Costly Business Case Utilities Co.

Costly Business Case Utilities Co. Introduction Utilities Co. was keen on cutting 120 jobs because of the tough economic climate and escalating competition. Maree Davis, the HR Manager of the company was at the centre point of implementing the plan of cutting the workforce.Advertising We will write a custom case study sample on Costly Business Case: Utilities Co. specifically for you for only $16.05 $11/page Learn More The CEO indicated that the redundancies were voluntary, but it emerged later that the plan targeted specific workers in the middle level management. The strategy of downsizing the workforce had two stages. The first stage was to make a public statement on the intention to dismiss employees and the second stage was to use targeted redundancies. However, the announcement invited attention from the press and state politicians because of industrial action to protect jobs. Similarly, the announcement led to severe work-related stress as many employees were in fear of losing their jo bs. In particular, the company received negative messages from the press and customers who were dissatisfied with service delivery at the time. As HR manager, Maree found it difficult to implement the strategy because she felt that the CEO’s decision was challenging and it was virtually impossible to identify 120 redundant jobs. Although she received voluntary redundancies from 52 employees, there was a lot of dissatisfaction. On the other hand, the CEO was relentless on implementing the layoff plan despite efforts for negations from the union and advice from HR department. Surprisingly, the targeted redundancies did not express interest in voluntary redundancy, thus triggering the need to enter the second phase of the plan.Advertising Looking for case study on business economics? Let's see if we can help you! Get your first paper with 15% OFF Learn More At this point, Maree resigned from his position because she felt that the decision to lay off many older employees could lead to troubles with Human Rights Commission. Therefore, this paper analyses the case of Utilities Co. with reference to HR implications of the CEO’s announcement to lay off 120 staff. The paper also explains the OHS concerns that arose in response to the announcement, and outlines recommendations to improve OHS during layoffs. Similarly, the third section of this paper evaluates the impact of industrial action on the organisation. Finally, the recommendation section discuses an ideal organisation’s plan to communicate the layoff decision to employees and managers. HR Implications of CEO’s Announcement to Lay off Staff The CEO’s announcement emerged because of the claims that the Utilities Co. was experiencing tough economic times and increasing competition. As a result, the company wanted to get rid of underperforming staff to remain competitive in its market segment. The CEO was in an unfortunate position of determining the bette r alternative of dismissing workers. The announcement was an indication that the company was determined to downsize its workforce, but the figure was quite alarming and consequently led to shock and disorder within the company. The workers, including the HR manager, were unhappy about the announcement because it would cost them their positions in the company. In addition, the announcement implied that the company’s management was poor because it elicited some interesting facts about employment relationship within the company. First, Maree had identified that the company had few workers in some significant areas.Advertising We will write a custom case study sample on Costly Business Case: Utilities Co. specifically for you for only $16.05 $11/page Learn More This meant that it was difficult to identify 120 redundant jobs despite the CEO’s suggestion that the exercise targeted underperforming middle managers. Second, the company did not relate w ell with its employees because expert staff expressed interest in voluntary redundancies, but the target group did not express interest in the process. This meant that the company was to lose its productive workforce. It is surprising how the company lacks proper procedures of communicating lay offs to its employees. In the light of the HR conflicts brought about by CEO’s announcements, it is essential to understand employment relationship in managing workplace relations. The perspectives of employment relationship help us to understand how an employee and an employer relate. Employment relationship entails managing staff for successful objectives of the organisation while taking into consideration worker’s anticipations (Chambliss, 2007). However, Utilities Co. did not consider the expectations of employees with regards to work ethics, moral, team contribution skills, motivation, and general aptitude. Furthermore, findings from studies indicate that employment relatio n is mainly open-ended, spontaneous, and an inclusion of contradictory theories about conflict, control, and regulation. The perspectives of employment relations are: utilitarianism, pluralism, and Marxism (Bateman Snell, 2009).Advertising Looking for case study on business economics? Let's see if we can help you! Get your first paper with 15% OFF Learn More However, the pluralist view of employment relationship is a good example of explaining the situation at the company. Pluralists perceive an organisation comprising of powerful and different sub-groups, including management and trade unions. This viewpoint considers conflicts as a common aspect in organisation because the employer and employees have dissimilar interests; the CEO’s objective is to reduce the number of employees in order to cut down the company’s expenses while employees’ interest is retaining their occupations and enhancing their welfare. Kramar et al. (2011) argue that different organisations with disparate management also engage in establishing guidelines of employment. Detection and control of conflicts is imperative in determining the best approaches of problem solving. Additionally, the management’s role is to coordinate and persuade employees to harmonize the different interests rather than enforcing rules that would compromise negoti ations. Trade unions are recognized as genuine agents of employees, thus such organizations advocate for collecting bargaining which helps in dealing with conflicts. Thus, employers should accept and expect to resolve conflicts through legitimate measures of dealing with disagreements (Brewster, 2008). According to Roethlisberger (2009), pluralism derives its ideas from the point of view of Donovan Commission, which started in 1965 to assess the rising conflicts in industrial relations practices. Pluralism was important in its analysis on management: unlike the unitary approach where there are no authentic grounds for conflicts, managers in a pluralistic system should accept conflicts and seek feasible procedures of avoiding them. Thus, the first basis of pluralism is that the organisation should have industrial relations and personnel professionals who provide staffing and collective bargaining counsel to managers (Brewster, 2007). Second, external arbitrators are required to help in conflict resolution. Third, the management should recognize trade unions when analysing employee sentiments. Finally, the management should establish a good environment for collecting bargaining with union representatives. Therefore, it is apparent that successful industrial relations involvements such as collective bargaining can resolve disputes. Unlike the unitary system, the pluralist theory provides alternative solutions to conflicts, thus the management must exercise control and regulation, considering the requirements of trade unions and the state. Similarly, pluralist engage all participants in conflict resolution, thus favourable solutions are open to discussion. This follows the notion that conflicts are important in understanding the major tensions in an organisation and therefore the management should not ignore them. Furthermore, the theory advocates for divergent employee relations rules. Some organizations can decide to deal with employee organizations instead of t rade unions, while other organizations can work with trade unions to enhance employee commitment. In essence, pluralism is appropriate for a collective industrial relations system because trade unions are involved in conflict resolution (Bateman Snell, 2009). However, the major disadvantage of pluralist perspective, which the case depicts, is emphasis on rules and procedures, but it ignores other factors that affect or contribute to resolving disputes. For example, through industrial relations, organisations can formulate rules that determine the steps of resolving conflicts. However, such rules may not apply to different working environment. Likewise, the theory fails to note that the state not only considers the interests of the public, but also business interests. Dekler (2007) argue that focusing on employee interest may hinder the process of collective bargaining. Likewise, the redundancies raised equity issues within the company. The concept of equity relates to satisfaction in relation to expectations of fair and/or unfair allocation of resources in the HR perspective (Kramar, 2011). The equity issues depicted in the company are flexible work and discrimination. The communication strategy assumed by the CEO and organisational factors affected the flexibility of work. According to Boxall Baron (2004), essential communication, from Human Resource perspective, stresses the open relations between the organisation and employees. This results to goals being realized, which in turn improve the company’s performance. However, Utilities Co. did not express the need to enhance effective communication. The management communicated the lay off news without considering workers’ reactions. As a result, employees exhibited low productivity since the customers were complaining. Several factors affect work behaviour. First, people within the company have different positions, relations, and views. The relationship between individuals of various departments with regards to management level determines how they behave. Workers tend to conform to their line manager more often as compared to managers of other departments (Godard, 2010). Customers also influence the way employees perform their duties, as there exist the need to satisfy customers. In addition, organisational goals shape the way employees work. The goals of an organisation are the reason for existence. Managers direct the activities of the organisation to the attainment of goals. The goals of an organisation will determine the nature of its inputs and outputs, the series of activities to acquire the inputs, and interactions with its external environment (Decenzo Silhanek, 2002). Furthermore, culture reflects the underlying assumptions about the way of performing work; what is acceptable and not acceptable, and what actions and behaviour are encouraged and discouraged within a company. Organisational structure underlines the manner of arranging individuals and groups with re spect to the task they perform. The culture and structure of an organisation develop over time and in response to a complex set of factors affecting work behaviour. The key factors that affect the development of any corporate culture include history, primary function and technology, goals and objectives, size, location, management and staffing, and the environment (Schmidt, 2009). On the other hand, discrimination was evident through the redundancies. As outlined by Maree, the CEO targeted older employees who held managerial positions and were receiving higher wages. Such employees were mainly 50 or older, and a move to lay them off would imply that the company discriminates people according to age. Similarly, the CEO’s argument that the targeted groups were underperforming was inconsequential because the team manages and controls the organisation; laying them off would worsen the current situation. OHS Concerns in Response to the Announcement The announcement to downsize the workforce had adverse effects on staff safety, health, and welfare. Lay offs often entail major changes to work processes because there is redistribution of tasks to a smaller number of staff, alterations to job descriptions, and changes to training (White-Means Hersch, 2005; Quill, 2005). The first reaction to the announcement was shock, which led to fear and decreased productivity. In addition, the OHS team received stress-related claims from workers who expressed their stress through anxiety disorders and depression. For instance, an employee became physically violent towards colleagues. In particular, Maree experienced stress-related sickness in the process of making difficult decisions within a short time. She was in a dilemma while trying to identify 120 redundant jobs and improving understaffed areas. For example, industrial action compromised the process because the HR staff received numerous abusive messages from both the press and customers; Maree ignored the messages, b ut felt sick. Besides, the CEO gave a short notice to persuade Maree to execute the layoff plans. According to Quinlan (2007), job insecurity and bad working relations (as the ones depicted in the case) correlate with undesirable effects on worker safety and health because there are fears that arise from new informal means of communication between employees. However, the OHS team in the company was overwhelmed with complaints from distressed staff members. Similarly, some unsatisfied staff accepted the call for voluntary redundancies, which led to cutbacks in customer service areas. This indicates that the organisation was not keen on supporting staff affected by the announcement; it is surprising that the CEO was happy with the process, and he did not consider worker’s wellbeing. For instance, Maree had to support her own staff and other organisational activities because many workers were unable or reluctant to adjust to the changes in workplace conditions. In light of OHS c oncerns in the organisation, the OHS team should embark on a risk assessment of the OHS effects of the layoffs, discuss with employees and their representatives, and manage the risks without interfering with current OHS standards (Dragano, Verde, Siegrist, 2005). This is in a bid to improve OHS during layoffs. The risks stem from personal factors that affect work behaviour. The HR department should assess the factors that affect work behaviour during layoffs. Work behaviour analysis encompasses the methodical assessment of the nature and components of a well-defined job (Armstrong Baron, 2004). The OHS team should identify individual differences such as gender, marital status, and tenure because they affect work behaviour. The obvious differences between men and women affect job performance. There exist no systematic male and female differences in analytical abilities, competitive focus, problem-solving skills, and decision-making skills. Researchers believe that women are more wi lling to abide by the rule of work and men are insistent and more likely to have expectations of achievement (Johnstone, Quinlan, Walters, 2005). Another issue that seems to differ between male and female employees is the preference for job environment; women mainly prefer an organisation that caters for their wellbeing (Mullins, 2004). For instance, Maree found that some women accepted voluntary redundancies because the organisation does not respect people. Work experience through tenure also affects work behaviour. Moreover, if person stays long in a job, chances are few that he or she will quit. Thus, tenure and satisfaction are concurrently related (Moore, Grunberg, Geenberg, 2004). This explains why the old employees of Utilities Co. were reluctant in taking voluntary redundancies. In essence, the equity officer analysed the demographic profile of workers who had quit their jobs on voluntary redundancies and found that many younger staff and women had taken redundancies. Seco nd, personality tends to predict behaviour and happiness related to work. These behaviours include absenteeism, performance, and team effectiveness. Personality matters when we combine different personality, thus achieving a stronger relationship between work performance and personality. Third, what people perceive determine how they perform their work-related activities. For instance, the layoff announcement shocked workers because they knew that their jobs were insecure, and therefore they felt disappointed by the organisation. Fourth, values help individuals to determine what is good, right, or desirable. Values help in the analysis of organisational behaviour and hence managers can be able to accommodate individuals from different cultures. Since values differ across cultures, understanding such differences is helpful in predicting employee behaviour from various cultures. Finally, attitudes affect work behaviour because they reflect how employees feel about the work. Attitude i nvolves the aspects of cognition, affect and behaviour. Cognitive facet of an attitude is a belief in something; for instance, grapevine is wrong. Affective facet of attitude is the emotional or feeling part of attitude, while behavioural facet of an attitude is an intention to act in a particular way towards somebody or something (Sverke, Hellgren, Naswall, 2002). Another recommendation for Utilities Co. is to provide help documents on layoffs to explain the role of OHS team and staff in order to improve OHS. The documents should take into consideration the factors explained in the previous paragraphs because they are the ones that lead to health issues during downsizing. The Impact of Industrial Action on the Organisation The workers union responded to the layoff announcement by engaging in industrial action in order to prevent massive layoffs. The union felt that the redundancy process was unfair. As one of the steps towards industrial action, the union applied for protected ind ustrial action through the Fair Work Australia (FWA). Besides, the union though that the pending enterprise bargaining agreement (EBA) was one of the major contributing factors of the redundancies. In light of the union campaign, there was keen interest from the media and national politicians because Utilities Co. was a big and formerly state owned business. This made the CEO to engage the company’s lawyers in devising plans to proceed with layoffs. The CEO defended his decisions by citing that the company wanted to stay afloat in the current economic problems. Besides, he agreed to proceed with negotiations on a new EBA because of pressure from the union. However, the ongoing industrial action surpassed the hostile meetings as it became gradually more disruptive and reduced the quality of service delivery. The company received many customer complaints and it was difficult to reach out to new customers because constant negative press was taking effect. Many HR workers receive d abusive e-mails and experiences emotional stress. However, the union did not achieve its major objective because the company proceeded to subsequent processes of cutting down its workforce. The industrial action only tainted the company’s image and facilitated the layoff process. Interestingly, the company postponed the EBA negotiations because of industrial action. In fact, the EBA meetings were not successful because the union opted for industrial action before considering the option of negotiations. The fallout of EBA negotiations meant that the company was determined to lay off employees. Although the CEO indicated that the redundancies were voluntary, the second phase of downsizing was compulsory redundancies, which targeted one third of middle management positions. The union could have opted for negotiation with the company through collective bargaining. Since there was an existing EBA, it was necessary to cite the guidelines in the agreement to avoid conflicts. In th e negotiations, the union could have cited unfair dismissal laws to persuade the company to retain workers or offer notice and full redundancy benefits (Artz, 2010). Another argument that the union could have used in the negotiation is that the company breached the Australian labour laws because the redundancies were not genuine. According to Decenzo Silhanek (2002), redundancy arises where an employer does not require a worker’s job and someone else cannot take the work. However, from the case, Maree found out that some important areas within the Utilities Co. were having few staff and it was difficult to identify 120 redundant jobs. In fact, it would be appropriate to consider the company’s action as unfair termination. This could have been a good discussion point because unfair dismissal laws is important to make sure both that employees can confront unjust termination, and to act as a guideline for employees who would layoff workers unfairly. In essence, understan ding the unfair dismissal laws could have been a significant step in ensuring safety and fairness in Utilities Co. Recommendations Maree resigned from her HR position because she was unable to work under pressure. This is evident because abuses from customers made her sick. If I were in the same position, I would not have resigned because such challenges are common in the workplace and it was a matter of executing what the company had initiated, but the process was wrong. Maree should have conducted thorough investigation of the company and communicated her findings to the CEO. However, she did not provide feasible suggestions to the CEO. For instance, Maree noticed that the company had few workers in some critical areas, but she did not explain it to the CEO. The CEO needed assurance that the company can weather the tough economic climate and increasing communication without necessarily cutting down the workforce. Maree failed to identify other significant factors that contribute t o productivity. The best approaches of increasing workplace productivity are positive management and good communication. In the place of work, managers who exercise positive means and enhance positive behaviour can achieve positive results. The managers must have broad knowledge and act as the intellectuals of the organisation. When disagreements arise within the organisation, it is the manager who advices the administrators on the approach to employ towards solving the problem amicably. Other matters that require the counsel of HR manager include appraisal, training, recruitment and incorporations (Kramar et al., 2011). As a matter of consideration, the manager understands the capacity of the organisation much more than anybody else. For instance, the manager is responsible for designing the tasks for every employee and thus he/she has to be involved when the organisation intends to hire and/or layoff staff (Dekler, 2007). Moreover, with regards to the layoff decision by the CEO, t he ideal organisation plan to communicate the decision would include good communication strategies, honesty, respect towards employees, asking feedback, ensuring commitment to employees’ safety and wellbeing. First, the organisation should share all the information regarding layoffs, citing the major reasons and implications to workers. The management should not imagine that workers understand the message at once or communicate only when all details are available. Consistent and accurate information is better in order to avoid rumours. Second, clarity of the decision to layoff workers might help them prepare, thus avoiding distractions like stress (Maertz et al., 2010). If the company does not know the exact number of redundancies, it is important to suggest a reasonable number. The company should make promises that are conceivable through exercising credibility. Third, the organisation should have guidelines that allow room for respect and dignity towards employees. For inst ance, a manager can exercise respect through giving the dismissed worker a chance to say goodbyes or letting him time to thank and/or receive thanks from colleagues. Fourth, the organisation should ask for feedback from various sources. Listening to employee’s suggestions or questions enhances organisational support to workers. The HR managers can administer questions, such as: How can we communicate better the layoff decision? Are there any major issues regarding how the layoffs are conducted? (Hershey, Blanchard, Johnson, 2008). Finally, it is important to restate the organisation’s commitment to health and welfare where possible. The organisation should focus on safety by expressing the likely effects of layoffs and the necessary reactions expected from employees to reduce the effects. For instance, a supervisor can take some time to ask each affected employee in his line of work how they are fairing with the changes. In this case, the supervisor can deal with the employees’ problems while focusing on work and enhancing safety measures. Conclusion The CEO and HR manager of Utilities Co. were in an unfortunate position of finding an appropriate strategy to lay off workers. Administering layoffs is often difficult because it involves dealing with people and factors that affect work behaviour. This paper analysed the implications of announcing layoffs, the concerns of OHS, the impact of industrial action on the organisation, and proposed an ideal organisation’s plan to communicate the layoff decision to the staff. The major HR implication of CEO’s announcement to lay off staff was that the HR department would work hard to identify redundancies within the company and consequently restructure the working environment. The announcement was received with shock from employees, and it led to decreased morale and productivity. As the HR manager, Maree was required to support her own staff and troubleshoot across the organisation in order to maintain the company’s operations. In addition, the announcement increased the OHS concerns as the news stressed many employees, and they even felt sick. As a response to the announcement, the union’s industrial action interfered with service delivery, but did not stop the company’s stand on dismissing workers. Therefore, the major recommendation for Utilities Co. is to have a feasible plan to communicate the layoff decision to the staff through the following five strategies: good communication strategies, honesty, respect towards employees, asking feedback, ensuring commitment to employees’ safety and wellbeing. 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