Problems in the Product Development Department: of the Nuf Fun Company - Case Study Example

Performance Issues Facing the Nuf Fun Company The performance issues facing the Nuf Fun Company are very broad, and are complicated further by being focused on two particular personalities, Vic the CEO and Linus the head of product development. The Nuf Fun Company does not actually have a performance management system, and any assessment of the performance of individuals, departments, or the company as a whole is entirely outcome-based: targets of a certain profit percentage, a certain number of new products, and so on are set, but there is no clear, measurable process to achieve them. Nuf Fun is doing well, based on its numbers, and everyone recognises that the reason for that is one very talented, aggressive individual in Linus. But what Nuf Fun should be asking themselves is, “What if we did not have this individual? Would we still maintain our overall performance?” The answer is, probably not. The expert commentators on this case study all recognise that, and they all recognise that Vic is more the source of the problem than Linus. Linus is an incredibly insensitive, stubborn, and arrogant person, and he fails in not understanding – or refusing to understand – that the status quo is not a realistic state of affairs. But on the other hand, he is actually working within the guidelines given him by Vic, and the fixes suggested by Vic for the conflicts in Linus’ department have been vague and not made very forcefully. The real problem this causes is that the resources of the other people in Linus’ department are not being used to their full potential. Thus, the performance issues facing Nuf Fun can be summed up by a relatively simple statement: the lack of a performance management system is creating inefficiency in the use of the company’s talented human resources. This shortcoming can be laid squarely at the feet of the CEO, Vic. Problems in the Product Development Department Because Vic’s management style stresses outcomes and results rather than processes, the main problem in the Product Development department is a lack of organisation. The staff have job titles, but their roles are not clearly defined, and consequently, they are doing jobs others should be doing. Linus is the manager, but he concentrates most of his time and effort on being a designer. Verity is a top designer, but she spends much of her time making up for Linus’ shortcomings as a manager. Steve and Janet are practically pushed to the margins in this continuous conflict of personalities. Although the case study does not say it in so many words, there is an implication that Linus does not want anyone else to receive any credit for developing new products, and that his activities, which he casually explained away by saying, “I’m Type A” are consciously intended to thwart the rest of his department’s opportunities to be creative and be recognised for it. A good example is his product development process. As Verity told Vic, Linus will insist on the policy and procedures being followed when someone presents him an idea, but while the other team member is bogged down in completing forms, Linus personally rushes ahead with the idea so that it really becomes his and not someone else’s. For a manager to demand that a policy – one that everyone agreed upon, as Vic pointed out – be strictly followed and then to ignore the policy himself is irresponsible and counter-productive. A Recommended Performance Management System for Nuf Fun Company Nuf Fun follows a Product-Focused business strategy. By default this is also a Customer-Focused strategy since products necessarily require customers to buy them, but the objective for the company is to prioritise the development of a large number of new products. Nuf Fun’s value chain is unbalanced to the left, in a manner of speaking, because of the strong focus on research and development and product design compared to the other functions of production, marketing and sales, distribution, and customer service. This is not necessarily bad; after all, Nuf Fun is a successful, competitive company with steadily-increasing profits. But in Nuf Fun’s case, this is the result of an unsustainable situation in which the company is lucky enough to benefit from one aggressive, talented individual, and not as a result of a good structure. Because Nuf Fun has a set of clear, simple, quantifiable objectives as part of its product-focused strategy, the company’s situation suggests a Balanced Scorecard performance management system might be a good solution. A balanced scorecard is a good way to describe how strategic objectives – for example, Vic’s edict that new product ideas be doubled from 75 to 150 per year – relate to strategic perspectives, such as the four most commonly used perspectives of Financial, Internal Processes, Learning and Innovation, and Customers. The program is also easily scaled, and can be applied effectively to the entire company, a single department, or even a single individual. This is helpful, because it eliminates confusion and inefficiency caused by different ways of measuring performance at different levels. Another reason the balanced scorecard may be particularly helpful to Nuf Fun is that the process of developing it requires the people in the company to ask and find answers for a lot of questions. It does so in a more positive way than what Nuf Fun is doing now, which is to ask “How do we solve the problems in the Product Development department?” Instead, the questions all become versions of “How do we achieve our strategic objectives, and how do each of our tasks relate to our strategic perspectives?” Using Vic’s goal of doubling product ideas as an example, the first step of the process of building the balanced scorecard would lead to questions like: What are the financial requirements of this activity? – Answering this question would suggest further questions and objectives related to the company’s budget and finance management. What internal processes are needed to achieve this objective? – This would go right to the heart of the problems and lack of sustainable processes in the Product Development department. What learning and innovation is needed to support the work to reach the objective? – This would highlight areas of training needed or even the need for additional people, depending on what is discovered in the course of asking the relevant questions. What will be the impact of this objective on our customers, and perhaps more significantly, what impact on our customers do we wish for this objective to have? – This helps to focus all the rest of the company’s work, and in fact re-examines the objective itself: do customers want or need 150 new products a year, and will they buy them? The balanced scorecard process works by starting with the company as a whole and dividing the process in steps down to the individual level. Besides being a practical way to manage the process, there is also a bit of a psychological benefit, in that the organisation is put before the sub-group or the individual, a point of view that Nuf Fun certainly should adopt. Individual Performance Management Program: Linus Carver The options that are available to deal with the “Linus problem” in Nuf Fun’s Product Development department range from asking for his resignation to doing nothing at all. Since Linus is very talented and a proven asset to the company, the best option would be to design a performance management plan that does everything possible to keep him in his position without sacrificing the long-term well-being of the organisation. There is a good chance, however, that it will not work; Linus might fail to meet up to the standards set by the program, or might simply be unable or unwilling to work with it and leave on his own. Therefore, any performance management program for Linus requires that one be made for each of the other team members in the Product Development department, so that a good structure is built that can survive the loss of even a very talented person. Linus’ job as a manager is to see to it that his department meets performance expectations; he obviously has the feeling of “if you want it done right, you have to do it yourself”, which is probably not uncommon. Therefore, his performance management program should contain KPI’s that deal specifically and exclusively with his role as a manager, and not the role of “do everything” which he has adopted. KPI’s such as “increase new product ideas from 75 to 150 per year” do not belong on Linus’ program, but rather on the one for the department as a whole. Some examples of KPI’s and their measures that would be appropriate for Linus: Staff Turnover: Can Linus manage to keep his team together, or at least most of it? If Linus can keep all his senior engineers and lose no more than 10% of the junior engineers, that can be considered a success. Working Hours: Can Linus effectively do his job as a manager without working 15 hour days? That can be easily measured by keeping track of his time spent at the office. Granted, he could certainly cheat and do a lot of work at home, but what someone chooses to do with his free time is not really within the company’s responsibility to manage. Time Management is the one area where Linus would most benefit from additional training, and he should be required to take a course in it. He has not been very receptive to suggestions concerning training or counseling in the past, but this is one subject in which he might actually be a little more cooperative. Staff Productivity: Can Linus develop department programs and procedures to allow each one of his engineers to develop at least one new product line per year with only minimal input from Linus? This performance indicator is complex but in general could be measured by Linus’ building a workflow process that gives primary “ownership” of an idea to the designer that developed it, organising appropriate training for the staff in the process, and then having new products actually be developed and approved by using the process. To keep it fair, responsibility for auditing the process should be given to someone outside the department, probably Vic. Summary of Linus’ Performance Management Program: KEY PERFORMANCE INDICATOR MEASURE OBJECTIVE Staff Retention Number of department employees remaining at year end. All senior engineers and 90% of junior engineers remaining. Working Hours Number of hours on company premises or work-related activities such as conferences, seminars, etc. Average of 40-60 hours per week over the entire year. Staff Productivity Number of new products per designer approved during the year. At least one product per designer, required that product meet new development procedures. Individual Performance Management Program: Vic the CEO As the expert commentators at the end of the case study suggested, in particular June Rokoff and David Olsen, Vic should concentrate on personal training in order to be able to guide his company effectively. He hired Linus and Verity on the basis of their personal qualifications, which is not really wrong, but he had no consideration of how they would fit into the organisation. So Vic’s first and biggest KPI would be management training completed, and should include, as the experts suggested, courses in active listening and team-building. A course in conflict resolution would probably also be a good idea. Vic also spends entirely too much time in his office looking at financial figures, and not nearly enough time keeping informed on the day-to-day activities in the company. The problem here is the oversight of Vic’s performance, which is the responsibility of the Board of Directors. Their concern most likely is with the company’s market and financial performance, and their reason for hiring Vic was to see that the company performed well; it is performing well, and they may not care to know the details of how that is happening. They will care, however, if the problems caused by the management styles of Vic and Linus blow up in everyone’s face and Nuf Fun’s performance diminishes. Vic’s second KPI would be the development and maintenance of an effective “internal information” program, in which he will regularly be updated on the details of the activities, problems, and other issues in each of the company’s departments, probably on a weekly basis. That will involve three steps: First, to develop a schedule and format for weekly meetings with his managers; second, to develop a program each department can use to hold their own weekly meetings; and third, to prepare a brief but concise report for the board after each meeting, one which effectively informs them of issues that need attention without requiring them to assume the role of managers. This is important to Vic’s position, because it will signal firm support for his actions by the board, and further reinforce the idea that the organisation and not the individuals are the company’s priority. Summary of Vic’s Performance Management Program: KEY PERFORMANCE INDICATOR MEASURE OBJECTIVE Up-to-date Management Training Number of required training programs completed *Active Listening Course *Team-Building Course *Conflict Resolution Course Management Communication Program in place Number of weekly managers’ meetings scheduled and attended by all managers Full schedule of 52 weekly meetings completed, with at least 95% average attendance Team/Department Communication Program in place Number of weekly meeting reports received from each department Full participation – 52 reports received from each department Board Reports Number of weekly reports prepared and forwarded to Board of Directors Full completion – 52 weekly reports In conclusion, what these two individuals’ programs are really meant to do is to establish a set of expectations for their positions, and not just them personally. Even under the best and most optimistic circumstances, neither Linus nor Vic will be available to Nuf Fun forever; therefore, it is important that the company establish a good structure now, while they still have very talented and successful people at their disposal. N.B. : Take out the highlighting (obviously), I just did that so you could see what I was talking about earlier. Read More