Products and services delivered to customers by an organization is basically what is known as the outputs of the organization but the primary way a company measures its performance is in the form of financial performance, whether sales for the current year as improved when compared to the previous year, whether the return on sales is higher than that of the previous year's performance, and also by determining the share of the market that the company holds. Various groups constitute an organization and the groups may be divided on the basis of their functional areas or may be through divisions or product groups but what should be noted is that each group is constituted of individuals and tasks. Measuring the performance of each group is possible if and only if each group has its own very clear objectives and goals within the organization.
In this assignment we measure the outputs at National Presto Industries Inc. at three different levels of the organization, namely, individual, task and the organizational level. The Nadler-Tushman Congruence Model would be used to analyze the National Presto Industries Inc outputs at the three different levels through its Annual Report for 2010.
1. Outputs At the Organizational Level
The products and service provided by National Presto Industries Inc are classified into three segments such as the Housewares/Small Appliance segment, Defense Products segment, and the Absorbent Products segment. Under each of these segments various products are produced and sold to the target market customers. For example, Housewares/Small Appliance segment “designs, markets and distributes housewares and small electrical appliances, including pressure cookers and canners, kitchen electrics, and comfort appliance, the Presto Control Master heat control single thermostatic control line of skillets, waffle makers, pizza ovens, slicers/shredders, corn poppers and host of other home products are also manufactured by the company under its Housewares/Small Appliances segment. The Defense products segment is involved in the manufacture of 40mm ammunition, electro-mechanical assemblies, medium caliber cartridge cases, and performs operations such as Load, Assemble and Pack (LAP) on ordnance products specifically for the United States government and for some important contractors. The Absorbent products segment manufactures and sells “adult incontinence products and diapers”.
The company measures its performance on the basis of sales effected in all the three segments and on the basis of gross profit. The sales for 2010 for all segments put together increased by less than 1%, that is, it increased by $532,000, gross margins increased by $3,482,000 (3% increase) and selling expenses decreased by $2,253,000 (12% decrease), while the earnings increased by $955,000 (2%). Individual sales figures for the each segment for 2010 are: for the Housewares/Small appliances segment the sales increased by $7,458,000 from $150, 016,000 to $157,474,000 or 5% increase, Defense segment net sales actually decreased by 5% from $253,789,000 to $240,762,000 mainly due to decrease in unit shipments, Absorbent products sales increased by 8% from $74,663,000 to $80,764,000 due to increase in unit shipments.
The gross profit for the Housewares/Small appliances segment decreased by $3,304,000 from $40,336,000 in 2009 to $37, 032,000 in 2010 due to increased commodity and freight costs, Defense gross profit increased by $6,205,000 from $61,866,000 to 68,071,000 and the gross profit of Absorbent products segment increased by $581,000 from $7,890,000 to $8,471,000.
The goals of the organization are disclosed in its annual reports nor it is known but the financial performance of the company for the year 2010 has been good.
2. Outputs at the group level
The groups in the company are identified as segments, and each segment may have subsidiary companies or corporations under it. In some cases these subsidiaries or corporations would have divisions under them.
There are three segments in National Presto Industries Inc. namely, Housing/Small Appliances segment, the Defense segment and the Absorbent segment. The Housing/Small Appliances segment manufactures pressure cookers and canners, kitchen electrics, and comfort appliances, the Presto Control Master heat control single thermostatic control line of skillets, waffle makers, pizza ovens, slicers/shredders, corn poppers and host of other home products. The performance of this segment is measured very much like the organizational performance and that is, it is based on the total sales effected and the profitability of the segment. For example, the Housewares/Small appliances segment the sales increased by $7,458,000 from $150, 016,000 to $157,474,000 or 5% increase in 2010 but the gross profit for the Housewares/Small appliances segment decreased by $3,304,000 from $40,336,000 in 2009 to $37, 032,000 in 2010 due to increased commodity and freight costs.
The Defense segment comprises of two companies, namely, AMTEC Corporation and Spectra Technologies. AMTEC Corporation has a division called Amron coming it. The performance of the Defense segment and each of the companies and divisions under it are measured in terms of their sales and gross profit. For example, Defense segment net sales actually decreased by 5% from $253,789,000 in 2009 to $240,762,000 in 2010, mainly due to decrease in unit shipments but its gross profit increased by $6,205,000 from $61,866,000 in 2009 to 68,071,000 in 2010.
The Absorbent segment comprises of three companies under it namely, RMED International, NCN Hygienic Products Inc. and Marietta Inc. The private labels of these companies are used by National Presto Industries Inc. while selling the products of these companies, whereas the branded products are sold under the “PRESTO” label. The Absorbent segment products sales increased by 8% from $74,663,000 in 2009 to $80,764,000 2010 due to increase in unit shipments and the gross profit of Absorbent products segment increased by $581,000 from $7,890,000 in 2009 to $8,471,000 in 2010.
3. Outputs at the Individual level
The key individual functions are that of the Chair of the Board, President and Chief Executive Officer, Vice President – Sales, Vice President – Engineering, Vice President, Chief Financial Officer, Treasurer and Director, and the Secretary and General Counsel.
The Chair of the Board, President and Chief Executive Officer Ms. Maryjo Cohen is the head of National Presto Industries Incorporation, and her main output is to provide direction, guidance and leadership for National Presto Industries Inc., so that it continues to be successful and stay in business. In this regard, she guides and coordinates the activities of the sales, engineering and finance teams towards achieving the goals and objectives of National Presto Industries Inc. Guiding the entire management team to achieve its sales, production, financing targets and at the same time ensuring minimal issues with shareholders, suppliers, customers and labor unions is the performance parameter for this post. This means that the CEO should have the ability provide direction and guidance to her subordinate management team to achieve their department's goals so as to achieve the larger goals and objectives of the organization.
The next key individual function is that of the Vice President – Sales, Mr. Donald E. Hoeschen. The Vice President – Sales provides direction to the sales strategies of the organization, especially that of the three segments so that they achieve their individual sales targets, which overall would help the organization to achieve its sales goals. Setting the sales targets and achieving them is the performance parameter for this post.
The Vice President Engineering Larry J. Tienor provides direction to the production targets of the three segments of National Presto Industries. He ensures that production targets are set and then achieved by the three segments of the organization. Setting the production targets and achieving them is the performance parameter for this post.
The Vice President, Chief Financial Officer, Treasurer, and Director Mr. Randy F. Lieble oversees financial activities in the organization, such as sourcing the funds for each and every requirement of the organization, this is a very key function because without proper finances the company will not be able to run its day to day affairs properly. Setting the fund requirements and ability to meet the fund requirements of the organization for its various projects is the performance parameter for this post.
The Secretary and General Counsel, Douglas J. Frederick, is the one who deals with incorporation of the company, dealing with shareholders, besides acting as the legal counsel for all legal issues faced by the company right from its contracts with suppliers and customers down to issues related to labor union problems in the company's factory sites. The performance yardstick for this post is the number of issues with shareholders, strikes, and court cases. The fewer the issues, strikes and cases the better the performance of the individual.
The outputs at the organizational, group and individual levels interact with each other at the performance level. If each key individual in National Presto Industries Inc. performs their job well then the performance of each segment would good. In this case, if the sales, engineering, and finance heads set their targets and give their directions to their respective departments in each segment of National Presto Industries Inc. and if the sales, production and finance targets are met, then each segment would run successfully and if each segment runs successfully then it will contribute to the success of the National Presto Industries Inc. as a whole. Therefore, it can be said that the overall performance of the company appears to be medium.
4. Making a case
The organization that we are studying in this case is the National Presto Industries Inc., which is publicly traded on the NASDAQ. According to the Nadler – Tushman Congruence Model, “the basic dynamic of congruence sees the organization as most effective when its pieces fit together” (Nadler, Tushman, 1980). As such, it is unclear whether informal organization in National Presto Industries Inc., meets the individual, group and organizational level needs from whatever sources of information data was obtained. Also, it is not clear whether there is convergence of individual and organizational goals. But from the way the tasks are assigned to key individuals in the organization it is very clear that individual needs are met by the tasks assigned to them. The key individuals have been assigned the right posts for their experience and level of exposure in National Presto Industries.
From the years of experience of the key individuals described in the annual report of National Presto Industries Inc., it is very clear that the individuals have the skills and abilities to meet the demands of their tasks.
The division of the company into three segments so as to facilitate clear identification of responsibilities and profit centers indicate that the organizational arrangements are adequate to meet the demands of the task in National Presto. Also, the clear demarcation of profit centers and roles and responsibilities indicate that the organization aims to motivate behavior that is consistent with demands of tasks. Also, the goals and rewards of the informal organization such as the incentive compensation plan are consistent with the formal organization. But the problem is with respect to the informal organization in National Presto Industries Inc. It is not clear as to how the informal organization in the company is making use of the individual resources that are consistent with informal goals, how the informal organization is facilitating task performance etc. Therefore, at best it can be said that the performance of National Presto Industries Inc. is medium.