Introduction
The case study offered for the present paper is titled “KD Transport” and is dedicated to the issues of workforce treatment in the crisis situation as compared to the normal work flow and management of workforce for several generations of owners. The brief background is given for the reader to understand the situation as it was during the previous generations of owners who were very indulgent concerning their employees, tried to improve the productivity and employee satisfaction by means of fair work appraisal and stimulation of those who went forward in the working process. This way the owners achieved the enlargement of their company, expanded the capacities and the staff as well as managed to sustain friendly and sound working environment. These were the achievements of the current company’s owner, John’s grandfather and mother (William and Marie) (Fisher, 2006, p. 536).
In comparison with his predecessors, John had a completely different vision of the way workforce should be managed and tried to take all governance in his hands, which was especially wrong taking into consideration the autonomy with which all depots belonging to the KD Transport company worked. John also made a mistake by not following the previously made promises for encouragement of employees who succeeded more than others (Fisher, 2006, p. 536). What was also deeply wrong is the unhealthy spirit of competition John tried to impose on separate depots belonging to him, as in the conditions of the joint commitment to one goal and joint work done it was highly irresponsible to raise the contradictions and conflicts on the ground between the affiliates of one common company.
It is clear that by these means John was trying to enhance worker’s activity and to increase their enthusiasm based on the competitive spirit they should have as a result of his actions. however, his actions only discouraged managers’ willingness to take part in the decision-making process (it is enough to recollect the way pitfalls were punished and important tasks and decisions were handled to John in the wish to avoid further problems and complications) by the series of penalties imposed by him for some actions that did not prove to be efficient (Fisher, 2006, p. 536). Thus, it is not surprising that the formerly prospering company entered the stage of degradation and failures. This may become a common situation for the company in which there is no trust between management and workforce and the employee satisfaction is gradually moving to the zero point.
Analyzing the present case study, it is necessary to note that it does not give any literature review relevant to the topic, so research will be conducted independently. The author only states the problem and creates a comprehensive understanding of the point in the historical paradigm, analyzing the policy of human resources management of the two previous owners. However, the author offers an efficient framework for understanding the motivations and emotions of employees and management, their values and attitudes, which facilitates the reader’s understanding of the case study enormously. This way it gives ground for further considerations of the matter and generation of a set of solutions and recommendations that may be relevant in this complicated and controversial situation.
Problem Analysis
It goes without saying that the present situation in business circles is a crisis one, on the background of the world economic and financial crisis a collapse of a transport service delivering company is not a surprise. Many companies, starting from the smallest ones and finishing with the large multinational corporations, have currently faced the necessity of layoffs, salary cuts, refusals from bonuses and financial stimulations of the most successful employees etc. In the context of the overall degradation of economics in practically all countries of the world these practices do not cause any surprise but surely cause considerable worries:
“Companies began downsizing in the late 1970s to cut costs and improve the bottom line. Today, companies with record profits carry on the quest to become lean and mean. More than 3 million jobs have been eliminated each year since 1989, for a loss of 43 million jobs since 1979” (Mishra, Speitzer and Mishra, 1998).
The main issue that represents complications in both economic and ethical issues is the necessity of layoffs and cutting down the amount of working places by selling capacities. In this situation, the attitude and behavior of human resources management plays the key role as this department is the main body responsible for decision-making in this sphere. The way layoffs affect the lives of employees, efficient communication between management and the staff are the matters of major concern for all participants of this bond. Here comes the question of conducting layoffs with the minor violation of ethical and moral standards of the company as well as cause fewer problems and complications for the redundant staff.
In the current crisis situation it is relevant to recollect the experience in human resource management laid out by Dyer and Holder in 1987 in the conditions of the previous crisis that affected the US and caused the necessity of similar actions:
“while in many cases this initially led to piecemeal (and sometimes draconian) responses, over the longer run it has also apparently encouraged at least a few firms to engage in a deeper level of thought and action. For some, the natural outcome of this introspection has been a more strategic approach to the management of people” (p. 7)
The authors stipulated the need for strategic HRM more than 20 years ago, but still not every HR manager is concerned by these issues, as one can see from the case described by Fisher. John did not decide to act progressively and pursue the policy founded by his parents and grandparents, trying to handle everything by himself and finally failing to manage his own firm. This case stud shows the major failure in creating a HR strategy that would lead to improving employee satisfaction, thus reducing the overall productivity and bringing about the collapse. In case the HR strategy were more thought over and leveled the destiny of the company would have been much more positive.
One more pitfall of John that can be related to the common business practice in the modern times is the way he has decided not to inform the employees about the coming crisis and the necessity of reducing the staff of the company. His actions contradict the basic ethical laws of human resources management as they ignore the need for efficient and timely communication of coming problems to the staff. The first rule being of the utmost importance for every HR manager is to establish an active information channel and to keep employees informed about all current changes in the company’s affairs and to get ready for the change, be it a positive or a negative one. Keeping employees ignorant of the fact that they will soon be fired, John deprives them of the opportunity to plan their further actions, to get ready for the negative change and to get morally stable to recover from the shock. In case they find out about their dismissal in the last minute, their dissatisfaction will grow enormously and will cause further negative consequences for the KD Transport Company. Under the conditions that it was not extremely high before as well, the outcome of John’s decision will completely destroy the company’s reputation and will cause higher dissatisfaction of those employees who remain at their working places, which will in no case positively affect their productivity.
Human resources management has always relied on efficient and timely communication that is considered to be the main source of reciprocal information exchange. HR managers recognize the need for informing the staff about coming troubles not as a means to intimidate or scare them, but as the necessary measure to let them realize the real current situation and to be able to undertake necessary actions in case of necessity. As Berman (1998) notes, keeping employees informed may benefit the HR manager in many ways:
“In these precarious times, it is wise to be aware that this could happen to you. From my experience with people and companies caught in this crisis, I believe there is something very substantive that individuals can do to prepare themselves so they are not destroyed if and when this possibility becomes a reality” (p. 1).
Thus, the case being analyzed in the present work suggests two constructive conclusions: first of all, it was partially John’s fault that the company arrived at the bottom line of its productivity indicators because of the shrinking customer satisfaction and his inability to establish the productive decision-making process within the administration of the company. Secondly, the layoff decision he made and his refusal to inform employees about the change are likely to destroy his and his company’s reputation as well as urge him to look for other employees. The ones who would be left in the company after the layoff are not likely to be enthusiastic about their work in the company being afraid of the same destiny awaiting them in the next complicated period for the company. Here one comes to re-thinking the strategy chosen by John and trying to implement the layoff decision in another way so that it would observe the common ethical, moral and lawful standards and would not affect the company’s reputation. Another direction of recommending certain actions is to design the appropriate HR strategy that would not lead to the same results in the future.
Recommendations and Possible Options
The first recommendation that appears relevant in the situation described by the case study is the one of arranging more efficient communication channels of the personnel of the company and HR management. As it has been repeatedly stated in the present paper, the HR department becomes a key body managing the staff change in a company, so it should be actively involved in the layoff process:
“the earlier HR is involved in the planning process, the more likely a downsizing will be successful…To survive it, companies must rely on skills that are at the heart of the HR profession: workforce planning, training and skills assessment, and communication” (Kuczynski, 1999, p. 1).
Employees should not be left aside in the process of making staff decisions, which is neither fair, nor lawful in the present situation. John should have thought of this issue earlier and should not deprive his employees of the right to know the truth. He might be afraid of dissatisfaction and gossip in case he announces the layoff plans beforehand; however, it will still be a more constructive decision than it turned out in the discussed case.
Besides, one more recommendation concerns the deeper investigation of the problems that led to the dramatic situation with the KD Transport Company. John should have arranged the management process in a more efficient and loyal way much earlier than the problems arose. He wanted to express himself in the role of the strong and capable leader who always made correct decisions; however, he forgot the simple truth assumed by the Chief Executive (1996) in the article discussing relations of the leader and his subordinates. He states that it is impossible to lead people from who the leader is detached; this is why the leader has to act in compliance with the thoughts and wishes of people with who he works and interacts, thus creating a sound basis for their further joint actions (p. 7). A leader alone cannot operate the whole company: everyone’s involvement in the business process will increase commitment and will ensure higher productivity.
Finally, the recommendation that should be thoroughly taken into consideration by John in case he would still pursue his decision is to manage the remaining staff very attentively and even hire additional staff members knowledgeable in the sphere who would be able to lead the company further and overcome the layoff shock. As it has been stressed by Yengst (2002), the remaining employees may fail to follow the necessary working direction, this way putting the company at risk of full destruction:
“A high portion of the experienced people left and those left behind didn’t know which shoe to put on first in the morning. It wasn’t that weak people were left running the show–no one was running the show” (p. 1).
Extensive layoffs may be a shock not only for those who leave but also for those who remain, especially in the atmosphere of massive distrust towards John and his management methods. So, it becomes necessary to create the administrative staff that will be more knowledgeable in the sphere, more psychologically stable and more rational to be able to implement the recommendations mentioned above and to give the company a new working direction that would satisfy more employees than it had satisfied before he change.
References
Berman, EL 1998, ‘Downsizing: strategies for survival’, Industrial Management, (online BNET).
Chief Executive, The 1996, The people/performance paradox – personnel management, (online BNET).
Dyer, L & Holder, GW 1988, Toward a Strategic Perspective of Human Resource Management. Web.
Fisher, R 2006, ‘KD Transport’, in Wood et al. (eds), Organisational behaviour, 1st Australasian edn, pp. 536-537.
Kuczynski, S 1999, ‘Help! I shrunk the company! – role of human resources in downsizing – Cover Story’, HR Magazine, (online BNET).
Mishra, KE, Spreitzer, GM & Mishra, AK 1998, ‘Preserving Employee Morale during Downsizing’, Human Resource Management and Industrial Relations, (online MIT Sloan Management Review).
Yingst, CR 2002, ‘The downside of downsizing? – Trendlines – remaining employees may not know how to run the business – Brief Article’, Diesel Progress North American Edition, (online BNET).