Earning Profit for Stockholders - Essay Example

? Operational Plan for AllPharm Inc and number submitted Operational Plan for AllPharm Inc Superficially speaking, an organization has a single target. Success of an organization is measured by how well an organization meets the target set by those who are authorized to set the target for the organization in question. There are requirements for meeting this target and to what extent these requirements are fulfilled determines how well the target is met. Such requirements are usually different for unique organizations even if the target is the same. A private, for-profit organization, AllPharm Inc, has the precise target of earning profit for its stockholder(s) with the desired amount of profit varying over time per the will of the stockholder(s). In this regard, for AllPharm in its unique place, adaptability and inter-departmental integration seem to be the most important factors affecting how well AllPharm fulfils the requirements for meeting its target. Vision and Values As stated earlier the core objective of any for-profit organization is earning profit for its shareholders. However how this profit is desired to be earned over time is prescribed by the vision of its owners. The pharmaceutical industry is on a high in this era and is considered an ever-green industry – that sees up and downs but can never go into a recession because the medical needs of human beings never end. For this reason, AllPharm’s vision has a substantial emphasis on sustainability and growth. And because of this vision, its reputation among its customers and employer unions is vital to its long-term interests. This is why AllPharm has an assertive code of ethics that is intended to be followed by employees from top to bottom in its organizational hierarchy. The company has a stated policy that it “values its customers as human beings more than it wants to provide them value for service as customers.” It is mandatory for office managers to display a printed code of ethics on notice-boards in every office and on walls in the production facilities and laboratories. The Human Capital Management division staff is regularly briefed on the importance of incorporation of human attributes in addition to candidate portfolio in the selection criteria for hopeful applicants for jobs at the company. Upper Hierarchy There are broadly three floors of management in any sizable organization, namely the top or governance level, the departmental management and the lower or direct personnel management. For an effective top-down approach to governance it is imperative that every post have as few subordinates as possible; this is the basic principle of AllPharm’s administrative structure. The President has no more than two Directors working under him. Hence the operations of the company are divided into two main categories: Production and Marketing. Together the two Directors and the President comprise the executive branch in the organizational structure. The President’s main responsibilities include devising developmental policies based on continuing market research and resource availability, supervising the Quality Control department, moulding production practices based on the latest legal stipulations and allocating staff and resources based on his own judgement of the overall industrial scenario. The Directors each take care of completely separate functions of the organization and integration and communication between the two departments is maintained by the liaison officers of the Sales Department. Both the Directors are accountable for all their position-based responsibilities except looking after staff lower than that working directly under them. This is the crux of an employee relationship principle that AllPharm has adopted known in the organization as the “charity begins at home” principle. Service Structure In the mid-level management structure AllPharm has four General Managers, specifically for Manufacturing, and Quality Control, which fall under the supervision of the Director for Production, and for Sales, and Research and Development which are supervised by the Director for Marketing. The lower level managerial positions are defined by various criteria, for instance, in the Sales department the lower managers are classified by brands and territorial coverage. Hence there is a team manager for a specific brand in one region and another one for a different brand in the same region, and yet another one for the same brand in a different region. Brands are distinguished by the type of medical application. The company manufactures utilities for first aid applications like bandages and medical thermometers, allergy medicine for which it has contracted with one of the largest consumer healthcare companies of the world, GlaxoSmithKline, as well as external application creams such as for bruises and itching-relief. Organizational Chart Fig. 1 Organizational Chart for AllPharm Drug Laws As a producer of pharmaceutical products, AllPharm has to comply with stringent quality assurance laws and stipulations of medical regulatory agencies like the U.S. Food and Drug Administration agency. Companies dealing with medical products go through the greatest length of red tape out of all companies. Yet some researchers like K. P. Purnhagen (2008) contend that the growth in the pharmaceutical laws bears testament to the fact that the regulatory authorities are too complacent. Hence to stay in-line with these governmental provisions while not getting bogged down the company should have a great emphasis on investing in its Quality Control and Contracts departments. This is the reason the company has a full time corporate lawyer as well as a Legal Affairs Division both of which are directly answerable to the company’s president. The Legal Affairs Division works with both the Brand Sales division (due to the fluidity of laws regarding drug advertisements) and the Quality Control department. Human Capital The most prominent facet of any organization’s operational policies is its Human Capital policy. AllPharm Inc has an independent Human Capital Management department that is only kept in check by the Quality Control department which employs a Human Resources Supervisor purely for this purpose. The HCM department is required to interact with the major shareholders of the company by phone and through a weekly confidential newsletter detailing the recent appointments and inductions and can be asked to present performance data for any employee by a major stakeholder. The importance of employing the right person has often been described as a far bigger factor in achieving corporate success than any other possible factor. In this regard Hambrick and Mason (1984) have even gone on to contend that organizations are reflections of their top managers. The Human Resources policy of AllPharm is also influenced by the “Ethics Code” of the company which states that humans are not to be considered a material asset in any function of any department even at the cost of loss of productivity and such classification by any staff member is to be looked down upon. The company code of conduct charter also demands that a policy of equal opportunity for women be implemented by the HCM division in fields where it is viable for female staff to compete for positions with male staff. Staff Conduct James R. Lindner (1998) defines motivation as “the inner force that drives individuals to accomplish personal and organizational goals (Abstract).” It has been long understood that employee motivation is not purely dependant on salary and other material benefits. Attributes such as ego, socialization potential and sense of security of a worker also play a major role in determining his output potential. Employees vie for the respect of their juniors and trust of their managers. AllPharm has a “Charter of Fairness” that all departments have to adhere to whereby all managerial staff pledge to treat their subordinates with equity and any staff member can report the misconduct of a fellow staff member of the same level against his subordinates to the respective General Manager. Employer-Employee Relations While the formation of labour unions is disallowed for workers of AllPharm, the rules for use of authority over junior staff are very comprehensive and do not allow for abuse of power by personnel in positions of authority. The company as an entity believes that the person a worker should have the best relationship with at the workplace is the one with whom the worker has the most job cohesion. Charity begins at home. If the President of the company wants to create an environment where workers remain motivated, he should evaluate the needs and incentives of the people directly working under him – the Vice-Presidents. This is why AllPharm has one common rule for employees of all levels in all departments: “You are not responsible for the well-being of staff lower than your direct subordinates.” This way, a manager’s corporate social responsibilities and evaluation criteria for his leadership skills are both concentrated in a small area. In addition to these measures the President of the Company also conducts employee satisfaction surveys at his behest from time to time. Happiness at the work place is a primary incentive for the resource managers at AllPharm and the organization holds the belief that spending on employee-employer relationship contributes to productivity. A study of medical companies’ patients and workers asserts that the happiness of the company staff is directly linked to the loyalty of the company’s customers (Atkins 1996). Productivity Performance evaluation is also a major tool for developing the productivity of an organization. Productivity is a broad concept that includes contributing factors from organizational culture to communicational system’s efficiency. In the conventional sense productivity is defined as the ratio of outputs to inputs directly involved in the process of production. However in the larger context productivity of an organization is really an indicator of its overall efficiency. Productivity is most dependent upon the attitude of the executive staff of a company. Bringing up productivity is not a subject that can be addressed as a whole; it is too intricate to be considered at length. The largest indicator of productivity is the competitive profitability of a company, that is to say how well a company performs in selling its product compared to its competitors without a the help of nature; this determines the true productivity of a company. The Human Capital Management division at AllPharm monitors employee performance through electronic reporting systems and employee surveys. The top management use software designed specifically to identify grey areas in the allocation of human capital to various sectors of the company portfolio. The Research and Development department is responsible for growth and expansion which is the only factor contributing to productivity that does not fall under the umbrella of the overall efficiency of the organization. Management Control At AllPharm, the management control strategy is formulated by the Sales department. The organization uses feedback control data whereby sales and production figures from the Sales department influence the ongoing production rates of different products. Because these policies define which direction the organization needs to be heading in terms of brand management, integrative initiatives among the various departments are also handled by the Sales department. For fast implementation of revised brand management policies the company uses Enterprise Resource Planning software so that the new guidelines are incorporated by all the relevant organizational staff without wastage of time, energy or resources. The Sales department has liaison officers, one each for the Production department, the Branding divisions and the Executive Branch to allow for direct administrative communication of the Sales department with these other departments which makes for a highly integrated organizational structure at AllPharm. Research at the University of California has even proposed managerial control mechanisms as a tool for ensuring equity among workers performing the same job (Ouchi 1979). Corporate Social Responsibility As a privately owned company, AllPharm does not owe any authority to the general public. This is also the reason this company is able to carve out and manoeuvre its own social responsibility policy rather than follow customary profit-oriented principles like those of a publicly owned company. Soon after the incorporation of AllPharm, the shareholders constituted a Corporate Social Responsibility section under the Development division of the Research and Development Department. The CSR section takes measures like ensuring on-time and complete payment of corporate taxes by AllPharm. The company provides free healthcare products to select Health-related charities. AllPharm has a tradition of donating money to charities working in its locality. The CSR section regulates the Development division in areas such as environmental protection, public safety and land acquisition. Rapid communication and integrated systems are make-or-break organizational functionalities in the modern corporate world. Global accessibility for consumers has taken corporate competitiveness to a level which has mandated staying updated with the latest industrial tools in order to stay ahead in the global market. Managerial guides keep evolving and new techniques keep arising as information gathering becomes easier by the day. An important consideration is whether to follow the trends or to try to adapt to the imminent situation. Evidently, for AllPharm the answer lies in the latter proposition. References Atkins, P. M., Marshall, B. S., & Javalgi, R. G. (1996). Happy employees lead to loyal patients. Survey of nurses and patients shows a strong link between employee satisfaction and patient loyalty. Journal of health care marketing, 16(4), 14. Hambrick, D. C., & Mason, P. A. (1984). Upper echelons: The organization as a reflection of its top managers. Academy of management review, 9(2), 193-206. Lindner, J. R. (1998). Understanding employee motivation. Journal of extension, 36(3), 1-8. Ouchi, W. G. (1979). A conceptual framework for the design of organizational control mechanisms. Management science, 25(9), 833-848. Purnhagen, K. P. (2008). Challenge of Globalization in Pharmaceutical Law-Is an International Drug Approval System Modeled after the European System Worth Considering, The. Food & Drug LJ, 63, 623. Read More