MANAGERIAL 6154 Tom Emory and Jim Morris strolled back to their plant
Tom Emory and Jim Morris strolled back to their plant from the administrative offices ofFerguson & Son Manufacturing Company. Tom is manager of the machine shop in thecompanies’ factory; Jim is manager of the equipment maintenance department.The men had just attended the monthly performance evaluation meeting forplant department heads. These meetings ha been held on the third Tuesday of each monthsince Robert Ferguson Jr., the presidents son, had become plant manager a year earlier.As they were walking, Tom Emory spoke: “Boy, I hate those meetings! I neverknow whether my departments accounting reports will show good or bad performance.I’m beginning to expect the worst. If the accountant says I saved the company a dollar.I’m called “Sir” but if I spend even a little too muchboy do I get in trouble. I don’t knowif I can hold on until I retire”Tom had just been given the worst evaluation he had ever received in his longcareer with Ferguson & Son. He was the most respected of the experienced machinists inthe company. He had been with Ferguson & son for many years and was promoted tosupervisor of the machine shop when the company expanded and moved to its presentlocation. The president (Robert Ferguson, Sr) had often stated that the company’s successwas due to the highquality work of machinists like Tom. As supervisor, tom stressed theimportance of craftsmanship and told his workers that he wanted no sloppy work comingfrom his department.When Robert Ferguson Jr, became the pant manager, he directed that monthlyperformance comparisons be made between actual and budgeted costs for eachdepartment. The departmental budgets were intended to encourage the supervisors toreduce inefficiencies and to seek cost reduction opportunities. The company controllerwas instructed to have his staff “tighten” the budget slightly whenever a departmentattained its budget in a given month; this was done to reinforce the plant manager’s desireto reduce costs. The young plant manager often stressed the importance of continuedprogress toward attaining the budget; he also made it known that he kept a file of theseperformance reports for future reference when he succeeded his father.Tom Emory’s conversation with Jim Morris continued as follows:Emory: I really don’t understand. We’ve worked so hard to meet the budget, and theminute we do so they tighten it on us. We can’t work any faster and still maintainquality. I think my men are ready to quit trying. Besides, those reports don’t tellthe whole story. We always seem to be interrupting the big jobs for all those smallrush orders. All that setup and machine adjustment time is killing us. And quitefrankly, Jim, you were no help. When our hydraulic press broke down last month,your people were nowhere to be found. We had to take it apart ourselves and gotstuck with all that idle time.Morris: I’m sorry about that. Tom, but you know my department has had troublemakingbudget, too. We were running well behind at the time of that problem, and if we’dspent a day on that old machine, we would never have made it up. Instead wemade the scheduled inspections of the forklift trucks because we knew we coulddo those in less than the budgeted time.Emory:Well, Jim, at least you have some options. I’m locked into what thescheduling department assigns to me and you know they’re being harassed bysales for those special orders. Incidentally, why did you r report show all thesupplies you guys wasted last month when you were working in bills department?Morris: we’re not out of the woods on that deal yet. We charged the maximum we couldto other work and haven’t even reported some of it yet.Emory:Well, I’m glad you have a way of getting out of pressure. Theaccountants seem to know everything that’s happening in my department,sometimes even before I do. I thought all that budget and accounting stuff wassupposed to help, but it just gets me in trouble. It’s all a big pain. I’m trying to putout quality work; they’re trying to save pennies.
