Tom Emory and Jim Morris strolled back to their plant from the administrative offices of
Ferguson & Son Manufacturing Company. Tom is manager of the machine shop in the
companies’ factory; Jim is manager of the equipment maintenance department.
The men had just attended the monthly performance evaluation meeting for
plant department heads. These meetings ha been held on the third Tuesday of each month
since Robert Ferguson Jr., the presidents son, had become plant manager a year earlier.
As they were walking, Tom Emory spoke: “Boy, I hate those meetings! I never
know whether my departments accounting reports will show good or bad performance.
I’m beginning to expect the worst. If the accountant says I saved the company a dollar.
I’m called “Sir” but if I spend even a little too muchboy do I get in trouble. I don’t know
if I can hold on until I retire”
Tom had just been given the worst evaluation he had ever received in his long
career with Ferguson & Son. He was the most respected of the experienced machinists in
the company. He had been with Ferguson & son for many years and was promoted to
supervisor of the machine shop when the company expanded and moved to its present
location. The president (Robert Ferguson, Sr) had often stated that the company’s success
was due to the highquality work of machinists like Tom. As supervisor, tom stressed the
importance of craftsmanship and told his workers that he wanted no sloppy work coming
from his department.
When Robert Ferguson Jr, became the pant manager, he directed that monthly
performance comparisons be made between actual and budgeted costs for each
department. The departmental budgets were intended to encourage the supervisors to
reduce inefficiencies and to seek cost reduction opportunities. The company controller
was instructed to have his staff “tighten” the budget slightly whenever a department
attained its budget in a given month; this was done to reinforce the plant manager’s desire
to reduce costs. The young plant manager often stressed the importance of continued
progress toward attaining the budget; he also made it known that he kept a file of these
performance reports for future reference when he succeeded his father.
Tom Emory’s conversation with Jim Morris continued as follows:
Emory: I really don’t understand. We’ve worked so hard to meet the budget, and the
minute we do so they tighten it on us. We can’t work any faster and still maintain
quality. I think my men are ready to quit trying. Besides, those reports don’t tell
the whole story. We always seem to be interrupting the big jobs for all those small
rush orders. All that setup and machine adjustment time is killing us. And quite
frankly, Jim, you were no help. When our hydraulic press broke down last month,
your people were nowhere to be found. We had to take it apart ourselves and got
stuck with all that idle time.
Morris: I’m sorry about that. Tom, but you know my department has had troublemaking
budget, too. We were running well behind at the time of that problem, and if we’d
spent a day on that old machine, we would never have made it up. Instead we
made the scheduled inspections of the forklift trucks because we knew we could
do those in less than the budgeted time.
Well, Jim, at least you have some options. I’m locked into what the
scheduling department assigns to me and you know they’re being harassed by
sales for those special orders. Incidentally, Why did you r report show all the
supplies you guys wasted last month when you were working in bills department?
Morris: we’re not out of the woods on that deal yet. We charged the maximum we could
to other work and haven’t even reported some of it yet.
Well, I’m glad you have a way of getting out of pressure. The
accountants seem to know everything that’s happening in my department,
sometimes even before I do. I thought all that budget and accounting stuff was
supposed to help, but it just gets me in trouble. It’s all a bi
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