Executive Summary To resolve Treadway Tire’s growing problem of a high turnover rate in the line foreman position, many alternatives have been evaluated to determine the final recommendation. The final recommendation of how to reduce high turnover in the line foreman position will help Treadway Tire’s business operations. These potential alternatives will include reducing line foreman staff, hiring outside the company, doing nothing, and increasing incentives for staying.After using the key criteria which includes ease of implementation, employee morale, and reducing risk, it was determined that increasing incentive for staying was the best alternative.
Among the alternatives, reducing the foreman staff would help reduce costs, but would would not increase the value that much and is very risky to Treadway Tire. Hiring outside the company would be very risky, but has the potential to reduce costs and increase value of the company. Doing nothing would perhaps ensure the current success of the company stays intact, but would do nothing to reduce the high turnover rate of line-foreman within the company.
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Each of these alternatives were weighed by the value, cost and risk it would bring to the company. After analyzing the situation, it was determined that increasing incentives for staying would be the best option for Treadway Tire. Increasing incentives will be easier to implement,boost morale and help reduce the risk of high turnover at the Treadway Tire Company also. A problem statement is given, followed by the problem and data analysis of the situation.
The alternatives are listed, and key decision criteria would include the value, cost and risk of each alternative to the company. An alternatives analysis and evaluation will evaluate each alternative according to the key criteria. Then the recommendation will be made using the chosen recommended alternative. An action and implementation plan will show just how increasing the incentives will happen.Problem Statement In 2007, Treadway Tire Company experienced a 46% turnover rate in the line foreman position at the Lima, Ohio production facility. Problem and Data AnalysisBackground of Treadway Tire Company Tire manufacturers face a variety of challenges, such as an increase in raw material costs and intense global competition. That is because raw material costs represented 55% of the total cost of producing a tire.
Oil was an important derivative in the raw material costs. The price of crude oil jumped from $25 a barrel to $93 dollars a barrel between 2003 and 2007. The goal is to cut the overall costs and improve direct productivity by decreasing the turnover rate. The problem is rising cost of oil prices coupled with an increase in price of raw materials does not seem to be going away (Skinner & Beckham, 2008). Production rates at the Lima, Ohio plant seem to be going well, with about 25,000 tires being made a day in 2007. There is plenty of space to work with, including a 1.5 million square foot plant situated on 128 acres of land.
There were about 1,120 people employed at the Lima plant, including 970 hourly employees and 150 salaried employees. Hourly personal were represented by a union called the United Steel Workers, later becoming the United Rubber Workers. The union helps with job classifications, pay rates, overtime rates, benefits, health/safety standards and grievances of employees (Skinner & Beckham, 2008). With the 100-million-dollar expansion undergone in the year 2000, the Treadway Tire Company has the manufacturing plant it needs to be productive.
The Lima plant is even operating around the clock 24 hours a day, seven days a week, with four rotating shifts. By Treadway Tire employees having two 12 hour shifts instead of three 8-hour shifts, the company is reducing its headcount while reducing costs. Hourly line-production employees are supervised by salaried, non-union floor managers called line foreman. The 50 line-foreman employees at the Lima plant work directly under 13 general supervisors who manage many production lines. The five area managers are responsible for everyone in their sector, including the hourly employees, line-foreman, and general supervisors (Skinner & Beckham, 2008). Turnover. High turnover ratio because the turnover ratio of Foreman is very high at 46 percent. In December of 2006, there were 8 external, 40 internal and 2 transfers, totaling 50 Foreman.
Compare that to 2007, when there were 10 external, 38 internal, and 2 transfers, totaling 50 Foreman. The trend seems to be showing more external hiring. In the year 2007, 23 out of the 50 Foreman left the company.
Ten of the employees did so voluntarily and thirteen left involuntarily (Skinner & Beckham, 2008). Cost. There is a high cost of hiring new employees and the turnover rate is very high. When Treadway Tire hires a new employee, the cost must be considered. When an employee leaves Treadway Tire, and is replaced by a new one, there is a cost there also. Costs can include salary and benefits, recruitment and the need to create more workspace.
Other costs can include equipment, training and in some cases relocation of the individual (Mathias and Jackson). Lack of Training Line Foreman feel unequipped to do the job. In a survey of line foreman at Treadway Tire, only 2 percent feel that they are prepared to accomplish duties at their job. That is a very low percentage that agree they are well prepared to perform duties at their job. A line foreman during an exit interview said that they were left to work alone. The line foreman went on to say that proper training was not given, thus the employees lacked necessary skills to get the job done (Skinner & Beckham, 2008).
Unrealistic Job Responsibilities ((Exhibit 4 and 5 and Page 3 The Line Foreman Experience) This is a current list of job responsibilities from the case study. The responsibilities of a Line foremen are to:• Meet production targets;• Contact maintenance to fix issues with machines or quality;• Maintain safety and health standards;• Investigate safety and health violations;• Find replacement workers for people who do not come in to work;• Record disciplinary actions taken;• Perform administrative actions;• Negotiate work standards;• Schedule hourly workers;• Approve vacation requests; • Check time cards; and• Solve payroll issues. The line foremen have too many responsibilities; it is impossible to do all, or any, of these tasks well. A person can only focus on so many things, and each person has different limits. With so many responsibilities, there is not enough time to focus on any one of them for too long. A person could feel overwhelmed by all the responsibilities, and this would affect their productivity.
After attempting to perform these responsibilities for a period, it would seem impossible, which would lead to them either quitting or being terminated for failure to meet standards. Unsupportive Management ((Exhibit 4 and 5 and Page 4) There is very low employee morale. According to a survey taken by Treadway Tire, the foremen have low morale.
The vast discontent of exiting line foreman was blatantly obvious in an August of 2007 survey. Incidents occurred that highlighted the tension between the hourly workers and the line foreman. In a recorded incident, a line foreman kept shouting at an hourly employee for returning late from break. In a meeting immediately after the big incident, Line foreman expressed concerns about their lack of authority and relations with hourly employees. Figure 1 provides an overview of the Lima employee survey results and show high dissatisfaction of their employment.
show that only 7 out of 50 or 14% of employees believe that management is sensitive to their problems. Figure 1: Survey taken of 50 line-foreman at the Treadway Tire plant in Lima, Ohio Only 2 out of 50 or 4% of employees feel that they can perform duties in their jobs. Only 3 out of 50 or 6% of employees believe that their supervisor is a positive role model. Only 2 out of 50 or 4% believe that the company offers clear opportunities for advancement. Only 4 out of 50 or 8% say that they are satisfied with the morale in the company (Skinner & Beckham 2008). Conclusion There are many threats to the stability of Treadway Tire staff, the Foreman. The high turnover rate is threatening the stability of Treadway Tire Lima plant.
The Lima location is the most important investment of the Treadway Tire company. The current trend cannot continue if Treadway Tire wants to keep manufacturing in Lima. AlternativesDo Nothing Doing nothing would reduce the risk of making drastic changes to the company structure. The time of implementation in doing nothing would not take any time what so ever.
Advantages of doing nothing would include:• The management and supervisors will be glad to not make changes. • No time would be wasted trying to solve problems or trying to find solutions.• It would not be a problem for employees, they could just continue their daily routine.• The Human Resources Management can hire Line Foreman who perform well. Cost.
The cost of doing nothing would remain the same at $347,670, which is way too high. The risk of doing nothing is neither too high nor too low.Hard and Soft Skills Training (how days, Line foremen need training to improve their communication skills, improve the interactions with their hourly workers, develop leadership skills, and learn general management knowledge. This would help them communicate better and more often with their general supervisors, learn how to be inspiring, and learn how to motivate subordinates. The training will consist of a scaled back version of the month-long training proposed by Ashley Wall, Human Resources Director in late 2007 consisting of 4 hours of training per week for one month. The types of training that would be provided are:• Communication skills;• Performance evaluation;• Time management;• Manufacturing process;• How to motivate employees, without having authority; and • Entry level leadership training.Cost. The 4 hours a week for 4 weeks for a total of 16 hours of training.
$42 wages and benefits x 16 hours = $672 x 50 line foremen Plus $2,500 in miscellaneous costs for trainer, materials, and refreshments Total cost $36,100 of estimated costs. Management Mentorship This alternative will focus on providing mentorship for line foremen to do well. The line foremen will be matched with their direct supervisor for an average of 2 days per month which is equal to approximately 10 minutes per work day for training and mentoring. Management Mentorship will provide line foreman with the necessary boost in morale that is so sorely needed. Since there is a majority of line foreman that believe that management is not sensitive to their problems, action needs to be taken. The majority of line foreman believe that they cannot perform their very own job. Most of the Line Foreman do not believe their immediate supervisor is a positive role model.
The management Mentorship will be available to all managers. The programs that are provided will include:• Sensitivity to other people• Allowing people to perform their job duties• Being a positive role model• Clear opportunities for advancement• Morale in the company Cost. Line foreman and direct supervisor wages would be $42 x 16 hours = $672 x 50 line-foreman + 2,500 in extra costs equals $36,100 and the Supervisors would be $52 x 16 hours=$832 x 13 = $10,816 plus 1,184 in extra costs equals to $12,000 + $36,100 = $48,100 total cost of mentorship. Key Decision Criteria Each of the criteria will be used to calculate a final score for each alternative, to determine which one is most applicable. Each of the alternatives will be evaluated based on a total score of adding the score of each key decision criteria, multiplied by the weight of the criteria. The most applicable alternative will be receiving the highest score. The calculated score for the criteria is on Table 2. Time to Implementation Given the urgency to develop a strategy to reduce turnover of line foreman, time to implement is an important factor to consider in choosing the best alternative.
The following criteria of ideal, acceptable, and not acceptable as described below will serve as means to evaluate each alternative objectively:• Any alternative that takes more than one year to implement would be unacceptable and result in a score of 1 on a scale of 1 to 3. • An alternative that takes six months to one year would be considered acceptable and result in a score of 2 on a scale of 1 to 3. • Finally, an alternative that takes less than six months would be considered ideal and result in a score of 3 on a scale of 1 to 3. • This decision criterion has a weight of 30%. Cost Since cost is a major factor for Treadway Tire Company and keeping any alternative at a reasonable price, it is important to consider the total direct costs of each alternative. The following criteria of ideal, acceptable, and not acceptable as described below will serve as means to evaluate each alternative objectively:• Any alternative with costs in excess of $150,000 would be ideal and result in a score of 1 on a scale of 1 to 3.
• An alternative with costs between $50,000 and $150,000 would be considered acceptable and result in a score of 2 on a scale of 1 to 3. • Finally, an alternative with a cost of less than $50,000 would be considered ideal and result in a score of 3 on a scale of 1 to 3. • This decision criterion has a weight of 45%.Risk The following criteria of ideal, acceptable, and not acceptable as described below will serve as means to evaluate each alternative objectively:• Any alternative with high risks in excess of 75% would be not acceptable and result in a score of 1 on a scale of 1 to 3. • An alternative with medium level of risk between 50% and 75% would be considered acceptable and result in a score of 2 on a scale of 1 to 3. • Finally, an alternative with a low risk less than 50% would be considered ideal and result in a score of 3 on a scale of 1 to 3.
• This decision criterion has a weight of 25%.Alternatives Analysis and EvaluationDo Nothing Schedule to Implement. Since there is no schedule for doing nothing as an alternative, this means that it falls in the category of less than six weeks which is a score of 3 which is ideal. Cost. The cost of doing nothing as an alternative is estimated at the total direct cost of turnover and assuming a continued rate of turnover of 46% at the Lima production. The cost is $347,670 which means it falls in the category of more than $150,000 which is a score of 1 out of 3, which is not acceptable. Risk. There is an 80% risk of doing nothing because there would still be a high turnover rate, and nothing would be done, so no changes would be made.
That is above 75% which is not acceptable, giving it a 1 out of 3 on the risk score. Hard and Soft Skills Training Schedule to Implement. The schedule to implement changes would be between 6 and 12 months, giving it a score of 2 out of 3 which is ideal. Cost. The cost of providing a hard and soft skills training program is estimated to be $36,100 giving it a 3 out of 3 which is ideal. Risk.
There is a medium risk because the Line Foreman are already seeking the hard and soft skills training they need. There is a 50% risk which is acceptable, giving it 2 out of 3 ideally.Management Mentorship Schedule to Implement. The schedule of a Management Mentorship program would be 12 months, giving it a 1 out of 3, which is not ideal. Cost. The cost is estimated at $25,000 giving it a 3 out of 3 which is ideal. The cost of the mentorship program would be $1000 per month, with bi-monthly sessions, for 12 months. That would be $24,000, payable in three installments (McEwan, 2018).
Risk. There is a low risk of having a Management Mentorship program, because that would then help managers, supervisors and line foreman alike. There is 25% risk which is ideal, giving it a 3 out of 3 which is not ideal. This would be ideal because a Management Mentorship program is going to be needed to guide managers and supervisors on how to communicateTable 1: Weighing of the alternatives and decision criteriaAlternatives/Decision Criteria Schedule Cost Risk 25% 45% 30%Do Nothing 3 1 1Hard and Soft Skills 3 3 2Management Mentorship 2 3 1 Table 2: Key criteria comparison based on the alternativesAlternatives Schedule Cost RiskDo Nothing Less than 6 months More than $150,000 75%Hard and soft skills training Less than 6 months Less than $50,000 50%Management Mentorship 12 months Less than $50,000 25%Figure 2 Recommendation Using the total scores in Table 2, it can be determined that the most applicable alternative is Doing nothing, with a weighted score of 83. The second most applicable alternative with a score of 58 is management mentorship. The third most applicable alternative would be hard and soft skills training, with a score of 38. At the very end, hard and soft skills training would be the least desirable alternative. Doing Nothing is clearly the most ideal alternative.
Action and Implementation Plan Without involving anything else, organizing social events with line foreman would help motivate them to be more active in their jobs. Helping line foreman in their current role would be more desirable than anything else. The current role of line foreman is to manage hourly employees.
The current structure at the Lima plant is the most efficient. Continuation on the path of steady performance will be the most desirable goal. Achieving better results will occur when the line foreman work well with the hourly workers, managers and supervisors. ReferencesSkinner, W. & Beckham, H. (2008). The Treadway tire company: Job Satisfaction and high turnover at the Lima Tire Plant. Brief Cases.
Harvard Business School. Retrieved: blob:https://hbsp.harvard.
edu/16eaffe3-4d64-4b87-8ec1-4cd5f79a0ec6Skinner, W. & Beckham, H. (2008). The Treadway tire company: Job Satisfaction and high turnover at the Lima Tire Plant (Audio Version). Harvard Business School. Retrieved: blob:https://hbsp.harvard.
edu/b7459dfa-c3f3-4d06-8e93-3f87dd6def01McEwan, B. (2018). 20/20 Executive Coaching. Accelerate your success: Coaching Fees. Retrieved: http://www.2020executivecoaching.com/fees/index.php?Extra StuffReducing line-foreman staff Reducing the line foreman staff would significantly cut the cost of running the Lima, Ohio plant operations.
That is because of the non-union salaried employees, taking so much of the wages given in Treadway Tire. There does not seem to be that much of a need to have so many front linemen having to lookover hourly employees. The hourly employees should have an idea on how productive they must stay with the company. If there are so many line-foreman yelling and shouting at hourly employees, it does not look good for the company. The value of having happy employees or hourly workers who do the actual work, would more than compensate the company. The happier hourly employees are with their jobs, the more productive they will be while working with Treadway Tire. Many of the line foreman just want to meet or exceed production, while giving no regard to the health or well-being of employees.
Hiring outside the company Hiring outside the company would be helpful in expanding the outlook of Treadway Tire. Getting new ideas and employees from college graduates will help the company become more prosperous. Increasing the value of Treadway Tire is a very high priority, and that can be done with new college recruits. While there are many good lines foreman working for the company, they will only demand more as time passes. College graduates will be less likely to waste the time of general managers and area supervisors.
In the year 2007, the base salary for line foreman was 30 dollars an hour, which is 16 percent higher than hourly employees. Pay rates are adjusted to represent experience with the company, which costs the company more than it would to hire new college graduates. Keeping with the status quo would still ensure the high production value of 25,000 tires per day at the Lima plant. The cost will still go higher because of the skyrocketing increase inraw material and petroleum costs. Value of the Lima plant and the Treadway Tire Company would continue increasing because of their business successes. An issue of helping front lineman will still be there because nothing would be done about it. Doing nothing would not resolve a variety of personnel, resource and administrative issues within a 12-hour shift. On top of that front lineman often feel like they are being pulled in different directions by management, workers, and the union.
That can be very frustrating for the front lineman, resulting more turnover within the front lineman position.Increase line foreman incentive Out of the alternatives, this seems to be the most viable because it addresses the issues that front-lineman deal with daily. The personnel issues that have to do with managers, employees, and the union can be resolved.
Too much blame goes to the front lineman when dealing with hourly employees, or the union itself. That is why meetings between the union, employees, front lineman and management need to take place regularly. Managers need to be more sensitive to the needs of front-line managers, who have so much on their plate. Resource issues can problematic, but if the line foreman are motivated, then the ROI will be higher. Many of these personnel, resource and administrative issues can be resolved through dialogue. If the front lineman are just quitting their jobs due to frustration with work, then there needs to be many changes made. That is why increasing the line foremen incentive will be helpful in increasing the value of Treadway Tire.
A solution to the problem may not be immediate, but with the right tools, there can be one. Reducing line-foreman staff Reducing the line foreman staff would significantly cut the cost of running the Lima, Ohio plant operations. That is because of the non-union salaried employees, taking so much of the wages given in Treadway Tire. There does not seem to be that much of a need to have so many front linemen having to lookover hourly employees. The hourly employees should have an idea on how productive they must stay with the company. If there are so many line-foreman yelling and shouting at hourly employees, it does not look good for the company.
The value of having happy employees or hourly workers who do the actual work, would more than compensate the company. The happier hourly employees are with their jobs, the more productive they will be while working with Treadway Tire. Many of the line foreman just want to meet or exceed production, while giving no regard to the health or well-being of employees. Hiring outside the company Hiring outside the company would be helpful in expanding the outlook of Treadway Tire. Getting new ideas and employees from college graduates will help the company become more prosperous. Increasing the value of Treadway Tire is a very high priority, and that can be done with new college recruits. While there are many good lines foreman working for the company, they will only demand more as time passes.
College graduates will be less likely to waste the time of general managers and area supervisors. In the year 2007, the base salary for line foreman was 30 dollars an hour, which is 16 percent higher than hourly employees. Pay rates are adjusted to represent experience with the company, which costs the company more than it would to hire new college graduates.