hours and after that it is moved to cream balance tank. Plate heat exchanger is used to maintain heat level in the process. From there churning process starts which results into production of butter milk as well as butter. After churning butter milk is cooled in chiller from where it is transferred to butter milk silo. Churning leads to butter grains which are washed with butter milk and salted and non salted butter is prepared. Non salted butter is used to make ghee and salted butter is grinded for adding colour and then blended thereafter it is stored in butter silo. From where is packaged into 10 gm chiplet, 8gm blister pack, 100 gm refill pack and 500 gm refill pack.




Flavored Milk, Coffee and Chocolate manufacturing Process

Process of making flavored milk, chocolate and coffee are slightly different. Sugar, SMP and TSP is mixed and dissolved with pasteurized milk for homogeniastion. The mixture is chilled at 5 degree Celsius while taking caring of prevention of acidity and then it is transferred to storage tank. Colour and flavour is added and filtration process is done to automatically wash, fill and cork milk in glass bottles and then placed in metal crates. Then the product os sterlised and cooled in cooling rooms where they are stored for 5 days at ambient temperature to watch quality defects such as curdling, leakage and discolouration. After that it is labeled and wrapped with hot glue machine.


Ghee Section

Sour milk is used to produce ghee. This milk is sent to cream machine for extracting cream. Cream is then converted into butter and butter is heated to make ghee. After that it packed into tins or plastic bags.

 

Supply chain management of Amul Dairy starts with milk being brought by farmers and milk producers to village cooperative society on their conveyance either by bicycle or on foot. Village cooperative unit measures the quality of milk and it is then transported to union production facility by special milk container trucks. From there it is further sent to wholesale Amul distributors who in turn send them to retailers in special trucks.

The whole process is outsourced to different operations and logistics partners to implement the supply process effectively and efficiently. Amul follows stringent process of verification and surety for maintaining safety and quality of products from channel partners. All members in supply chain have to adhere rules and guidelines issued by Amul at different levels of logistics management. Amul offers good profit margin for its wholesalers and retailers, support in estimating demand and easy repayment policies for retailers for capital investment done by them.

 


Technology and e-initiatives in Supply chain management of Amul

Amul is one of the first FMCG firms in India to employ Internet technologies to implement B2C commerce. Another e-initiative taken by Amul is to provide farmers access to information relating to markets, technology and best practices in the dairy industry through net enabled kiosks in the villages. Amul has also implemented a Geographical Information System (GIS) at both ends of the supply chain, i.e. milk collection as well as the marketing process. Farmers now have better access to information on the output as well as support services while providing a better planning tool to marketing personnel. In collaboration with IBM, Amul has set up an ERP base system to integrate its upstream and downstream partners thus keeping a track to improve efficiency, reduce wastage and meet supply and demand effectively and efficiently.

Key strategic performance objectives of operations in Amul

1. Quality

All plants of Amul are ISO 22000:2005 certified for having Excellency in food safety management system. It has executed Total quality management system of international standard to avail best quality products to its national and international customers.

2.Speed

Since Amul deals in perishable products, speed is something which is essential for conduct of operations at Amul. Amul has outsourced partners to collect, deliver and transport raw milk and finished products on time without any delay. The company stringent rules in terms of getting raw material and finished products delivered on time.

3.Dependability

Amul has Ecommerce website through which customers can order products and get it delivered on stipulated time. To maintain its supply chain and customer relationship management, it has implemented SAP system to reduce wastage, keep track of inventory of raw material at plant and finished goods at retail outlets and distributors. Transport vendors are also aligned on ERP system which makes possible to track shipment.

4.Flexibility

Amul believes in continuous improvement in its operation process since its inception. They have diversified their product range from dairy products to manufacturing of oils, selling of fruits and vegetables. From time to time they bring necessary changes to meet market and customer requirements. Operation process of Amul is rigid in terms of following manuals and guidelines of manufacturing products and quality maintenance but flexible at adopting changes in process of manufacturing to gain competitive advantage and quality improvement.

5.Cost

Reduction in cost of manufacturing product is at utmost priority in Amul. To achieve this, they have initiated multiple programs with their milk producers to increase productivity of milk thus achieving economies of scale at production and reducing cost of finished goods. Amul has removed third parties in distribution channel and set up retail outlets to sell their products directly to its customers. Amul follows JIT system that allows reduction in cost which can incur due to money invested in stocks. Multiple operational procedures are followed to reduce cost of manufacturing in Amul.

Collaboration of Operational function with other functional areas

None of the organisations can survive for a longer period of time if functional areas of that business are not aligned. Amul uses integrated ERP system to keep a track of harmonious coordination among efforts of all functional departments towards achievement of organisational goals. Relationship of operation function with other managerial function is of immense use in getting a steady, planned and long term growth of any organisation. Relationships among these functional departments have been explained below:

Accounting and Finance Function

Operation department provides valuable information with regard to cost of production of goods, cost of inventory holding, budgeted production units, requirement of plant expansion, software upgradation and finance and account department provides information on availability of funds that can be allocated on operation functions of the company. On the basis of the information, finance manager takes capital budgeting decisions, and raise funds to meet procurement and working capital requirement of the organisation. On the basis of the information, finance manager decides over make or buy decision and outsourcing decisions too.

Technical function

Operation manager seeks information from technical department to improve production efficiency and technological upgradation that is required at production floor. Technical department assists in availing best production technologies to enhance production and reduce cost. Technical department has to install suitable MIS to control systems for production control which takes inputs from marketing information system and provides output to purchasing information system.

Human resource function

Both departments remain in touch with each other where operation managers gives input on number of employees currently working at production floor. If there is any shortage or surplus of employees in operation department, the same is made known to HR department. And HR department recruits or shifts employees to fulfill the desired needs at operation level. HR team seeks information on salary to be paid to different categories of employees working in operation department on the basis of acquaintance of skills required to perform that job. They also collection information from production department regarding job analysis, job design KSA and KRA of the employees to be recruited for production department. Operation team also seeks information on training and development programs for employees working at operational level.

Marketing Function

Marketing manager provides current demand status of products to operation department and operation department has to schedule production to meet those demand needs on time. Marketing Managers need to understand production schedules to meet their delivery requirements. Marketing managers also provide information with regard to customization to be done as per customer needs. Operation department provides monthly production status to marketing department which helps them to avail products to customers as per production schedule and meet the demand of market according to availability of products. It also help them to avoid false commitments to customers with respect to availability of products.

Core challenges faced by Operation functions at Amul

Some of the major issues faced at Amul with respect to operation function include:

Unstructured lead time

Due to faulty and obsolete means of transportation, products are not delivered on time. Since people at logistics and transportation system are not professionals, they posses delay in delivery. However this impediment has been reduced to maximum extent by implementation of JIT at Amul. Still more needs to done to improve level of efficiency at logistics and distribution part.

Gap between demand and supply

There is huge gap in determining demand and supply of products at Amul. In peak season, company is not able to satisfy the demand of the market and in off season many products got expired due to less demand of that particular product. It is a core challenge being faced at operation level and steps have been taken to accurately forecast demand and supply needs of various products so as to reduce wastage and shortage without incurring huge investment on it. To reduce this gap, Amul focused on adopting farmers business facing process. Still a lot is to be done to meet supply and demand needs.

Suppliers

Suppliers of milk to Amul are farmers. Most of them are illiterate, untrained and have liquidity issues with them. Mismanagement and delay in payment to the producers always initiate backlog in supply of milk on time. Amul focuses on making payment to them without delay. Pricing of milk has been fixed by Amul but fixed price also creates issue at pick time as these farmers get better price in market than what Amul gives them. Amul has done a lot of programs with farmers to keep them intact with Amul and benefits they accrue by becoming permanent members of the system. But liquidity issue with them imposes a threat to Amul and lot is to be done at this level.

Issues related to managing third parties service providers

Except for marketing of products, all other operational activities are entrusted with third party service providers at Amul. Farmers are the shareholders at Amul and they decide the price of raw material payable to them. Processing of milk nad production of dairy products lies in purview of union from the beginning. Logistics and distribution management is attributed to third party service providers, who possess impediment in the successful implementation of operation functions by causing delays, using old vehicles to perform their jobs. They are not specifically trained, skilled and professional to manage the operations professionally. Amul has started giving training and keeping vigilance by successful implementation of JIT and ERP bases vendor management system still things go out of the way which is uncontrollable many times at functional level. Issues related to Cold storage system for frozen food distribution is still not handled by distribution vendors. They are not equipped with such vehicles due to which quality of food gets deteriorate. Many times, children are used as labours to load and unload trucks which are unlawful.

Strategies to be implemented to improve operational efficiency

Time schedule of logistics, transportation & distribution can be set and traced from ERP system which is being done at Amul; still things go in haphazard manner due to undisciplined behaviour of vendors leading to suffering to retailers and ultimately consumers. Stringent rules and penalty provision should be implemented to reduce number of occurrence of such events. Parallely, Amul should train drivers, and vendors to drive carefully and avoid accidents on roads and delay in logistics and transportation. None of the manpower in operation process should be less than 18 years as it has been observed many times children loading and unloading dairy products from vehicles, which is even against conduct of law. Many times, benefits offered by Amul do not reach to retailers and whole benefit is enjoyed by distributors. Amul must encompass programs to ensure that it reaches to retailers thus benefitting retailers and not only distributors and wholesalers. This will also provide them an incentive to sell more and more products of Amul. Raw material codification should be done in such a way that it can be easily understood by logistics team and operation personnels to avoid any miscommunication and understanding. Since farmers suffer from liquidity Crunch Company should take action and make payment to farmers even before stipulated time to keep them happy and feel proud to be associated with Amul. Consumer complaints at Amul are not resolved at stipulated time creating nuisance and rupturing of reputation of the company. Amul should provide training to its retailers to handle consumers’ issues and grievances and provide all levels of support in resolving their queries. Demand Supply analysis predictor softwares can be used in alignment with retailers and wholesalers valuable information to predict actual demand of products. Farmers should be provided training on cattle management system to avoid diseases caused to cattle and increase milk productivity. Amul must explore new market and develop new products that can be manufactured and sold to utilise unused milk of off season.

References

Business Strategies for Managing Complex Supply Chains in Large Emerging Economies: The Story of AMUL; Chandra, Pankaj; Tirupati, Devanath; IIM A – April 2003

A case study of AMUL cooperative in India In relation to organizational design and operational efficiency; Prasad, Ruchira; International Journal of Scientific & Engineering Research Volume 4, Issue 1, January-2013 1

http://www.amul.com ; http://www.amuldairy.com/ ; Amul Operational manuals. Amul store manuals of production process.

https://digital.hbs.edu/platform-rctom/submission/amul-the-taste-of-india/

(https://www.rediff.com/money/2005/sep/23spec.htm )

http://www.pearsoned.co.uk/media/onlinepreview/slack_9780273731603/assets/pdf/9780273731603_c01.pdf