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Team 3 Members:

Abdulmajeed Alshaikh

Nathalie Goh-Livorness

Ferdy Wan

Edward Kusuma

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 TABLE  OF  CONTENTS  

Abstract.......................................................................................................................................3  

Modeling  the  organization .........................................................................................................4  

Organizational  map  of  the  company ..........................................................................................4  

Organizational  context................................................................................................................5  

Relationship  context ...................................................................................................................5  

Relationship  map ........................................................................................................................6  

Mass  vs  Lean  production ............................................................................................................6  

Demographic  &  social  context....................................................................................................6  

Technology:  company’s  core  technologies  and  competencies...................................................7  

Defining W-T-O Variables .........................................................................................................7  

W-­‐T-­‐O  interactions ...................................................................................................................10  

W-­‐T-­‐O  related  problem  chart ...................................................................................................11  

Alternative  designs ...................................................................................................................11  

Immediate  recommendations ..................................................................................................12  

Long  term  recommendations ...................................................................................................13  

Redesigned  of  organizational  map ...........................................................................................16  

Evaluations................................................................................................................................16  

Immediate  recommendations ..................................................................................................16  

Long  term  recommendations ...................................................................................................17  

Conclusion: ...............................................................................................................................18  

Risk Table ................................................................................................................................18  

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ABSTRACT    

PT Redwood is Indonesia’s first Corn Starch and Corn Oil production company. The raw materials are imported from the United States, processed and the final products are sold to food and industrial product manufacturers. The local noodle factories are major consumers of Corn Starch. Our team has devised several solutions that can be implemented immediately and which address the most pressing problem of inefficient supervision. Firstly, we recommend sub-dividing work processes amongst the production workers and their supervisors, such that responsibility is delegated down from overworked managers. Having several groups each in charge of different tasks, and taking responsibility for the results, would help to improve efficiency. Secondly, staffing levels need to be reviewed so that there are enough resources to balance the workload of supervisors and managers. This would lead to managers who are focused on their specific area rather than spread too thin. With more focus, we assume they will be able to do their jobs more efficiently and with greater productivity and quality. Thirdly, we PT Redwood needs to address human resources practices. PT Redwood has a major problem with employees leaving the company because they cannot keep up with the work pace. The issue is not the supply in workers; there are plenty that want to join the company. PT Redwood has to find a way to keep them there once they start work. To do this, we suggest PT Redwood use a new hiring strategy where they hire workers on a paid probationary or trial period before offering them permanent positions. Through this trial period PT Redwood will know which workers are the most productive and capable, while the workers would also be able to see if the company and work meet their expectations. By getting to see how the workers are before committing to hire them, Redwood can reduce employee turnover rate. As a long-term solution, Redwood would need to start hiring locally rather than bringing foreign technicians to Indonesia, as it is extremely costly. They would need to seek out the best local technicians and to do this would require extensive 6 month training. While this may be expensive, it would still prove more cost-effective in the long run and give local employees incentive to perform and to progress to higher positions. Key words: Communication, productivity, efficiency, decision-making, turnover rate, cost. INTRODUCTION    

Our team chose to study PT Redwood primarily because we wanted to explore a foreign company and one that has a prominent profile in its geographic location. PT Redwood is unique as it is the only corn wet milling company in Indonesia. PT Redwood operates its business and production facilities through an organization structure that includes Corporate Staff, Engineering, Quality Assurance, Program Management, Finance and Administration, Manufacturing and Warehouse Operations.

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To approach this problem our group had to analyze the company’s organizational structure. They run a top-down hierarchy but the company has found that the most significant problems lie at the lower end, with the low-level managers and factory workers and their related WTO elements. In our analysis, of PT Redwood’s WTO our group identified the main issues to be: (1) machinery malfunctions that lead to frequent production line shutdowns, (2) lack of quality communication between the head office and the factory site, and most importantly (3) supervisors at lower levels are unproductive and inefficient due to corporate hiring practices, lack of local talent and unclear reporting lines. Our suggested solutions to these problems assume that PT Redwood will be willing to spend the time and money to improve their situation, however we did try to be as resourceful as possible. Our biggest assumption is related to the work variable. We predict that it will be possible for PT Redwood to find more capable lower-level managers and that they will want the job, and we also think that there should be an abundance of local technicians that they could hire instead of looking overseas. The rest of this paper will give an in depth examination of PT Redwood’s WTO context as well as some possible solutions and outcomes to their problems. MODELING  THE  ORGANIZATION  

ORGANIZATIONAL  MAP  OF  THE  COMPANY  

Figure (1): Organization map

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ORGANIZATIONAL  CONTEXT  

The main goal of PT Redwood Indonesia is to manufacture corn-related goods like corn starch, corn gluten meal, corn gluten feed, and maltodextrin in its factory and, most of the employees are located in that factory at Port Cigading Complex Cilegon, Baten, Indonesia. As a manufacturing company, its organizational structure is very hierarchical and, as a result, the decision-making processes are centralized. The company has approximately 530 employees in its factory and the majority is low-wage laborers. The headquarters of the company, on the contrary, consists of eight departments that house thirty employees and reflects the inverse relationship of power and space with respect to the rest of the factory’s employees. Moreover, in terms of the macro-organizational context, an internal auditor files daily productivity and market reports and submits them directly to the CEO. As product prices change constantly, the CEO updates the prices on a daily basis in accordance with the structure of his reports. In addition, weekly meetings held between the CEO and the heads of the departments to discuss the company’s progress and new ideas. Nevertheless, other than the heads of the various departments, employees rarely communicate with the CEO. More importantly, the factory workers are not consulted in any form when it comes to making decisions about the company. In effect, their input is not important at all to the company. This last aspect of the organizational context arguably creates an authoritarian culture in the company that impedes worker productivity and worker investment in the company. In short, the culture of the company facilitates viewing the workers as units rather than as people.

RELATIONSHIP  CONTEXT  

Below is a relationship map that displays the interactions between each function units within PCI, suppliers, and customers. The raw materials are imported from the United States, processed and the final products are sold to food and industrial product manufacturers.

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RELATIONSHIP  MAP  

Figure 2: Relationship map MASS  VS  LEAN  PRODUCTION  

Additionally, because the company operates according to mass production techniques, the majority of the workers’ jobs are automated (i.e. they only need to push buttons along the production line and pack the products). And, like most manufacturing production lines, every employee only works on his specific job. In other words, the factory workers generally do not cooperate with other workers nor are they asked to be creative or innovative in the application of their skills. Consequently, the level of autonomy for the factory workers is also very low.

DEMOGRAPHIC  &  SOCIAL  CONTEXT  

The factory workers are primarily low-wage, low –skilled workers. They are predominantly male and the average age of the employees is 22 years old. Moreover, their wages and skill-levels remain low because much of the work in the factory is automated and repetitive. Equally important is the notion that these young workers generally do not complain about their wages because most do not have immediate families to support. In other words, these young men make up supplemental income in larger, extended family networks. Nevertheless, these conditions reflect the national cultural and social environment with respect to employee/employer relationships (i.e. that laborers are generally expendable).

TECHNOLOGY:  COMPANY’S  CORE  TECHNOLOGIES  AND  COMPETENCIES  

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Corn Oil and Corn Starch are the most important products produced by PT Redwood Indonesia, and because these are byproducts of a largely semi-automated manufacturing process, much of the labor-intensive work is done by machines. Nonetheless, the company is not very advanced in terms of its technology. A large portion of the machines in the factory is from the previous owner’s era but there are some new machines that have been installed in the factory. In terms of technology that governs worker productivity, each employee has to sign in by swiping his card at the entrance to the plant. The company, however, has an advanced handling process as the storage area is equipped with: “the most modern handling system, including cleaners, laboratory, bucket elevator, conveyors, weighers, aeration, fans, temperature monitoring and side draws” (PT Redwood brochure).

The company also makes efforts to operate on Green technology. Redwood Indonesia treats the wastewater it produces and reuses it. Nevertheless, coal burning, which is considered a gross pollutant, is used as the primary power source instead of electricity to reduce costs. Overall, the company relies on very solid technologies that efficiently produce corn products. DEFINING W-T-O VARIABLES

 WORKER Every function has its unique worker type that interacts among themselves and with workers of other functional unit. One functional unit consists of production workers and managers. Production workers are divided to several units. There are cleaning, milling, centrifugal separating, and packaging units. Each unit is then assigned 2-3 managers. The managers are responsible for their unit processes and the communication among managers from other units. The production workers are limited in that they can only produce certain amount of corn starch a day, constrained by speed and time. The production workers are capable to operate machineries with minimal training and mechanical knowledge. The following is the worker characteristics of each these functional units. Factory’s Employees

Worker Type Manager

Production Worker

Job Description Manages production line and communicates with other units, record production activities

(1) Fulfills orders given (2) Operate machineries

Mental Characteristics Intuitive, Analytic, Extrovert Systematic, Organized Attitude Hardworking, Patient, Multitasked Hardworking, Follows Orders

Life Experience Required Managing Work Experience, Computer Literate, College-educated

None required

Goals/ Expectations of Administration

(1)Communicate efficiently with administrators in main office (2)Keep workers in factory motivated (3) Supervise employees in factory site

(1) Fulfills goals set by on site managers

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Number of Employees 20-30 530+ Employee Turnover Low Medium Table (1): Job description

Main Office’s Employees

Worker Type Top Level Administrator

Middle level Administrator

Bottom Level Administrator

Job Description Decision makers Pass orders and suggestions from top to bottom level and vice versa,

Communication with employees in factory site. Keep up with production activities

Mental Characteristics

Intuitive, Analytic, Risk Takers

Systematic and Analytic

Systematic and Analytic

Attitude Hardworking, Patient, Multitasked

Hardworking, Detail Oriented, Follows Orders

Hardworking, Detail Oriented, Follows Orders

Life Experience Required

Managing Work Experience, Computer Literate, Have at least 2 years work experience in the top level management

Managing Work Experience, Computer Literate, 2 years + of work experience in the desirable position,

Managing Work Experience, Computer Literate, University graduates- preferred 0-2 years’ work experience.

Goals/ Expectations of Administration

(1)Communicate efficiently with middle level management (2)Setting company’s goal, mission, and vision

(1) Keeping track of goals set by CEO (2) Supervises low level management workers

(1) Keeping up with statistical data. (2) Making production, financial reports to be sent to upper administration level (*) Can get promoted to Middle level management

Number of Employees

2-5 8-11 20+

Employee Turnover

Very Low Low Medium/High

Average Salary $2500 ++ a month $1000+ a month $500-$800 a month

Table (2): Job description Bottom Level Administrator suffers a medium/ high employee turnover. According to Ms. Yanti, a HR manager located in Middle Administrator level, 2-3 new employees are hired in Bottom level administrator every two months. This turnover is due to the fact that workers are not meeting the job expectations and are quickly laid off. The company struggles in finding workers that are at par with the work demanded of them.

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TECHNOLOGY There are two main cores of technology that keep the company running. The first is a corn-milling machine. This piece of equipment is important to the flow of the system in the factory. When the corn first comes in, it is brought directly to the peeling station. Designated production workers examine if there is any unpeeled corn missed by machines. After peeled corn is examined, then it goes to the milling system. This system removes any germs, and extracts the starch slurry from the corn. The second technology core in the company is the centrifugal separators system. At this point, starch slurry is separated from its gluten. From here, the separated starch slurry is then washed and dried as high quality starch. Furthermore, the high quality starch is transferred to the packaging area and distributed to customers. The managers on factory site are the only one that has access on the inventory system. Main office waits for the report from those managers. In addition, in charge and responsible for technology is the IT department. The IT department itself is not independent. Every purchase of new parts has to be reported back to main office for authorization.

ORGANIZATION Each functional unit at the factory site is assigned a specific task. For example, in milling system, a unit of production consists of 10-15 productions workers and 2-3 managers work on operating and supervising the milling process of the corn. Together, they need to operate machines (pushing buttons), check for any unprocessed corn in a timely manner. The manager acts as the leader and is responsible for keeping the production workers on track, motivating them, and submitting production reports based on his units to the bottom level administrator at main office. In main office environment, organization factor plays an important role to the survival of the company. Everything must be report back according to the hierarchy ladder. Final report is delivered to top-level administrators. There will be a performance evaluation each month. If performance is not progressing/ not doing well, they will be given warning. If they do not improve, they will be laid off. MISTMATCHES Redwood has several mismatches. The first mismatch can be seen in the area of technology. Redwood purchased new machineries from China. However, these machineries break down a lot. Thus, this delays the production rates and the company hardly accomplishes the goals set by the CEO. Furthermore, this put the company to spend more money by calling technicians from China. Second mismatch occurs in the area of employee turnover. First it is know that there is a quite number of low administration level employee’s turnover and workers at the factory level. Low-level administration employees’ revolves around keeping in contact about production statistic, employees’ status in the factory level. Hence, this is not a hard job to do and there should be not a quite high turnover rate. In the interview with Miss Yanny, one of the HR managers at the main office, it is known that Redwood hires employees that have minimal skill and experience so they can pay low wages. Since training for the low level administration is implemented as “learn on the job” process, employees must constantly stop and ask questions to

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the seniors on how to do specific tasks, therefore causing delays and perhaps human errors. If an employee works too slow or causes a big enough delay, they are fired and a new employee is hired in hopes of doing a better job. According to an article called “Alternative Pay Rate and Employee Turnover” published in the Group and Organizational Academic Journal, ”although turnover can be either functional or dysfunctional as a general rule, it is extremely costly and most employers are better served with lower rates of employee turnover” (Guthrie, pg 9).

W-­‐T-­‐O  INTERACTIONS  

The characteristics of the employees of the company are important variables because they show a lot about each individual employees of the company such as the employees’ individual strength and life experiences. These are strong variables because when a company has employees who are experts or knowledgeable in the area of their profession, it will increase the efficiency of the company, and needless to say, less time is required to do a specific job. This may then lead to the increase of company’s productivity. And in order for an organization to succeed or improve, the organization or company needs to have expectations. P.T. Redwood has expectations from the employees that they will complete their task, which are assigned to them by the manager on time. Hence, to fulfill the company’s expectation, work experiences of the employees are important for the company, and only then will the company know whether the employees are up to the standard of the company. If the company were to ignore this variable, and just hire anyone that applies for the job, and if this employee were to not do a good job in the specific area of the profession they in charge of, it will affect the company’s efficiency and also its expectations will not be achieved. Since P.T. Redwood has high challenges and growth for the employees, therefore, the employees are expected to work hard, know the field, be dedicated in their job, and to be able to live up to the expectations of the company. Challenges and growth are other strong variables because with challenge, people are more motivated to work, and the job the employees are given will seem more interesting. With expectations and challenges, P.T. Redwood would strive to achieve the goals of their company and therefore, they will try their best and be motivated to reach their standard, challenges. P.T. Redwood has three months’ probation before the company decides whether the employee is qualified for the job. And P.T. Redwood hires employees with minimal skills because it will cost them cheaper to hire these people for the lower level. This will cause problem because these lower level employees, with very little skills, will have to keep asking the managers what they have to do. Hence, the employees’ jobs are not so secured because they may be fired anytime if they were to do anything that is not up to the standard of P.T. Redwood. With this knowledge in mind, the employees may either be motivated to do error free work or they may be so conscious and scared about getting fired that they will not be able to do a good job and not enjoy what they are doing because they only fear to get fired. Also, the bottom level administrators maybe too concerned with securing their job to the extent that they will not tell their managers if they were to do anything wrong. This will eventually cause problems, because the employees will not be honest and will act in their self-interest. This can be seen by the many problems P.T. Redwood is facing, which is that sometimes the main office is not notified immediately if the factory is having any issues with the machineries, and that the main office has a very limited knowledge on knowing the progress of the production or production rates. Because of the fear of losing the

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jobs, the workers are becoming dishonest as we can see from the problems P.T. Redwood is facing, which may slow down the efficiency of the company. Hence, P.T. Redwood should give warnings before they fire the employee if they were to do something wrong, and if the mistake was not big enough to impact the company negatively. P.T. Redwood’s level of automation is semi-automated, and therefore it should not require heavy labor, instead they should heavily invest and focus on machineries because this determines the quality of the product. The company claimed to have changed the machines from the previous owner, and bought new machines from China. However, there have been many problems related to the breakdown of the machines and technicians have been called in often. Not only does this hinder the production and efficiency, it also affects potential technological innovation of the company. Also, most of the machines come from the china companies whom they partnered from the very beginning; this has caused resistance for the company to replace their machines. Hence, technology is a weak variable for P.T. Redwood. W-­‐T-­‐O  RELATED  PROBLEM  CHART  

Nature of Problem:

Description Issues

T-O Cost of maintaining machines’ issues

− Machines often have issues. − Company spends a lot in calling foreign technicians to repair

machines.

W-O Lack of Communication between Main office and Factory site

− Factory site’s managers are too busy to oversee many factory workers. Thus, main office sometimes is not notified immediately if something happens in the factory.

W-W Bottom level administrators are inefficient and slow

− Low level administration employees are often slow to report statistical data to middle level administration employees.

W-O Turnover rate of workers

− Low performance results in this quite high turnover rate +-25 factory workers turnover per 2 months 10 employees turnover from low administration level per 3 months

Table (3): Problem description ALTERNATIVE  DESIGNS  

The group divided its recommendations for Redwood into two categories: immediate and long-term. The immediate recommendations will have immediate results after being implemented. It involves on fractioning tasks on the lower level administration, hiring new manager at the

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factory site, and practicing new employee strategy. The group’s long-term recommendation revolves around the training of local technicians to completely grasp the knowledge of maintaining machineries. IMMEDIATE  RECOMMENDATIONS  

 SUB DIVISIONS OF LOW LEVEL ADMINISTRATION Currently communication between the functional units of factory site and the main office is the responsibility of lower administration level employee. In order to combat the poor of communication between functional units, the group recommends for fractioning the tasks to several groups in the lower level administration level. A new fraction inside the lower level administration is in charge of monitoring back and forth to the factory. Another fraction of group in the lower level administration is in charge to put the information from the previous fraction into statistical data. Finally, another sub division is in charge of only reporting the statistical data to the middle level administration.

NEW MANAGER AT FACTORY SITE Hiring a new manager will relief the overwhelming burden that the current manager at the factory site has. The less stress the manager is the more productive they can be. Also, with a new manager the old manager can pay more attention on important issues like communicating with the main office, and monitoring production rate. The new manager can take care of smaller issues such as maintaining the quality of work life inside the factory, and machines’ status.

NEW EMPLOYEE STRATEGY Redwood has been having trouble to retain workers in the lower level administration and workers in factory level. Redwood is looking to expand products to Thailand, and Malaysia markets. Without a stable growing workforce in both lower administrative and functional units in the factory, it will never reach the capacity of producing enough corn starch to satisfy the demands. One solution would be to provide a more comprehensive type of training. However, Redwood does not want to spend the money and time into training. The CEO says that they do not want to invest into workers because they might not stay long enough with the company to make the training investment worth it. In addition, Mrs. Yanny, one of the HR managers of Redwood says that the company does not have trouble-finding people willing to work for them. Meaning that there is definitely supply of workers. The problem arises when people are hired and cannot keep up with the pace. After several troubles they are laid off. Thus, for most of the time, workers are not leaving on their will but are forced out by the company. If workers were leaving the company on their own it would mean that they do not want to work and therefore a mismatch in the job specifications. However, since there is enough supply of workers a mismatch occurs between the quality of workers and the expectation of Administration. According to Willis Mushrush from Missouribusiness.net, a University of Missouri Incentive, the first step in reducing employee turnover is to hire the right people the first time and develop their careers (Mushrush, 2002). So the second recommendation in the New Employee strategy in order to identify workers that can meet the expectations of management is to hire workers on a temporary trial. In order to maximize the probability of picking the best quality workers,

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Redwood can hire twice as many workers it currently needs for a specific time frame. After the time frame has passed, Redwood can hire the half that was the most productive during the trial. However, this approach can be an expensive cost burden since it requires Redwood to hire twice as many people than needed for a certain time frame. To lower this risk, Redwood can spread the hiring and time trials over time and temporary hire in small groups of 5 or 6 and pick the best workers. The group is concerned that temporary hiring for short periods would not be fiscally and legally feasible. Although further research is required, ehow.com states that as long as temporary workers are told exactly how long and are given the same benefits including overtime pay as permanent employees this solution should pose a problem (Weiss, 2010). Redwood can use another company or firm to choose the workers with best quality. In other words, outsourcing the trial period to another company who will choose the employees that best fit into Redwood’s requirements. Another way to motivate the workers is to implement an incentives-based system. In Redwood’s case, it’s better to utilize a group based incentive systems. Through their report, W. Bentley MacLeod and Horst Siebert (1995) indicate that Miller and Hamblin (1963) claimed that group rewards system because it is better than individual rewards system in cases that the contribution of individuals is hard to be measured separately. In addition, incentives can vary from monetary rewards to recognition. This kind of system will increase the competition between the different teams in the company and will result in a better output. COMMUNICATION Lack of communication between the top management and the low-level employees was one of the main problems in the company. There are several approaches to this problem such as allowing the low-level employees to communicate directly with the manager through the phone or direct contact. As Leigh Goessi (2008) claims, management should establish an open door policy where low-level employees can share their thoughts and complaints with the management. He also added that creating a team environment is another solution to improve communication, and will increase the sense of unity. Staff can meet on a regular basis to share information and ideas. Furthermore, he states “When managers take an active part in the daily activities and maintain an avid interest in what goes on during the day employees are more inclined to relate to their bosses.” LONG  TERM  RECOMMENDATIONS  

TURNING TO LOCAL TECHNICIANS The group recommends the company to turn from foreign technicians to local technicians. By doing so, the company can cut some cost of calling foreign technicians to Indonesia. However, to do this, Redwood has to select the best available of their local technicians to be sent into trainings. The training involves on learning on how to build, maintaining machineries in the original country it is purchased from (in this case, it is China). The trainings can take up to 6 months. The drawback in this strategy is that the company has to spend a lot to invest on the local technicians. Nevertheless, in the long run, it will help the company to reduce cost of employing foreign technicians.

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Here is the calculation that the group makes: Salary of one foreign technicians per call $800 Cost of facilitating the foreign technicians per call (housing, transportation)

$375

Cost of sending one technician to China for 6 months for trainings

$2,800

Salary of one local technician per month $400 Cost of facilitating local technician $- Note*: In the record, the company explains that they have to rely on calling foreign technician 3-4 times every 6 months to repair machineries in the average. For the first six months, the company is forced to spend more money to support local than to call foreign technician. Cost for foreign technician in the first 6 months of the strategy

$4,700

Cost for local technician in first 6 months of the strategy

$5,200

However for the rest of time, the company is able to cut cost by focusing on local technician as the primary force to maintain machineries: Cost for foreign technician per 6 months $- Cost for local technician per 6 months $2,400 DECENTRALIZATION OF AUTHORITY The company’s decision-making structure is considered a centralized hierarchy. According to Thomas W. Malone, a Professor of Management at the MIT Sloan School of Management, the major benefits from this structure are the low communication cost and the ability to resolve conflicts easily. On the other hand, he summarizes the gains from decentralization in three points “… decentralization has three general benefits: (1) It encourages motivation and creativity; (2) it allows many minds to work simultaneously on the same problem; and (3) it accommodates flexibility and individualization.” In other words, decentralization will encourage the low level employees and it will pass on to them the sense of responsibility as they have an input in the decision-making process. Also, it will increase productivity and quality of work life (Thomas W. Malone). In the case of Redwood Company, the decentralization of authority is highly recommended, particularly loose hierarchy. In the very first page of Redwood’s brochure, it says “WE AIM TO BE NUMBER ONE.” To accomplish this goal, the company needs to expand and, as a result, decentralizing decision-making becomes very important as Zábojník (200) claims “According to Chandler, as a U-form (unitary) firm expands, it experiences inefficiencies because of the loss of control by top management, and it is replaced by a more efficient, less centralized M-form (multidivisional) organization.” Here’s an evaluation of the decision-making structures: (Malone,

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2004)) Table (4): Comparing the different decision-making structures

 RESEARCH AND DEVELOPMENT DEPARTMENT This strategy involves around creating a new department for research and development that’s independent from HR and Marketing departments. The congress of the United States has claimed that the consensus view of the relationship between R&D and productivity is that R&D has a “positive impact”(CBO, 2005). This means that creating R&D department would increase the company’s productivity. The department will be constantly interacting with the production and HR departments. It will increase the productivity of the company, as it will share the results with production department. The new department will help the company improve and compete internationally as the international competitors are more advanced than Redwood. Not only this but also it will help the HR department to find better ways to recruit and train the employees.  

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REDESIGNED  OF  ORGANIZATIONAL  MAP  

      Figure  (3):  Redesigned  organizational  map    

 EVALUATIONS  

IMMEDIATE  RECOMMENDATIONS  

SUB DIVISIONS OF LOW LEVEL ADMINISTRATION The positive effects of the sub divisions are that it will enhance the communication between the Main Office and the Factory Site. By fractionating tasks in the lower level administration, the work will be far more efficient and that communication will be improved. Because now different sub divisions can focus on the specific tasks they are assigned to. The sub division that is in charged only reporting the statistical data to the middle level administration will allow the Main Office to know immediately about any problems that happen in the factory and also the production rate in the factory. NEW MANAGER AT FACTORY SITE

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By hiring a new manager, the old manager can be more motivated and productive because his or her workload is lessened and the task assigned to the old manager is more specific and manageable. Also, the hire can affect the productivity, efficiency and quality of the factory. Because now, there is more man power to resolve problem, as the new manager will take care of smaller issues such as maintaining the quality of work life inside the factory and helps unload some the old manager’s responsibility. With a lessened workload, the old manager can have more time to interact with the workers, increasing the chances of the communication among the workers and the managers. This can lead to the improvement of the teamwork and have a better understanding of what the managers want them (workers) to do. NEW EMPLOYEE STRATEGY Giving a more comprehensive training to the workers would be a good solution whereby the workers will have a better understanding of the job or the assigned task they are given. This will prevent any error and will increase the efficiency because with a better understanding of the job after the training they are given, the workers will not need to go back and forth asking their supervisors or managers how to operate or do the task that they are assigned to. And since the workers in P.T. Redwood does not have a secured job because they are fired if the workers are not able to keep up with the pace and did some error, this contributes to the high employee turnover rate, which is not what we want for P.T. Redwood. Therefore, training the workers will help to differentiate workers’ productivity and efficiency at an early stage, even before they are officially hired. Second solution that is recommended is to hire workers temporarily to maximize the probability of picking the best quality workers. Although this is a very costly solution, if the company is willing to implement, this will benefit them in the long run. Because by picking out the best quality workers, the company’s efficiency and productivity will increase. Another solution is to give incentives in the form of monetary rewards or recognition. This solution has been proven in the industry that it works effectively. Hence, if P.T. Redwood were to implement this solution, it will be the least costly solution initially in a way that—the company rewards those workers who are up to the standard of the reward system. Not only does the company ensure the quality of the worker, also, they will be able to motivate the other workers to increase their productivity in order to be considered in the reward system. LONG  TERM  RECOMMENDATIONS  

DECENTRALIZATION OF AUTHORITY This strategy helps to increase the employees’ responsibility of what is assigned to them, because in expansion, we have to ensure that decision making process is fast and flexible enough to be able to adapt to changes in the organization daily. So middle management employees do not necessarily have to report every single movement instantly to upper management. This will cause speed up the decision making process and not hinder the production rate of the company. RESEARCH AND DEVELOPMENT DEPARTMENT Research and development help to increase product innovation. So the company can increase the variety of products and increase their revenue. However, to support the Research and

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Development, the company also needs to have a production team ready to keep up with the R&D team. CONCLUSION:  

RISK TABLE

Recommendation: Probability of Failing

Monetary Impact Risk

Subdivision of Lower Level Administration

Low: Subdividing will enhance the communication between main office and factory site.

Low: Diving developments, without hiring new employees does not need a lot of money

Low/Medium: There is no tangible dollar number that recommendation will produce.

New Manger Strategy

Medium: Do not know if the new manager can adapt well to the working environment in Redwood.

High: Paying for an extra manager without enough work for him/her is not optimal.

Medium/High: Managers cost more than an average employee and most employees are already organized in teams with team leaders.

New Employee Strategy

Low: Once productivity increases, more employees are needed.

Medium/High: Providing training, hiring twice the number of workers temporarily costs quite a sum of money.

Low/Medium: Results can be measured immediately based on productivity demand.

Decentralization of Authority

Low: Employees responsibility increases, more flexible, more creative.

Low: Spreading the power is done internally, so no additional cost needed.

Low: Managers at different departments and levels can make key operating decisions that are related to their sphere of responsibility.

Date:12/01/2011

TEAM 3 | PAGE 19

Creating a New Department for Research & Development

Low/Medium: The employees working in the new department have to have some skills of engineering on research & development, or it will fail.

Medium/High: Requires workers who are experts in research and development.

Medium: Depends on the competency of the workers hired for the new department. Whether they are able to adapt and have the necessary skills.

Table (5): risk evaluation Our group recommends that P.T. Redwood should implement the subdivision of lower level administration, new manager, new employee strategy and creating a new department for the research & development as soon as possible because these solutions will help to increase the efficiency and the productivity rate. Also, the communication between main office and factory sites will have a lower cost and take lesser time. PREDICTING FUTURE DIRECTION We believe that with the solutions from immediate and long-term recommendations our group has come up with, P.T. Redwood will have a lower employee turnover rate and hence increase the efficiency in production. And with focus on product innovation, the company will produce more products, which will lead to the increase in revenues. Also, the solution will allow a better and faster communication within the top, middle and low management levels. Although all these solutions requires high costs, if P.T. Redwood were to implement this solutions, we believe that in the long run, they will benefit more than what they have paid for. A SIMILAR WORLD-CLASS ORGANIZATION AS P.T. REDWOD Azteca Milling is the largest and most prominent of corn masa flour in the United States. They manufacture over fifty types of corn masa flour used for tortillas, tacos, tamales, and also the snack and bakery industry. Azteca Milling is now the market leader of the corn flour industry and they export to clients in United States, Canada, Mexico, Europe, Asia, Africa and the Middle East. Their production plants in the US have a capacity of over 780,000 metric tons per year. We think that if PT Redwood expands as Azteca has done they could see similar rise in production and sales. By going global, and possibly moving their headquarters elsewhere, PT Redwood will be able to expand their resources. They would also have the means to hire more employees and create a more structured organization map for each location, and for the overarching organization as well. Azteca prides themselves on delivering to their clients needs and they are constantly working to develop new products as well as improve their existing ones. They have excellent ingredient technology, with yield enhancement, opacity, texture characteristics achieved by their advanced technology and research. If PT Redwood strives to modernize their technologies as well they could perhaps eliminate the problems amongst low-level workers. They could also consider adding other types of products to their production line, as Azteca has gained success from their variety in production.

Date: 12/01/2011

TEAM 3 | PAGE 20

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Helium.com permanent URL: http://www.helium.com/items/1037599-improving-communication-between-management-and-employees. May 10, 2008.

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PT Redwood’s Brochure. Weiss, Jan. “Laws Regarding the Hiring of Contract and Temporary Workers.”

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