You Make the Call-Situation 3

question 19

Essay

You Make the Call-Situation 3
The owner of a small food products company was confronted with an inventory control problem involving differences of opinion among his subordinates. His accountant, with the concurrence of his general manager, had decided to "put some teeth" into the inventory control system by deducting inventory shortages from the pay of route drivers who distributed the firm's products to stores in their respective territories. Each driver was considered responsible for the inventory on his or her truck.
When the first "short" paychecks arrived, drivers were angry. Sharing their concern, their immediate supervisor, the regional manager, first went to the general manager and then, getting no satisfaction there, appealed to the owner. The regional manager argued that there was no question about the honesty of the drivers. He said that he personally had created the inventory control system the company was using, and he admitted that the system was complicated and susceptible to clerical mistakes by the driver and by the office. He pointed out that the system had never been studied by the general manager or the accountant, and he maintained that it was ethically wrong to make deductions from the small salaries of honest drivers for simple record-keeping errors.

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Definitions:

Evaluating Performance

The process of analyzing, assessing, and documenting the efficiency and effectiveness of operations, personnel, or investments.

Providing Incentives

The process of offering rewards or benefits to motivate employees or customers to achieve certain goals or behaviors.

Direct Labour

Refers to the wages and salaries of employees who are directly involved in the manufacturing or production process of a company's products.

Direct Materials

The raw materials that can be directly attributed to the production of a product.