Employees from the most important asset within any organization. This is because the success and profitability of the organization depend mainly on whether or not the workforce is efficient. Workflow management is a function in human resource management that involves creating programs that ensure that there are enough employees with the necessary competence to meet the objectives of the organization. Today four critical business issues are affecting how human resource managers handle the issue of workflow management. These issues are cost reduction pressures, business restructuring, broad-scale downsizing, and globalization. Considering the case of Oceana Air, this paper will highlight some of the strategies that can be used while implementing a workforce reduction program.
The main reason why companies carry out workforce reduction is due to the need to reduce their expenditures. Situations that compel companies to reduce their workforce include economic downturns and increased global competition. Such situations lead to reduced sales and profits. By having fewer employees, organizations can reduce some of the expenses incurred by paying high salaries and wages. Through such reductions, organizations can be able to cope with increasing competition in the market and still make profits.
Cost reduction and downsizing strategy
Heathfield (2010, para. 1-10) explains that before carrying out an actual downsize, it is prudent for a company to consider options that can lower the operational costs of a company through reduced spending on employees. Such options are also helpful as they minimize the burden of legal problems tied to the implementation of broad downsize programs. To reduce operational costs on a short-term basis, Oceana Air can renegotiate the employment contracts with the employees, giving a clear explanation why such a review of contract terms is necessary. The expected outcome is that employees will continue performing their duties according to the terms in the reviewed contracts. The company can also introduce a hiring freeze. By implementing the freeze, Oceana air will rely on the existing pool of employees to meet the essential obligations of the company to its customers.
Moreover, the company should consider retaining the most crucial employees and put on hold employees who are not very beneficial to it. For instance, employees such as pilots as well as marketing and sales personnel can be retained as they are the backbone of this company. On the other hand, Oceana Air can put on hold excess employees in other positions especially those who are not very essential in income generation. This may include some cabin crew trainers.
In addition, the company may also consider putting salary and benefit increases on hold. This decision should be clearly and convincingly explained to the employees and an appropriate timeframe was given on when the company will review this decision.
Another strategy that the company can use to reduce costs is reducing the employees’ pay rates, fringe benefits as well as working hours. In case the business condition does not improve; the company can then relieve the temporary and contract employees, and recall them at its own appropriate time.
Moreover, the company may also consider asking some of its employees to take voluntary layoffs, along with offering early retirement to qualified employees. In case the industry continues to perform poorly, the company can then implement an employee buy-out plan as a means to reduce costs. This can be achieved through offering some money to the employees when terminating the employment relationship. This way, Oceana Air should be in a better position to reduce the extra costs which may be involved in lengthy legal proceedings.
Moreover, the company can schedule for an unpaid employee furlough. This would save it from paying huge sums of money in settling compensation claims. This option may be expensive in the short term but can be very effective in reducing long-term costs. The cost reduction plan should be reviewed carefully to give preference to the retention of the most imperative employees.
While implementing such strategies, the company should be wary of the fact that despite the prevailing circumstances that necessitate downsizing, there is the need to retain the most vital employees, and especially those who are directly involved in generating revenue for the company. The strategies should be implemented successively to avoid the legal complications that may arise from the outright suspension of many employees. While implementing the above plan, the company should demonstrate its concern for the employees’ welfare. It should also consider that, there could be a positive turnaround in the industry after the low season is over. This would be a helpful guide in the reinstatement of the employees back to their jobs.
Retention strategy
The company should be responsive to all the employees’ queries and concerns. Since the prevailing conditions do not allow for upward review of salaries and benefits to pilots and flight attendants as well as other retained employees should have a flexible work schedule. They should also enjoy paid day-offs, especially during the low travel season. During the contract review period, the company can allow voluntary employee turnover after which it can undertake employee branding as a cost-cutting measure on advertising. This also acts as an incentive to the employees (what could have been paid out in advertising is given to the employee). This strategy can help retain the most crucial employees. The company should also institute a leadership program. The essence of the leadership program is to retain employees who may want to move to another job level. It’s normal anticipation that when employees leave a company, some see it as an opportunity for career advancement. Through this strategy, the company will be able to create a pool of competent employees who can carry out the essential tasks in the company before the prevailing market factors improve to allow recruitment of more employees (Taylor, p. 3-40).
Reference List
Heathfield, S. M. (2010) Before you do a Workforce Reduction. Web.
Taylor, S (.2002).The employee retention handbook. London: CIPD Publishing.