DPC Analysis

Renuga Navaratnarajah

June 25, 2015 Diagnostic Products Corporation

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Problem Statement Diagnostic Products Corporation’s newly implemented Performance Bonus Program cannot

measure the performance of FSE’s in all critical aspects of their job in an objective mann er and have decided to combine co mbine instrument groups to calculate one overall call bac! rate per FSE" #his has caused FSEs to worry about uncertainty about their ability to influence their own  performance"

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Analysis DPC is a leading manufacturer of immunodiagnostic testing lab instruments and their objective

is to increase DPC’s value to their customers" The Field Service Organization • •

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Provides on$site support to customers and distributors ideally within %$& hours '%() *& field service engineers +FSEs, organi-ed into & regions" .ost have associate degree in technical field bachelors degrees trained in military FS/ was ran as a cost centre ce ntre and emphasis was on total customer satisfaction FS managers monitored using repair rates productivity call bac! rates incomplete call rates return call rates mean time to repair mean time before failure travel e0pense per call and on$

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sit response time reported monthly at 1uality management meeting Preventative .aintenance +P., important part of FSE’s jobs Done on time 2 increased chance of no problems o o  3ot completed to standard 2 increase chance of 4call bac!5 unhappy customer increased costs to repair  6deally FSEs should complete job on first visit because downtime is not affordable by most customers7 they must screen the job in order to prepare for the visit  Performance Dependent Compensation

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Bonus Program8 .easures critical performance in & areas of a FSE as it pertains to aspects of the  job leading to total customer satisfaction Cross-training 8 9 of instruments 1ualified to service  Cross-training 8   Preventative maintenance (PM) completion: 9 of P.s completed  Teamor! Teamor! factor for PMs: : PMs: : of P. goal in region completed

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Possible to game system if FSEs focus on completion but fail to perform service

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ade1uately Complete first visit: completion of P. or repair on first visit   ;ncontrollable factors such as delivery delays means low probability of achieving this

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resulting in employees being frustrated with unattainable goals Call "ac! rate: multiple visits within <= days of each other for the same relative issue   /riginal bonus plan only ta!es into consideration 6..;>6#E and 6..;>6#E '===

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since failure rates are well established but not the case for 6..;>6#E '?== and S.S  #dministrative F$nctions: customer satisfaction e0pense reports service reports completion dispatch feedbac! synchroni-ation company car maintenance conference call roll call

inventory management +subjective, •   3ew Call Bac! @ate .easure8 one overall rate per FSE with higher payouts for more calls and fewer callbac!s" #here are a few issues employees feel about this measure8 Being held accountable for something with environmental factors affecting results •  Being placed at disadvantage if customer mi0 tends to be one with high call bac!s •  #a!ing away bonuses for results they can influence and giving them unreasonable goals • 

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for bonuses may lead to lac! of motivation and ultimately declining productivity @ewards do not seem to be as motivational as before due to the new goals