Five Factors and Downsizing Assignment

Five Factors and Downsizing Assignment Words: 2450

Which two of the five HR factors listed by the authors of your course do you consider the most important for your organization? (Explain your organization and its nature of business briefly). Justify your choice, and discuss these two factors in detail. Assuming that the U. S. sub-prime crisis of the present day is now affecting the Asian economies and your organization is feeling the effects of slowing sales as well as rising raw materials cost. Downsizing is a real possibility and one of the most challenging aspects of human resources management.

Discuss some of the approaches to use, and describe how you would go about downsizing 20% of your work force if you are eventually forced to do so. Give an example of another organization where downsizing has evidently not benefited that company. Elaborate in detail. Resources: http://www. libraryspot. com/ http://findarticles. com/ http://lib. utexas. edu/ Introduction To analyze the business strategy, the best known benchmark for general framework is Porter’s Five Forces. 1. The External Environment: Social, Political, Legal, and Economic 2. The Workforce 3. The Organization’s Culture 4.

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The Organization’s Strategy and 5. The Technology of Production and Organization of work Among the above factors, I prefer Workforce and the Organization’s Culture as important factors for my company that I worked. Organization Background The company that I worked in was KG Information and Systems Limited (KGISL). [pic] Name: KG Information and Systems Limited (KGISL) Tagline: We make IT happen Industry: Information Technology Services Employees: 983 Certification: SEI CMM Level – 4, ISO 9001:2000 Divisions: IT Services, Business Process Outsourcing (BPO) Homepage: http://www. kgisl. com/

The Organization that I worked in was an Information Technology Enabled Services (ITES) company. It is located in Coimbatore, South India. Our company had both Software development and Business Process Outsourcing (BPO) divisions. The Business Process Outsourcing division had both Voice-based services (Call centre) and non-voice based services (Medical & Business Transcription). Due to globalization, our company received a lot of overseas projects, especially from the United States and Europe. The project that I worked in was Business Transcription under the Business Process Outsourcing division.

The work was always in the night daily since there is a 12 hour time difference between India and the United States. Because of this change in work timings and the heavy competition from other rival outsourcing companies from throughout the world, both the efficiency levels of our employees as well as their English language proficiency had to be improved and sustained. Workforce – Justification Workforce demographics play an important part because, the right mix of age and skill demographics will decide how well the company is equipped to meet its mission and vision.

Our company always preferred to recruit younger employees not just because they have a high drive to perform but they also show least resistance to change. Only young people can adapt themselves well to work night-shifts. Employees were recruited through an interview that made sure that only the best of among the rest were chosen. The first one month was a probationary period for all newly recruited employees. In the first one month, the employees were given on-the-job training (OJT). Employees were clearly made aware that they had to perform well to go into the next level (mainstream production).

In the Voice-based department (Call center), there were more female employees than males. This was because, women were considered more suitable for customer care services. Traditionally, women are considered polite, considerate and soft-spoken – the qualities that are relevant for this type of job. In the Non-voice department, once the new employees moved into mainstream production, their performance were still closely monitored. Listening Comprehension (LC) was the core skill that was expected out of these new employees.

Since the nature of the job was to listen to English conversation and transcribe the speech verbatim, English proficiency was of utmost important. Whether the employees’ performance met or did not meet the required criteria, they were given continuous learning. Continuous learning was compulsory to all employees in the organization. In this way, these employees were made sure that they remain at the forefront of the skill-base and knowledge in their respective domains. [pic] KGISL Employee Growth [pic] Workforce Age Demographics The Workforce factor was very critical in my company.

This was because our company was a services company rather than a manufacturing one. Services companies mostly require high-skilled employees. Therefore, Human Resource Management becomes very significant. Employees were the real assets in companies like KGISL. From the above chart, it is clearly seen that the majority of the age group is in the 20-30 age category (41%). Employees’ age demographics was considered very important in our company. Organization’s Culture – Justification Our company’s Organizational culture had four elements: • Attitudes • Experiences • Beliefs • Values KGISL’s Organizational Culture

With more and more companies becoming Multi National Corporations (MNCs), the whole world becomes their market. All the citizens of this world become potential customers. The reach of these companies become phenomenal. Every company wants to have a share in this global pie. As a result, competition becomes ruthless on a global scale. Because of this, they must strive to achieve high performance in the context of competitive and complex global environment. In order to cope up with the rapid changes, our company’s work culture was to be altered in such a way that it creates a conducive environment for learning and growing.

Our building location was called as campus rather than an office – showing that our company was a learning-organization. KGISL always strived to direct and align all the employees’ efforts towards the organization’s values – to become a highly-respected information technology corporation and to create wealth through rapid growth by recruiting, training and retaining the best talent in the industry. Since our company’s business reach had spanned the whole world, upholding the level of quality of our services was considered mission critical.

As a result of this, more people were recruited for doing the quality check before the projects were delivered. People who gave poor quality works were given more focus and were trained further to raise their levels of competency. Quality issues were taken seriously. Initially there were 12 companies doing projects to our US-based client. Our client, one by one reduced that number to 7; and finally there were only 3 companies doing the projects all over the world. The first company was based in the US, second one in the UK, and third one being KGISL, India.

It was a sense of pride that KGISL was at par with those firms in the US and UK. This was made possible by the stringent quality efforts that were undertaken by the company’s management as part of the company’s time-tested organizational culture. Our company’s strong belief has been to have an information-rich culture. Information Technology was one area where change was always constant. It is a norm that established platforms become obsolete in a short time. To prevent people from becoming technology illiterates and to constantly hone their skills with the new changes, continuous learning was inevitable.

It was made mandatory. New people were recruited to teach employees with the latest technologies as well as other related areas of the work being done. The company has to make sure that the employees are kept up to date with all the developments taking place. This was made possible by continuously upgrading the work culture into the one that encourages continuous learning and growing. The whole world is slowly moving from a manufacturing driven to a more service driven economy. This requires huge investments in education, training and information technology.

As it is proven that human resources are the most important resources than physical and financial resources of an organization, it is imperative that organizations must invest heavily to make the organization’s culture highly inclined towards learning. In this context, the attitude of our company had always remained the same – to have a workforce that is the best in both the core skills as well as soft-skills. (Source: http://www. mier. org. my/mierscan/archives/pdf/elayne4_10_2004. pdf) Downsizing In the event of a crisis (like the U. S. ub-prime crisis), I would support downsizing. I would downsize those new employees in the on-the-job training (OJT) level. Since they have not moved into production, they will be the people who could be downsized. My way of employee lay-offs will be more like right-sizing rather than downsizing. Downsizing happens because of the following major reasons: – Production cutbacks – Market considerations – Facility considerations and – Internal restructuring or reorganization (Source: Raymond J. Stone, “Human Resource Management,” John Wiley & Sons Ltd. Fifth Edition: 2005)

If a company is in the manufacturing industry, it is agreeable to lay off employees in the middle management levels as well. These employees are mostly supervisors. After the lay-off, other measures can be taken like – making 2 supervisors look after the job instead of 4. If it is a services company, it is difficult to lay-off employees because most of the employees in a services company are white-collared professionals – highly-skilled employees. Downsizing Precautions Downsizing must never be done in a haphazard manner. It must be carried out after a thorough analysis and planning.

Understanding the workforce profile prior to downsizing helps the organization anticipate which group of workers will be affected by downsizing the most. Downsizing must be based on the following criteria: 1. Seniority 2. Particular job positions 3. Elimination of highly-compensated workers and 4. Job performance (Source: H. M. O’Neill and D. J. Lenn, “Voices of survivors: words that downsizing CEOs should hear”, Academy of Management Executive, vol. 9, no. 4, 1995) Effective Downsizing 1. Promote open and frequent communication to encourage employees to become part of the change process 2.

Retain those employees who have the right combination of skills and knowledge needed to achieve the organization’s vision and mission. 3. Target specific inefficiencies, redundancies and low-value activities for elimination 4. Treat those employees who lose their jobs with compassion and dignity 5. Plan the restructuring efforts and link it to organization’s business objective (Source: M. K. De Vries and K. Balazs, “The human side of downsizing”, European Management Journal, vol. 14, no. 2, 1996) Alternatives to Downsizing – Real-Life Examples

Example 1 – During the merger of BB&T Financial Corporation and Southern National Corporation, redundant positions were eliminated through the strategic use of a temporary recruitment pause (hiring freeze). Example 2 – Hewlett-Packard implemented an innovative fortnight program in which all employees were asked to take one day off without pay every two weeks until business revenue increased. This way they averted lay-offs (Source: http://humanresources. about. com/od/layoffsdownsizing/a/downsizing_3. htm) Downsizing Failure – Examples 1. Apria Healthcare Group Apria Healthcare Group Inc. www. apria. com/) is one of United States’ largest home health firms and provides service and equipment to patients in all 50 states. With a turnover of US $1. 61 billion, it has an employee strength of 13,276. The company decided to downsize its workforce. After downsizing, its stock fell almost 72%. The reasons for the downsizing failure are many. Since most of the Apria Healthcare Group’s employees are trained employees, once they were laid-off due to restructuring, it proved difficult for the management to manage the expenses incurred as a result of this.

Apart from this, when demand for employees increased suddenly, recruiting new employees also proved to be a costly move since they also had to be trained before induction into the organization full-fledged. (Source: http://www. afgen. com/layoffs3. html) 2. Scott Paper [pic] Scott Paper, a manufacturer of paper based consumer products, downsized its workforce by about 10,500 employees in the mid-1990s. As a result of this downsizing, the company was not able to introduce any new products and it witnessed a dramatic decrease in profitability. It ran in losses until it as bought over by Kimberly-Clark Downsizing Failure – Reasons 1. It is estimated that about half of all downsizing firm lay-offs end up with at least as many labourers within a few year’s time. 2. Downsizing is successful mostly only in the Manufacturing industries. 3. Downsizing firms tend to increase their profits but not their productivity. This commonly leads to lower wages within the downsizing firm without huge increase in production. 4. Workers with the least seniority are often laid-off, who are also the best trained and educated incidentally. This is how the brightest workers are let go. . Though downsizing is mostly a cost-reduction strategy, it mostly makes the companies incur huge expenses. Surveys show that cost of layoffs generally outweighs the payroll savings to be gained from them. 6. Due to downsizing, the existing employees lose trust in the management and they work under the constant pressure of being laid-off which result in the loss of productivity in the end (Source: http://management. about. com/cs/people/a/LayoffAlternate. htm) (Source: http://www. marginalrevolution. com/marginalrevolution/2004/02/facts_about_dow. html) Legal Reasons 1.

Breach of Commitments in existing agreements 2. Breach of legal obligations other than Non-discrimination 3. Discriminatory downsizing 4. Downsizing “problem” employees Downsizing – After Effects Though downsizing is imminent, it must be noted that the current US sub-prime crisis may not last long. Economy might bounce back in the near future. Demand might increase even rapidly. At that time, when everything comes right, the organization might face shortage of workers as a result of downsizing. Recruiting employees again will be expensive, time-consuming and resource-crunching.

Therefore, care must be taken that the employees who are laid-off do not dent the company’s talent pool in an adverse manner. The best talent must never be terminated from the company. They are the real assets for the organization in the long run. Downsizing must always come as the last resort and not the first option. (Source: H. M. O’Neill and D. J. Lenn, “Voices of survivors: words that downsizing CEOs should hear”), Academy of Management Executive, vol. 9, no. 4, 1995) Bibliography 1. M. K. De Vries and K. Balazs, “The human side of downsizing”, European Management Journal, vol. 14, no. 2, 1996 2.

H. M. O’Neill and D. J. Lenn, “Voices of survivors: words that downsizing CEOs should hear”, Academy of Management Executive, vol. 9, no. 4, 1995 3. Raymond J. Stone, “Human Resource Management,” John Wiley & Sons Ltd. Fifth Edition: 2005 References 1. http://www. afgen. com/layoffs3. html 2. http://www. kzalaw. com/pdfs/2000_downsize. pdf 3. http://humanresources. about. com/library/weekly/nosearch/naa101602a. htm 4. http://management. about. com/cs/people/a/LayoffAlternate. htm 5. http://www. pamij. com/hickok. html 6. http://www. marginalrevolution. com/marginalrevolution/2004/02/facts_about_dow. tml 7. http://management. about. com/cs/people/a/Brightsizing. htm 8. http://www. govexec. com/reinvent/downsize/0896s3. htm 9. http://www. salon. com/tech/col/smith/2006/05/26/askthepilot187/ 10. http://www. mier. org. my/mierscan/archives/pdf/elayne4_10_2004. pdf ———————– Values Beliefs Elimination of Highly-compensated workers Job Performance Particular Job Positions Seniority Organization’s Culture Social, Political, Legal, and Economic Potter’s Five Forces Technology of Production & Organization of work Workforce Organization’s Strategy Experiences Attitudes

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