To: Chief Executive of Gore-Tex UK
From: Mr. Tebogo Msiza
Subject: Potential issues for Gore-Tex UK
Date: 25 July 2018
Executive Summary
The Gore-Tex Manufacturing branch in the UK is a medium-sized company consisting of 426 employees, and are best known for their efforts in creating world renowned high-performance fabrics that can be used in industrial, electronic, leisure and medical sectors. Their business strategy states that they aim to deliver continuous innovations by turning management principles on their head, and as a result have been able to acquire a turnover of £26m. In their efforts to turn management principles on their head, Gore-Tex have taken the initiative to abandon traditional management principles and implement a few of their own. Gore-Tex have done this by: removing management, not including job descriptions, not having any bosses to tell individuals what to do, and have opted to rather have associates and leaders in order to keep order in the company. In order to become a leader in the company an employee needs to convince others of the quality of their ideas as well as their contribution towards the goals of the company. Currently employees in the company are not given a fixed salary, they are remunerated through a system based on peer review, in which members of a team are asked to rank one another from largest contribution to lowest contribution, then payment is divided according to the percentage of their contribution. Employees are also given a stock option as a form of remuneration which is represented by the proportion of their earnings. One of the influential keys to Gore-Tex’s success over the years is the fact that they have kept their operating units small, in which around 170 associates are placed in each unit. In the company employees are able to come up with an idea of their own, thereafter will form teams in order to assist them in implementing their idea. As a result, teams are continuously changing in Gore-Tex and it is important that employees keep up to date with the changes. This can be done through an interconnectional network that keeps all employees aware of the changes in teams as well as with new projects that may be in the pipeline. Gore-Tex believes in employee self-motivation, in which they state that if the right working environment is provided to employees, then they will look forward to coming to work. As a result, Gore-Tex have opted to not formulate any written rules in regards to leave, and believe that employees in the company are extremely motivated to achieve their objectives, so there is no need for written rules. Currently Gore-Tex make use of the Kaizen process instead of management programmes in the company.
Issues
The organisation currently has a number of potential issues that may become problematic in the future, and need to be addressed in order to ensure that the organisation can continue to operate smoothly into the future, which are as follows:
1. Management Problem: Individuals working in teams are not correctly remunerated for their work.
2. Organisational Behaviour Problem: The use of the Kaizan technique
3. Leadership Problem: There are no written rules for the employees
Management Problem
One issue that may become very problematic in the future for the company is that there is no management in place to correctly and fairly remunerate the employees for their work. Because of the peer-based remuneration system that is currently in place, many employees may begin to feel as though they are not being treated fairly in terms of remuneration. For example, when an individual generates an idea for a new product, they automatically take on the role as leader of that project. Thereafter individuals that have an interest in the products development or that possess the necessary skills to assist in the development of the product will then form a team and assist the leader. When the product is complete and money is issued out to the team, it is up to the team to distribute the money according to how much work they feel their peers have done. This form of remuneration may become very problematic in the future as employees may begin to feel as though they are not being correctly paid for their efforts. With reference to the 14 principles of management, developed by Henri Fayol, in order to ensure that employees feel encouraged to carry out their duties with full motivation and devotion to the organisation, equity and a sense of equality is important when dealing with your employees (Fayol, 1949). As a result, if a sense of equality is not instilled in the company many employees may begin to become less motivated to perform their tasks at optimal level.
Organisational Behaviour problem
One factor that may also have a negative effect on the organisation in the long-term is their use of the Kaizen process technique. The Kaizen technique is a method in which small, incremental and continuous changes are made in order to make improvements and achieve higher standards in an organisation (Didis, 1990). Currently in the company, there are no management programmes involved, instead it is up to the teams(employees) to identify the different constraints and bottlenecks that they may be experiencing, then identify different ways to tackle the problem. This is an issue because employees are using their common sense in order to tackle these issues. This then has an effect on the productivity of the employees as they spend varied amounts of time coming up with ways to tackle different issues, and if their proposed solution does not completely fix their problem then they are forced to continuously make different changes until they see improvements. According to Taylor (1911), an organisation should look to replace the rule of thumb, which is the process of habit and common sense, and much rather use a scientific method in order to determine the best and most efficient way to carry out specific tasks and tackle different problems (Taylor, 1911).
Leadership Problem
In the company, there is a belief that the employees are highly committed to meeting their objectives, and that in certain circumstances, are the best suited to make certain decisions. As a result of this, there are no written rules in place for the employees. Therefore, when it comes to bereavement leave for employees, there is no specific amount of leave for employees, which then allows the employees to take leave for as long as they please. This may become problematic in the future as employees may begin to take advantage of the leave, and end up not reaching their objectives in a timely manner. Referring to the content theory of the principles of bureaucracy developed by Max Weber, in order for a company to operate efficiently there needs to be strict rules and regulations in place (Mullins, 2016). This helps keep a level of discipline amongst employees and will often times bring out the best in them.
Recommendations
In order to ensure that employees stay motivated to continue working at optimum level all into the future, I would recommend that Gore-Tex remove the peer-based remuneration system and begin to pay employees a fixed salary. Gore-Tex should look to implement one of Henri Fayol’s principles of management (equity), and ensure that all possible actions are implemented in order to ensure that all employees are treated as equal as possible (Onkar, 2008). In the case of individuals who develop a new product idea, they can be given an additional bonus in the form of royalties for the product they helped create. As a result, a number of employees would feel more motivated to come up with new products.
In order to ensure that employees do not spend large amounts of time making small incremental changes in order to improve the efficiency of performing certain tasks, I would recommend that a manager be hired in order to implement scientific management principles in the attempt to make carrying out tasks more efficient. By doing this Gore-Tex would avoid unnecessary costs from making small changes that may not always work, allow employees to focus on reaching their objectives without any barriers, and leave all the work to a manager that could implement a full strategy that had been thoroughly thought through, with all possible factors being considered.
The implementation of Douglas McGregor’s Theory X management theory, when it comes to the implementation of rules for employees, would assist in making sure that employees do not take advantage of the current lack of rules in the company. According to McGregor (1960), an employee needs to be coerced, controlled and threatened with different methods of punishment in order to achieve the company’s objectives. Therefore, it is in Gore-Tex’s best interests to implement a set of rules that will be able to govern an employee’s behaviour in the company, in order to ensure that they continue to fulfil the different objectives that have been set in place for them (Mcgregor, 1960).
Bibliography
Didis, S. K., 1990. Kaizen. The Internal Auditor, 47(4), p. 66.
Fayol, H., 1949. General and industrial management.. 1st Edition ed. London: Pitman.
Kullabs, 2018. Note on Max Webers Bureaucracy theory Concept and Principles.
[Online] Available at: https://www.kullabs.com/classes/subjects/units/lessons/notes/note-detail/5329 [Accessed 27 July 2018].
Mcgregor, D., 1960. The Human Side of Enterprise. 1 ed. New York: Mcgraw-Hill.
Mullins, L. J., 2016. Chapter 2: Approaches to organisational management. In: G. Christy, ed. Management and Organisational Behaviour. New York: Pearson Education Limited, pp. 41-42.
Onkar, M., 2008. HENRI FAYOL’S 14 Principles of Managemen.
[Online] Available at: https://managementinnovations.wordpress.com/2008/12/04/henri-fayols-14-principles-of-management/ [Accessed 26 July 2018].
Taylor, F. W., 1911. The Principles of Scientific Management. 1 ed. New York : Harper Bros.