Focusing managerial attention on a single metric may result in undesirable emplo
ID: 2466159 • Letter: F
Question
Focusing managerial attention on a single metric may result in undesirable employee behavior and adverse business consequences. For each of the following scenarios, identify the undesirable results that could occur. 1.) A shipping department is evaluated solely on total shipping costs incurred. 2.) An airline is evaluated based on on-time departures. 3.) A production line is evaluated based on the percentage of time machines are running 4.) A salesperson is evaluated based on the number of new accounts opened.
Explanation / Answer
1. When shipping cost incurred is the only evaluation critera, the shipping department will try to minimize the shipping cost incurred for a period. The undesirable effects may be hiring of transport agency with a lower cost but longer delivery period and bad goods handling resulting in late delivery and damaged goods.
The shipping department may also try to club more shipments together to send the godds in bulk , resulting in delayed delivery and failure in on time delivery.
2. When an airline is evaluated only on the basis of on time departures , there may be negative effects like less preventive maintenance and higher risk of flight , reduced cleaning time of planes between flight schedules and customer complaints, careless luggage handling and customer compliant, quicker check in , on boarding and de-boarding leading to chaos and unnecessary hurry.
3.When the evaluation criteria for a production line is the % of time of machines are running , the production line will try to run the machines as much as possible. This will cause some negative effects like excess inventory built up, reduced preventive maintenance and increased break down and cost of breakdown maintenance, higher utility cost, higer manpower cost etc.
4. When a salesperson is evaluated only on the basis of no of new accounts opened , the negative results will be too many customer accounts without significant sales, higher cost of follow up for payments, higher customer service cost, higher chance of bad debt , higher cost of collection , higher cost of accounts reconciliation and less control over accounts receivable , higher complexity is demand forecast and demand planning , higher cost of shipping and delivery to a large no of customers having smaller quantities and higher chance of sales return and inventory obsolescence.