ANSWERS TO CHAPTER 5 QUESTIONS

ANSWER 5.1
The International Standards Organization (ISO) specified a
set of quality standards in 1987. These standards focus on
defining quality control processes to maintain a quality
management system sufficient for achieving sustainable product
quality levels.
Over 120 countries are ISO members. Within ISO, there are 200
technical committees working on 10,000 standards. Worldwide,
there are 200,000 organizations which are now ISO registered.
Only 30,000 companies in the US have done so.
In order to become certified to these standards, a company
needs to do the following:
A. Say what you do, by prescribing all procedures (i.e.,
sequences of well-defined steps) engaged in a specific
engineering function such as product design, customer service,
and technology advancement.
B. Do what you say, by training employees involved in said
function to understand and practice the procedures.
C. Prove it by ensuring that employees can quickly locate any
specific written procedures if called upon to do so.
An ISO certified company is regarded to have achieved
proficiency in practicing well-defined procedures, thus they are
also deemed able to better ensure product quality. The general
categories of ISO standards are as follows:
ISO 9000 Quality management and assurance standards
(general guidelines, advisory)
ISO 9001 Quality systems (for companies involved in design,
development, production, installation and
servicing of products)
ISO 9002 Quality systems (only for production and
installation of products)
ISO 9003 Quality systems (only for final inspection and
testing)
ISO 9004 Quality management and quality system elements
(advisory)

33

Chapter 5 Answers

Each standard is described by numerous volumes of manuals. As

an example, the ISO 9002 standard covers the following
engineering activities: (1) management responsibility; (2)
quality system; (3) contract review; (4) document control; (5)
purchasing; (6) purchase supplied products; (7) product
identification and traceability; (8) process control; (9)
inspection and testing; (10) inspection, measuring and test
equipment; (11) inspection and test status; (12) control of
nonconforming product; (13) corrective actions; (14) handling,
storage; packaging and delivery; (15) quality records; (16)
internal quality audits; (17) training; and (18) statistical
techniques.
ANSWER 5.2
The engineering manager should do the following:
A. Rank order the performance of all staff in the department
based on performance criteria agreed on at the beginning of the
year.
B. Divide the departmental staff into three groups, excellent,
average and marginal, and assign to them a salary increase of
4.0 percent, 2.7 percent, and 1.30 percent, respectively.
C. Within each of these groups, the allocated salary increase
may be subdivided to allow additional differentiation.
D. The sum of the individual salary increases so assigned must
equal the total allowable increase for the entire department.
E. Explain to staff face-to-face, at the performance review
time, the 8 percent total salary increase constraint and the
rationale of distributing individual salary increases.
ANSWER 5.3
The director should not approve the managers recommendation
of matching the competitors offer, and he should instead request
that the manager make a plan to cover the assignment left behind
by the engineer and double efforts of finding a replacement. They
should call in the engineer, thank her for her past contributions
to the company, and wish her well in her future professional
career. Should she want to come back one day, she would always be
welcome.
Past experience has demonstrated that there is a low
retention rate of engineers who quit for better compensation and
then stayed because of a matched offer. Countless such engineers
end up quitting within 6 to 12 months for the second time due to
one reason or another. Not insignificant is the potential impact

34

Chapter 5 Answers

on staff morale arising from the perceived preferential treatment

of a special individual by management.
No person is indispensable to any organization. Management
must be prepared to handle emergencies and unexpected personnel
changes at all time.
ANWSER 5.4
The staggered lunch break did not allow the operators to
lunch together and then socialize for a period of time. Social
gathering and membership in a peer group are known to be an
important motivation factor. The operators became less motivated
as such a socializing opportunity was taken away from them.
A remedial solution is to reinstall the original lunch break
and to initiate additional social events such as shop picnics,
Christmas parties," and bowling nights to foster peer group
activities.
ANSWER 5.5
The key issue involved in this situation is how to balance
the companys long-term need to groom future leaders from within,
and the departmental need to have experienced managers to lead
and deliver short-term results. Departments are typically
operated in silos, each trying to maximize its own short-term
outputs and paying little attention to the long-term needs of the
company.
No, Bill Carter should not be given the job. So far as the
company is concerned, it has gained one good procurement manager
from the outside while still having Bill ready to be promoted
into the managerial rank.
Bill is advised to be patient and to continue practicing
various managerial skills, readying himself for the next
managerial opportunities. However, the department manager should
submit a report to alert the companys top management of Bills
availability for promotion.
ANSWER 5.6
The following steps may help resolve the information overload problem at hand:
A. Limit informational reports to one page and exclude
supporting details. They should include the project name,
objectives, budget, personnel, key final results and perceived
impact. Only reports for project budget exceeding $10 million
should be sent to the company president and copied to the

35

Chapter 5 Answers

responsible VPs who will receive all other reports with lower
budgets.
The project support details are to be preserved in fulllength reports which can be requested at a later time.
B. Use search and compile software to generate packages of
one-page reports in order to gain a broader perspective over
related activities in the company.
C. Prescreen and endorse all reports, which request presidential
approval, by VPs and deliberate them at staff meetings.
D. Send all reports via the Intranet to ensure speed. The
company should offer training to those who need to become
familiar with this new style of reporting.
E. Hold quarterly review meetings to listen to important staff
presentations prescreened by VPs.
F. Consult individual contributors or department heads regarding
some of the reported projects and offer comments and feedback.
ANSWER 5.7
The following steps may help the department head to regain
control of the situation:
A. He should do his homework to understand the major issues
involved such as:
(a) Ease of use of these machines by operators (e.g., setup
time, convenience in changing tools, etc.).
(b) Factors affecting productivity gain.
(c) Life cycle cost and delivery.
(d) Reasons for long-term productivity advantages of Swissmade machines over American counterparts.
(e) Others.
B. Ask both the automation team leader and the line supervisor
to prepare and make presentations before an outside automation
expert who is to be hired by the department head as a consultant
to evaluate the proposals and offer an impartial recommendation.
C. Tell all staff beforehand that the department head will
decide on a course of action based on the inputs of this outside
consultant and that he expects everyone to wholeheartedly support
the management decision.
36

Chapter 5 Answers

D.

Implement the plan to control the situation.

ANSWER 5-8
Discrimination, favoritism and property misuse are very
serious charges. They must be dealt with immediately to avoid an
employee morale problem in the department. As director of
production, you should take the following steps to exert control
over the situation without delay:
A. Query the engineers for facts (e.g., the nature of the
incidents as well as dates, names, circumstances, facilities
involved, etc.) and ask why they think that discrimination,
favoritism and facility misuse were committed.
B. Thank them for the information and state that you will
personally look into these matters immediately and will let them
know your findings and disposition. Assure them that you will
keep confidential the fact that they filed complaints.
C. Call in the manager and ask for facts related to the reported
incidents. Also ask what actions were taken and what the
rationale was behind these actions.
D. Contact additional people who may have been affected by or be
able to verify specific facts in the case, but refrain from
soliciting their interpretations which could be biased in one way
or another.
E. Assess if misunderstanding and/or facts unknown to the
engineers were the reasons for the complaints. Determine if the
rationale given by the manager makes sense from the companys
perspectives. Ask whether any special assumptions were
introduced and/or personal biases factored in. Evaluate if and
to what extent discrimination, favoritism and/or property misuse
have indeed been committed by the manager.
F. If needed, consult the companys Human Resources group on
behavioral conduct and standards for professional ethics. Decide
on the merits of the complaints.
G. Call a town meeting to inform all managers and engineers of
your decision, the basis of your decision, and any correctional
steps deemed proper in this case. Advocate open communication to
resolve conflicts in the future.
ANSWER 5.9
Yes, the company should take the small order which may
precede more sales in the future. Accepting the small order will

37

Chapter 5 Answers

also demonstrate the flexibility of the company in satisfying

customers needs.
Hire temporary people to take over the established product
development work so that experienced in-house product developers
may devote time to create the small-order new products.
Add temporary people to replace those in production so that
experienced shop floor workers can take on the jobs of modifying
the production process for the small order.
ANSWER 5.10
Technical know-how is typically derived from application
experience. It is practically useful and, although it is costly
to bring forth, it is usually not of the type which can be
patented. One example is the use of a combination of sensors and
software available in the open market to measure the tolerance of
large machined surfaces. Expertise of this type is the tried
and true tricks of the trade.
Usually, small businesses lack the financial resources needed
to fight against the violation of confidential agreements and the
infringement of intellectual property rights in foreign
countries. The following may exemplify useful alternative steps
to protect technical know-how:
A. Form a joint venture and rely on the domestic partners power
base to deter copycats.
B. Write new software sections to communicate and control data
flow among components and to utilize special techniques to
protect these sections (e.g., computer keys, etc.).
C. Apply for a provisional foreign patent in the target country
to gain two years of marketing time, during which company may
derive financial benefits from the technical know-how.
ANSWER 5.11
The company suffers from two major policy deficiencies:
A. Authority Not Commensurate with Responsibility - Plant
managers are responsible for profitability, and Vernon Scott
controls the expenditures required to ensure profitability such
as maintenance, computers and other facilities enhancing the
plant productivity.
B. Deficiency in Budget Approval Policy - No distinction is made
between capital budget for production facilities versus that for
supporting facilities. No clear guidelines are established for

38

Chapter 5 Answers

approving these expenditures. Disagreements between Scott and

plant managers were not resolved to everyone's satisfaction.
George Elrod should not fire Nelson, but a warning should be
given in order to preserve respect for organizational authority.
Specifically, George Elrod should take the following steps:
(a) Call in Nelson and Scott to state that it was wrong for
Nelson to purchase equipment component by component and direct
Nelson not to do it again in the future. In the same meeting,
George Elrod should also confirm Nelson's responsibility for
plant profitability and their direct accountability to the
president. Certain facility needs must be satisfied to enable
him to carry out those responsibilities.
(b) Request that Scott establish a review procedure to resolve
future proposal funding disagreements. In particular:

Annual facility budget is to be prepared for review and

approval by the Executive Committee.

Additional budget requests by plant managers are to be

submitted to Scott with copies to Elrod.

All approvals and rejections, including justifications, are

to be in writing.

(c) Query Nelson and other plant managers for advice on how to
revise the present budget request and approval procedures, given
the need for corporate control and the plant managers needs to
ensure profitability.
(d) Publish a revised budget request and approval procedure for
use by all.
Answer 5.12
All workers respond to criteria by which they are measured
and compensated. This case reflects a poor management job done
with respect to setting performance standards, which emphasize
quantity of output without regard to quality of output.
The manufacturing manager needs to first define the
acceptable standards for normal operations, utilizing inputs from
production workers, industrial engineers and outside consultants
in terms of the following:

39

Chapter 5 Answers

A.

Quantity of output.

B. "Right-first-time" rate - the percentage of products which

pass through the production system without rework and achieve
acceptable quality.
C.

Scrap rate.

D.

Percentage of products which are reworked.

Subsequently, the incentive program for the manufacturing

operations should be structured to reward performance exceeding
these normal standards.

40

Chapter 5 Answers