Lecture 6

Operations Management
Seventh Edition
R. Dan Reid & Nada R. Sanders
Chapter 11
Work System Design
©2020 John Wiley & Sons, Inc. All rights reserved.

Learning Objectives
1. Discuss work system design.

2. Discuss job design.
3. Explain work measurement.
4. Describe compensation approaches.
©2020 John Wiley & Sons, Inc. All rights reserved. 2

Work System Design
• Designing a work system is part of developing an operations

strategy.
• Effective operations strategy provides structure for company
productivity.
• The work system includes:
o job design
o work measurements
o worker compensation
LO 1 ©2020 John Wiley & Sons, Inc. All rights reserved. 3

Job Design
• Job design specifies work activities of an individual or group.

• Jobs are designed by answering questions like:
o What is the job’s description?
o What is the purpose of the job?
o Where is the job done?
o Who does the job?
o What background, training, or skills are required to do the job?

Job Design Factors
• Technical feasibility
o The job must be physically and mentally doable
• Economic feasibility
o Cost of performing the job is less than the value it adds
• Behavioral feasibility
o Degree to which the job is intrinsically satisfying to the
employee (e.g., Google)

Machines or People: Should the Job Be
Automated?
• Safety and risk of injury to workers
• Repetitive nature of the task (monotonous?)
• Degree of precision required
• Complexity of the task
• Need for empathy, compassion, or other emotional elements
• Need for personal customer relationships

Levels of Labor Specialization
• Level of labor specialization can:

o reduce the employee’s scope of expertise (higher levels of
specialization)
o increase the employee’s scope of expertise (lower levels of
specialization)
• Work satisfaction helps define level of specialization.
• Specialization can result in employee boredom.

Specialization: Management’s View
Advantages: Disadvantages:
• readily available labor • lack of flexibility
• minimal training required • worker dissatisfaction:
• reasonable wages costs o high absenteeism
• high productivity o high turnover rates
o high scrap rates
o grievances filed

Specialization: Employee’s View
Advantages: Disadvantages:
• minimal credentials required • boredom
• minimal responsibilities • minimal growth
• minimal mental effort opportunity
needed • minimal control over work
• reasonable wages • minimal room for initiative
• minimal intrinsic
satisfaction

Eliminating Employee Boredom
• Job enlargement
o Horizontal expansion of the job through increasing the scope of
the work assigned; instills pride
• Job enrichment
o Vertical expansion of the job through increased worker
responsibility; control and pride
o Adding work planning or inspection to a routine assembly task
• Job rotation
o Shifting of cross-trained workers to other tasks
o Broadens understanding and can reduce fatigue
Team Approach to Job Design
• Problem-solving teams
o Small groups trained in problem-solving techniques used to
identify, analyze, and propose solutions to workplace problems
• Special-purpose teams
o Highly focused, short-term teams with a focused agenda (often
cross-functional)
• Self-directed (SD) or self-managed (SM) teams
o Team members work through consensus to plan, manage, and
control their assigned work flow
o SD (goal defined by team); SM (goal defined by others)
The Alternative Workplace
Brings work to the worker rather than the worker to the workplace
• Alternative workplaces are made possible by technologies like
email, e-networks, cell phones, and video conferencing.
o A survey at IBM reveals that 87% of alternative workplace
employees believe their effectiveness has increased significantly.
o Sun Microsystems gives many of its designers the option to work at
home.
o AT&T provides flexible workstations so workers can rotate in and out
as needed.

The Work Environment
• Working conditions can affect workers:

o productivity
o product quality
o worker safety
• Temperature, ventilation, noise, and lighting are all factors in
work system design.
• Congress passed OSHA in 1970 to mandate specific safety
conditions that must be met.

Method Analysis
• Method analysis consists of:

1. Identifying the operation to be analyzed
2. Gathering all relevant information
3. Talking with employees who use the operation
4. Charting the operation
5. Evaluating each step
6. Revising the existing or new operation as needed
7. Putting the revised or new operation into effect, then following
up on the changes or new operation

EXAMPLE: Methods Analysis at FEAT Company
The methods analyst has been asked to review the transformer wiring operation
because of past quality problems from poor solder joints. The solder operation
sequence and the workstation layout are shown below.
1. Picks up wire in left hand and

moves it to the terminal
2. Simultaneously picks up solder iron
in right hand and it moves to the
terminal
3. Solders wire to terminal and
replaces solder iron in holder
4. Solders terminal 1, then terminals
2–6, going right to left
Analyst’s Recommendations
The methods analyst reviews the

workplace layout and the present flow
chart (below), and recommends reversing
the solder sequence to start at terminal 6
instead of terminal 1, which is less
problematic for the right-handed operator.
The analyst schedules a follow-up to
ensure that the new method has fixed the
quality problem.
FIGURE 11.2 Chart of the wiring

activity

Work Measurement
• Work measurement helps determine how long it should take

to do a job.
• Involves determining standard time:
o The length of time it should take a qualified worker using
appropriate processes and tools to complete a specific job,
allowing time for personal fatigue and unavoidable delays.

Standard Time
• Standard time is used in:

o costing the labor component of products
o tracking employee performance
o planning a production schedule

Procedure for a Time Study
TABLE 11.2 Procedure for a Time Study
Step 1 Choose the job for the time study.

Step 2 Tell the worker whose job you will be studying.
Step 3 Break the job into easily recognizable units.
2
 z  s  
Step 4 Calculate the number of cycles you must observe. n     
 a  x  
Step 5 Time each element, record the times, and rate the worker'sperformance.
Step 6 Compute normal time. NT = ( MOT )( PRF )( F )
Step 7 Compute the standard tune. S T = (NT ) ( AF )

Conducting a Time Study
• Need to determine how many observations are required

• Involves determining the level of accuracy required and the
confidence level desired
o n: number of observations of an element
that are needed 2
o z: the number of normal standard  z  s  
deviations needed for desired confidence n     
o s: the standard deviation of the sample  a  x  
o a: desired accuracy or precision
o x̅: the mean of the sample observations
Example: Pat’s Pizza Place
Pat hires an analyst to determine a standard time to prepare a large pepperoni and cheese pizza. The analyst takes
10 observations of the 7 elements and calculates the mean time and the standard deviation per element. He must
then calculate the number of observations to be within 5% of the true mean 95% of the time.
TABLE 11.4 Mean Observed Times Standard Deviation Mean Observed Time
Work Unit (minutes) (minutes)
1. Get appropriate ball of dough. 0.010 0.12
2. Flatten dough. 0.030 0.25
3. Spin and toss dough. 0.040 0.50
4. Place dough on work counter. 0.005 0.12
5. Pour sauce on formed dough. 0.035 0.30
5. Place grated cheese on top of sauce. 0.025 0.25
6. Place pepperoni on top of cheese. 0.030 0.24
• Calculate observations for each element to determine how many additional observations must be taken. The
maximum number of 25 (in this case) for element 7 means that an additional 15 observations must be
made; then the observed times are revised.
2 2
 z   s    1.96   0.03  
n7 =      =      = 25 observations
 
 a x   
 0.05 0.24 
Frequency of Occurrence
• The frequency of occurrence (F) is how often the element

must be done each cycle.
• The normal time (NT) is computed by multiplying the mean
observed time (MOT) by the performance rating factor (PRF)
by the frequency of occurrence (F).
• The PRF is a subjective estimate of a worker’s pace relative to
a normal work pace.

The Allowance Factor
• The allowance factor (AF) is the amount of time allowed for

personal time, fatigue, and unavoidable delays.
• Standard time = normal time × AF, where:
1
AFTime worked = = 1.176,or 117.6%
1 − 0.15

Calculating Normal Time and Standard Time
at Pat’s Pizza
TABLE 11.7 Standard Times for Making Large Cheese and Pepperoni Pizza
Work Element Normal Time (minutes) Standard Time (minutes)
1. Get appropriate ball of dough. 0.135 0.159
2. Flatten dough. 0.250 0.294
3. Spin and toss dough. 0.510 0.600
4. Place dough on work counter. 0.165 0.194
5. Pour sauce on formed dough. 0.360 0.424
6. Place grated cheese on top of sauce. 0.280 0.329
7. Place pepperoni on top of cheese. 0.266 0.313
Total 1.966 2.313
• The standard time for preparing a large, hand-tossed cheese and pepperoni pizza is
2.313 minutes. This means that during an eight-hour day, a worker should be able to
prepare 207 (480 minutes per eight-hour shift, divided by the standard time of 2.313
minutes) large, hand-tossed cheese and pepperoni pizzas.
Other Time Study Methods
• Elemental time data establish standards based on previously

completed time studies stored in an organization’s database.
• Predetermined time data (e.g., methods-time measurement
[MTM]) is a are elemental time data found in published
databases and used for establishing standard times.
o Reach, grasp, move, engage, insert, turn, etc.
• Work sampling is a technique for estimating the proportion
of time a worker spends on an activity.

Work Sampling Procedures
1. Identify the worker or machine to be sampled.

2. Define the activities to be observed.
3. Estimate the sample size based on level of accuracy and
confidence level.
4. Develop the random observation schedule. Make observations
over a time period that is representative of normal work
conditions.
5. Make your observations and record the data. Check to see
whether the estimated sample size remains valid.
6. Estimate the proportion of the time spent on the given activity.
Work Sampling
©2020 John Wiley & Sons, Inc. All rights reserved. 27

Work Sampling Example
We are interested in estimating the proportion of time spent by secretaries arranging and scheduling
travel. We are considering the possibility of bringing on site a travel agency to free up secretaries
from this time-consuming task. We estimate that the proportion of time spent on travel
arrangements might be as high as 0.50.
• Step 1 – We need to estimate the number of observations needed to provide an estimate with
97% confidence (z = 2.17) and within 5% of its true value. We use the following equation:
2 2
 z  2.17 
pˆ = 0.5 n    pˆ (1 − pˆ ) = n   0.5 (1 − 0.5) = 470.89 observations
 e  0.05 
• Step 2 – Based on the first 30 observations, we find the secretary made travel reservations 6
times (6 out of 30 observations = 0.2). With this new estimate, we recalculate the sample size
needed: 2
 2.17 
n  0.2 (1 − 0.2 ) = 302 observations
 0.05 
• Step 3 (final) – Based on 302 observations, we find the secretary made reservations 60 times, or
19.9%. This estimate can now be used to make the decision on bringing in an in-house travel
agency.
Compensation
• Third part of work system design.

• Time-based compensation systems
o Pay based on the number of hours worked
• Output-based (incentive) systems
o Pay based on the number of units completed
• Group incentive plans reward employees when company achieves
certain performance objectives
o Profit sharing — an employee bonus pool based on sharing of
company’s profits
o Gain sharing — focuses on cost reduction rather than profits
Incentive Plan Trends: Individual and Group
• Trends:
o Individual incentive systems undermine teamwork, encourage short-
term focus.
• Study (20 SSA offices) showed no effect on worker performance.
o Overall, companies using group incentive systems tend to
outperform companies that do not use such systems.
• A company would consider:
o Do plans put part of a worker’s salary at risk?
o Does the compensation system undermine teamwork?
o Does plan prevent free-riders not doing their fair share?
o Does the plan support the long-term health of the organization?
Work System Design and Methods
• Work system design includes job design, work measurement, and

worker compensation.
• Job design determines exactly how the product or service will be done
and is linked directly to product and process design. Based on the type
of product (standard or custom) and its proposed process (mass-
producing or producing one at a time), a company determines the skills
set needed by its employees as well as the necessary equipment.
• Method analysis provides a means for evaluating different processes
and materials, thus allowing a company to focus on continuous
improvement. This ties in directly with a company’s total quality
management (TQM) focus.

Measuring Work and Standards
• Work measurement techniques allow a company to develop standards to use

as a basis for evaluating the cost and effectiveness of different methods and
materials for building a product or providing a service; for creating detailed
work schedules and determining long-term staffing levels and for making
delivery or completion-time promises to customers.
• Standard times are used to develop lead-time estimates, which are inputs for
the MRP (material requirement planning) system as well as the MPS (master
production schedule) process.
• Work measurement provides the means for setting standards against which to
compare new methods, new materials, and new designs; assures that
employees know how to do their jobs; and provides the information needed
by the company to calculate its costs.

Work System Design across the Organization
• Accounting calculates the cost of products manufactured,

variances between planned and actual costs, and operational
efficiency.
• Marketing uses work system design as the basis for determining
lead time.
• Information systems uses estimates of job duration and resources
in the software for scheduling and tracking operations.
• Human resources uses work sampling to establish and validate
hiring criteria.

Chapter 11 Highlights (LO 1–2)
• Work system design involves job design, methods or process analysis, and
work measurement.
• Job design specifies the work activities of an individual or group in support of
organizational objectives.
o Relevant job design issues include design feasibility, the choice of human or
machine, the use of teams, and the location where the work is to be done.
Technical feasibility is the degree to which an individual or group of individuals is
physically and mentally able to do the job. Economic feasibility is the degree to
which the value of a job adds and the cost of have the job done are profitable for
the company.
o Methods or process analysis is concerned with how the employee does the job.
Methods analysis can also be used to improve the efficiency of an operation.
© 2020 John Wiley & Sons, Inc. All rights reserved. 34

Chapter 11 Highlights (LO 3)
• Work measurement is used to determine standard times. A standard time is

how long it should take a qualified operator — using the appropriate process,
material, and equipment, and working at a sustained pace — to do a particular
job. Standard times are used for product costing, process and material
evaluations, and for planning workloads and staffing. Standard times are
usually based on time studies. Work sampling is used to estimate the
proportion of time that should be spent on an activity.
o To do a time study, first identify the job then break the job into work elements.
Determine the number of observations needed and perform the observation.
o Work sampling involves random observations of a worker. Each time you observe
the worker, you note what activity the worker is doing. After numerous
observations, you can project the expected proportion of time the worker should
spend on different activities.

Chapter 11 Highlights (LO 3, continued)
o You learned how to develop standard times using time studies. After conducting
the time study, the mean observed time for each work element is computed.
Normal time for the work element is computed by multiplying the mean observed
time by the performance rating factor. Find the standard time for each work
element by multiplying normal time by allowance factor.
o Standard times are used to compare alternative processes, evaluate new
materials or components, and evaluate individual worker performance. Standards
also allow you to determine when a job should be completed or how many units
can be done in a period of time.
o Learning curves show the rate of learning that occurs when an employee repeats
the same task. Using learning curves, you can estimate how long a particular task
will take. It allows the company to schedule better and calculate cost more
accurately.

Chapter 11 Highlights (LO 4)
• Worker compensation systems are either time-based or output-based. Time-

based systems pay the employee for the number of hours worked. Output-
based systems pay the employee for the number of units completed.
Compensation schemes can be based on either individual or group
performance.

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Operations Management

Work System Design

©2020 John Wiley & Sons, Inc. All rights reserved.

1. Discuss work system design.

©2020 John Wiley & Sons, Inc. All rights reserved. 2

• Designing a work system is part of developing an operations

LO 1 ©2020 John Wiley & Sons, Inc. All rights reserved. 3

• Job design specifies work activities of an individual or group.

LO 2 ©2020 John Wiley & Sons, Inc. All rights reserved. 4

LO 2 ©2020 John Wiley & Sons, Inc. All rights reserved. 5

LO 2 ©2020 John Wiley & Sons, Inc. All rights reserved. 6

• Level of labor specialization can:

LO 2 ©2020 John Wiley & Sons, Inc. All rights reserved. 7

LO 2 ©2020 John Wiley & Sons, Inc. All rights reserved. 8

LO 2 ©2020 John Wiley & Sons, Inc. All rights reserved. 9

LO 2 ©2020 John Wiley & Sons, Inc. All rights reserved. 12

• Working conditions can affect workers:

LO 2 ©2020 John Wiley & Sons, Inc. All rights reserved. 13

• Method analysis consists of:

LO 2 ©2020 John Wiley & Sons, Inc. All rights reserved. 14

1. Picks up wire in left hand and

The methods analyst reviews the

FIGURE 11.2 Chart of the wiring

LO 2 ©2020 John Wiley & Sons, Inc. All rights reserved. 16

• Work measurement helps determine how long it should take

LO 3 ©2020 John Wiley & Sons, Inc. All rights reserved. 17

• Standard time is used in:

LO 3 ©2020 John Wiley & Sons, Inc. All rights reserved. 18

TABLE 11.2 Procedure for a Time Study

Step 1 Choose the job for the time study.

LO 3 ©2020 John Wiley & Sons, Inc. All rights reserved. 19

• Need to determine how many observations are required

• The frequency of occurrence (F) is how often the element

LO 3 ©2020 John Wiley & Sons, Inc. All rights reserved. 22

• The allowance factor (AF) is the amount of time allowed for

LO 3 ©2020 John Wiley & Sons, Inc. All rights reserved. 23

• Elemental time data establish standards based on previously

LO 3 ©2020 John Wiley & Sons, Inc. All rights reserved. 25

1. Identify the worker or machine to be sampled.

©2020 John Wiley & Sons, Inc. All rights reserved. 27

• Third part of work system design.

• Work system design includes job design, work measurement, and

LO 4 ©2020 John Wiley & Sons, Inc. All rights reserved. 31

• Work measurement techniques allow a company to develop standards to use

LO 4 ©2020 John Wiley & Sons, Inc. All rights reserved. 32

• Accounting calculates the cost of products manufactured,

LO 4 ©2020 John Wiley & Sons, Inc. All rights reserved. 33

© 2020 John Wiley & Sons, Inc. All rights reserved. 34

• Work measurement is used to determine standard times. A standard time is

© 2020 John Wiley & Sons, Inc. All rights reserved. 35

© 2020 John Wiley & Sons, Inc. All rights reserved. 36

• Worker compensation systems are either time-based or output-based. Time-

© 2020 John Wiley & Sons, Inc. All rights reserved. 37

© 2020 John Wiley & Sons, Inc. All rights reserved. 38

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