Achmad Faizal Azmi (361160)

11-73
a. This is an organization where the activities of all the elements of the system must
work together and be very highly integrated. This is a setting where basing rewards on
individual measures of performance can be very dysfunctional. Since the investment
center approach requires that the costs, profit, and investment levels of each
responsibility center be computed, it would seem, on the surface at least, that this is
not the type of organization where an investment center approach can be properly
used.
b. The company itself is too focus on the financial meausures to evaluate the employees
performance and eventually does not pay enough attentions to other importans
attributes such as error rate, on time processing, and customer complaints. Since these
elements also promote the organizations long term success, they also need to be
measured and monitored. Measures including defect product rate, on-time
performance, and overdue rate should be taken into account and can be uses as reward
basis as well as because wage and bonus that are only based on residual income will
encourage the manager do whatever they think it is important to make residual
income as large as possible hence leads to imbalance performance.

c. The organization should consider eliminating the investment center approach. The
existing responsibility centers could be organized as cost centers and the performance
measurement system expanded. Each responsibility unit manager could contract with
the other managers and the process controller to deliver cost, quality, and customer
service results. Unit members could be rewarded based on their ability to meet cost,
customer service, and quality targets of their unit and the profit of the overall
operation. The performance measurement system could also reflect the requirements
of the organization by other stakeholders (such as public safety considerations in the
operation of the courier trucks) if they are deemed controllable by the responsibility
center managers. The current financial system is distracting the organizations
attention by focusing on allocation issues rather than customer service issues.

11-74

a. This is a situation where historical and political issues, combined with an

inappropriate delegation oorganization responsibilities to organization units, created a
problem that caused customer and safety concerns and organization frictions. Given
the structure and the division of responsibilities, the event described in the case was
virtually certain to occur at some point in time. Moreover, the bureaucracy and
inability to handle priority calls relating to citizen safety issues exacerbated the
underlying organization problem. There are at least five problems here: A poor
organization design, a poor division of responsibilities among the organization units, a
bureaucratic structure within each department that requires approval by specific
individuals and makes no provision for replacements when individuals are
unavailable, a lack of initiative that is widespread, and no provision to provide an
emergency response group that cuts across departmental lines.
b. The organization should provide an emergency response group to handle such
problem. creating multi-department team can be necessary to overcome problem
regarding emergency and public safety issues.

c. The city manager should accept the blame for what happened and ensure the
public that: Steps will be taken to ensure that this event will not happen again, that
these steps will be taken promptly, and that the manager will report back to the
public within 2 weeks with the change proposal.

d. The structure of organization should be simplified to adjust the current need. The
organization should flatten its chain of command in order to address priority
problem in a timely manner. Response team consisting of members from
appropriate department should be formed to deal with emergency incident in
which requires no authorization from higher level. Furthermore, activities should
be grouped under the same basis therefore it will ease the communication process
between the employee.
e.