Problem Statement
West Midlands Designers and Architects Limited was running profitably until some three years ago when the situation started to change. The property market collapsed and WMDA, like many other architectural firms, now finds itself struggling to survive. Russell Quinn, the WMDA boss, has always made sure that he is on good terms with the firm’s architects. WMDA employees are a close-knit family where all employees get along well with one another. They are very industrious in the office, and also get some time to socialise after work. However, WMDA has made huge losses for the last two years, and cannot afford to keep all its employees any longer. The loss-making trend threatens the firm’s long-term success. To survive, WMDA is forced to lay off four of its ten employees. Russell’s greatest challenge is finding an acceptable method to make some of its architects redundant.
Analysis
Company Background and structure
WMDA is an architectural firm with ten employees working under Russell Quinn as the head. The company’s financial position was healthy until three years ago when it entered the loss-making territory.
Organization and Management System
The company’s management is always on good terms with its architects. There is a good rapport between the management and the employees, and among the employees themselves.
Salary and payment System
From the case, it is evident that WMDA pays its employees well since some of them can afford an expensive lifestyle. Moreover, some employees have worked with the company for a long period of time. This means that the company’s turnover of employees is very low; a situation only possible where the employees are well-remunerated.
Products
WMDA is an architectural firm mainly involved in the design of buildings.
Competition
WMDA is way ahead of its competition because it has always had more work than it can handle, and only started experiencing problems with the collapse of the property market.
Staff/personnel
WMDA has a staff of ten architects who are very hardworking, and get along well with one another. Some of these employees have worked with the company for over twenty years. This is a clear indication that there is a high level of employee loyalty among the firm’s staff.
Firm’s finances, Turnover and Profits
WMDA has had a very strong financial background over the years until three years ago. From the case, the firm has had more work than it can handle, and therefore a high sales turnover and profits. However, the firm has made losses for the last two years.
Recommendations
WANDA’s management has to make hard choices to survive in the current economic hardships for the property industry.
- It has to lay off four of its ten employees in order to cut down its costs on employee compensation. To ensure that this process is fair, WMDA’s management has a number of options. They include peer selection, selection on merit voluntary redundancy and last in first out
- We recommend that employees to be retained by the firm be selected purely on merit. This will ensure that only the best employees remain, while the unproductive ones are rendered redundant. Other available options are not viable because they fail to consider the interests of the firm
- We further recommend that the laying off process is done after a comprehensive evaluation and appraisal of all the employees. This will help rank the employees in terms of their productivity, and thereafter decide on who should go and who should be retained. This evaluation should also consider the employees’ experience in architecture and design. However, employees willing to take the early retirement option should be given this opportunity regardless of whether they have been recommended to be laid off or retained.