Problem: Echo Electronics

Paul Sanchez is the production manager for Echo Electronics, a small company that makes and distributes communications equipment. Paul's direct subordinates are the supervisors of the four production departments in the company's manufacturing plant. Six months ago, the engineering manager at Echo Electronics proposed a plan to install new computerized workstations to increase productivity in the plant. It seemed to be a good idea to Paul, and he welcomed the change. The CEO also approved the plan, and the new equipment was installed immediately. Three months later, Paul was surprised and disappointed to find that the expected increase in productivity did not occur. In fact, productivity and quality actually decreased. The marketing manager told Paul that several of their best customers complained about receiving Echo equipment that was defective. Paul does not believe that the problem lies with the new workstations. Technicians from the firm that built the workstations recently checked them and found that they were operating properly.

Paul talked to someone at another company that uses the workstations, and his contact reported that they were having great success with them. When Paul discussed the problem with his four production supervisors, he found that they shared his concern but did not agree among themselves about the cause of the problem. Reasons given for the decline in performance included poor design of the workstations, inadequate training of the production workers who operate them, and lack of financial incentives for increasing productivity. The supervisors also told Paul that the production workers have strong feelings about the workstations. Morale declined, and two employees quit because they were upset about the changes made in the way the work is done. This morning, Paul received a phone call from the CEO who just received the production figures for last month and was calling to express concern about them. The CEO indicated that the problem was Paul's to solve, but he must take immediate steps to deal with it. The CEO wants to know by next week what steps Paul will take to reverse the decline in productivity and product quality. SOURCE: Adapted from a case by Timothy R. Hinkin and used with his permission.

Questions: 1. What actions could Paul have taken to prevent the problem?

2. What steps should Paul take now to deal with the problem?