Using Pareto analysis to prioritize business challenges on Kava Island

Decisions in Paradise III With Paretto Analysis

Decisions in Paradise II

Cesar a Rivera

Roy Chuang

Decisions in Paradise II

This is Nik's problem

Nik has landed on Kava an island that is faced with numerous challenges including tidal waves/tsunami; typhoons/hurricanes; tornadoes; floods; fires; volcanic eruptions; earthquakes; HIV / AIDS; petroleum spill; high risk for avian flu; and terrorism, and has been asked to helped establish a business there. Aside from the above problems that impact the potential business, other challenges include the location and site being a mess; HR procedures being chaotic, disrupted and confused organizational structure; and conflicting and conflicted workforce due to diverse composition, beliefs, attitudes, and ideologies. Employees in the past, the wrong mix and too many, barely stayed and so business management and environment became increasingly chaotic.

Nik's tasks, according to Alex, consist of establishing a greater presence in Kava. Ways of establishing that presence would be up to Nik's volition and may take various forms, based on "what's good for the company and what's good for the people of Kava." Nik is expected to team up with Alex and analyze, synthesize, and prescribe regarding that decision." In short, Nik's tasks consists of stabilizing the situation, correcting past damage, and structuring the business -- its planning, managerial, leadership, and controlling aspects -- so that the business gets off to a promising start. Given the current situation and history, this is a tall order.

The outcome, according to Alex, would be "to develop and manage a very effective, as well as highly efficient, organizational structure and processes. That includes all aspects of the company; marketing, finance, purchasing, technology, human resources, physical resource, transportation, strategic planning, leadership, etc."

If Nik wishes to retain his job, he is faced with the inordinate challenge of transforming 'Paradise lost' into Paradise regained'. The decision-making methods that will help him do it is the following:

Pareto Analysis

The Pareto Analysis is ideal for this situation since it helps prioritize tasks in order of importance. For Nik faced with an overwhelming surplus of responsibilities, the Pareto analysis would help him prioritize the various challenges that will most dramatically improve the situation.

Also called the 80-20 rules, the Pareto Analysis is also applicable since it serves to encourage poor Nik in his predicament. 20% of causes, according to this method generate 80% of the results; we just need to find those most significant 20% determining factors.

The method:

1. Nick would list all the problems that he would have to solve. Included here, for instance, would be attracting a compatible and steady workforce and motivating the diverse ethnic group of effectively work together for the good of the company.

2. For each stated problem, Nik would identify the fundamental cause as far as he is able. Brainstorming with Alex could help here. Lack of consistency with the organization, for instance, may be traced to the country's problems with terrorism.

3. Nik would then score each problem, the scoring method depending on the particular problem. For instance, in terms of improving customer satisfaction, Nik might score on the basis of incoming complaints, or complaints eliminated by solving the problem.

4. Nik would group problems under their root course. For instance, one or more problems that are linked to organizational mismanagement would be placed under that category.

5. The scores of each cause group would be totaled, and groups (or tasks) prioritized according to groups with higher scores receiving foremost priority.

6. Nik now has to deal with the causes of these problems starting with the top-most challenges first. Those problems with the least scores may be negligible or may have nullified themselves by the time Nik works his way to them.

Emotion often gets into the way of forming rational decision. Nik's first impetus when faced with the situation was to flee. Fleeing, however, as Alex pointed out, would make him lose his job. Faced with an overwhelming multiplicity of tasks and with internal and external confusion, Nik may likely fall into a scramble and mess up his assignment. After all, others before him had tried and failed. Nik's best and, possibly, only option, therefore, is to reduce his emotional situation to logical and mathematically structures of thinking.

Decision-making strategies, as per Lenz and Engledow (1986), result in enhanced leadership skills and, consequently, in improved organizational development. The business is counting on Nik to help them out. By using the Paretto analysis, Nik can make sense of the situation, prioritize challenges, and, with Alex's help and with the help of other friendly organizations mentioned in the case history, plunge ahead.

Pareto Decision Analysis

Problem (Step 1)

Cause (Step 2)

Score (Step 3)

1

Location and Site Being a Mess

Lack of Organization

4

2

HR procedures being chaotic

Lack of Organization

4

3

Disrupted/Confused Organizational structure

Lack of Organization

4

4

Conflicting and Conflicted Workforce

Diverse Composition

2

5

Beliefs/Attitudes/Ideologies

Diverse Composition

2

6

Bad Employee Choice

Human Resources Failure

2

7

Employee Retention

Human Resources Failure

2

8

Chaotic Business Management and Environment

Lack of organization

4

Root Causes of the Problems

1. Lack of Organization-16

2. Human Resources Failure-4

3. Diverse Composition-4

4. Human Resources Failure-4

Priorities Based Upon the Paretto Analysis for Nik

1. Establishment of Workflow

2. Employee Hiring/Retention

Work Flow Streamlining

As the organization grows, it will depend upon the work flow laid down in its infancy. While tasks may not be distributed exactly as planned in the beginning, as operations grow, the basic work flow template will need to followed to have maximum organizational effect. "Jumping the chain of command" at a later date will have even more dire consequences than in the beginning mistakes in a larger organization will be larger, more difficult and more expensive to correct.

Nik (R&D, Bus. & Org. Dev.)

Alex (CEO)

Rank & File

Input

Human Resources (Implementation)

Evaluating the Ethical Implications- the Stakeholders Perspectives

Nik (R&D, Business and Organizational Development)-Make sure that the day-to-day running of the company is smooth by the researching, formulation and execution of tactical planning on a micro-level.

Alex (CEO-Make sure that macro-organizational issues are taken care of.

Human Resources- Fair implementation and execution of the company's plans and policies while balancing off the collective and individual needs of employees. Even though at the beginning there is no formal human resources department per se, there are human needs, ergo their issues are human resources issues ("Library's Human Resources Blog").

Rank & File Employee's-Make sure that their legitimate concerns are heard and take into consideration of the management.

Conclusion

Nik's problems of on-site management are daunting but are primarily those of efficient organization and work flow. While taking consideration of rank and file opinions and suggestions, he is responsible for the day-to-day formulation and execution of company policies. Once these root issues are taken care of, many other problems will become more manageable over time.