Implications of the Layoff Announcement at the Utilities Co - Case Study Example

Report: Utilities Co. Table of Contents Executive Summary 2 Introduction 3 Implications of employee lay off 4 Are the implications surprising? 8 OHS concerns as a result of the layoff announcements 8 Staff in general 8 Maree 8 Ways in which the organization and Maree dealt with the concerns 9 Equity issues as a result of the redundancies 9 Risk implications for the organization 9 Communicating employee lay off to managers and staff 10 Implementing the layoff 11 The reason why Maree resigned 12 Conclusion 13 References 14 Executive Summary This report the report aims at identifying the implications of the layoff announcement at the Utilities Co. by the CEO, the occupation health and safety concerns as a result of the layoff as well as how the organization dealt with the concerns. Moreover, the report will identify the equity issues as a result of the redundancies and its implications to the organization. In conclusion the report will give recommendations on how the organizations are supposed to make the layoff decisions. Apparently, Human resource leaders are currently under amplified pressure to express outcomes from their employees’ policies and practices. Nevertheless, to ensure productivity and efficiency of the organization, human resource managers should put into effect strategies to ensure efficient management of people. The report has identified such implications as reduced productivity as a result of the employee lay off, complaints from its customers and the negative effects of the media. The employees also faced stress as a result of the lay off and their morale went down. Additionally, he OHS team of the human resource department was largely affected by the announcement of the layoff and the subsequent events that took place for instance the customer complaints. Furthermore, equity officer evaluated the demographic profiles of the employees who had left the utility company on voluntary redundancies. He indicated that the employees reported that they are not ready to work in a company that does not value its employees. In conclusion, the report has recommended that the company should treat their employees with respect and compassionately to be able to lighten the situation and make the situation tolerable for the organization and employees if the layoff is investable. Introduction This report aims at analyzing human resource management at the Utilities Company. Human resource leaders are currently under amplified pressure to express outcomes from their employees’ policies and practices (Byars and Rue, 2006). In fact, such leaders are aware of the relationship between organizational success and the individuals within the organization. Furthermore, they understand that individual linked matters necessitate being at the core of the boardroom agenda (Byars and Rue, 2006). As a result, human resource managers are highly encouraged to formulate and put into action people strategies, which support the organizational objectives and boost the transparency and accountability around the management of people. In this case the organization should understand that managing people is not an easy task. Nevertheless, to ensure productivity and efficiency of the organization, human resource managers should put into effect strategies to ensure efficient management of people (Clark, 1993). According to studies, maintaining human capital in an organization should not be merely perceived as simply a responsibility, rather an extremely significant skill that human resource managers should continually hone and enhance to handle the varied personalities in an organization. Research has revealed that the most significant but difficult job of a manager is managing people (Ulrich, 1998). Managers must lead, inspire, motivate, and encourage them, whilst still they are expected to employ, fire, and assess the workforce. Efficient management of people in an organization necessitates an understanding of job design, motivation, and group influence and reward systems (Ulrich, 1998). The report aims at identifying the implications of the layoff announcement at the Utilities Co. by the CEO, the occupation health and safety concerns as a result of the layoff as well as how the organization dealt with the concerns. Moreover, the report will identify the equity issues as a result of the redundancies and its implications to the organization. In conclusion the report will give recommendations on how the organizations are supposed to make the lay off decisions. Implications of employee lay off Due to the increased competition as well as the tough economic climate, the Chief Executive officer of the Utilities decided to lay off some of his employees with the aim of saving the situation. By so doing the CEO thought that he would be in a position to do away with the expensive as well as long serving employees whom he deemed as non-performers whose capacity to enhance improvement and growth was very little. These employees were seen as obstacles to making the company a flat efficient organization capable of withstanding the tough economic times. However this was not the case as the layoffs led to traumatic upheavals to both the company and its employees due to the widespread economic consequences (Raymond, pp 589-590). According to studies, layoffs always create a sense among the employees that they are commodities that can easily be disposed. As a result of this the employees become disengaged from the organizations and its objectives (Boxall and Steenveld, 1999). The Utilities Co. is no exception. The news of employee layoff came as a shock to the employees and this largely affected their productivity in the company. It is apparent that within the Utilities Co., email traffic came to a standstill and all the employees did was to talk in whispers on the phone lines behind closed doors. The companies who operate under the slogan that “employees are our most important asset” are worst hit if when economic times get tough one of its first step is to lay off employees (Byars and Rue, 2006). This does not indicate that the employees do not understand the necessities of the business and that cutting on the workforce is the only alternative the business has at its disposal (Ulrich, 1998). Of concern is whether reducing the workforce is among the very first actions the company undertakes to respond to difficulties or just an action undertaken reluctantly as a last resort by the company and with caring and generous treatment to its affected workers (Byars and Rue, 2006). In addition, the company faced complaints from its customers. The company was first hit by a letter addressed to them by the union. The union brought to the attention of the Utilities Company that a fruitful application had been wedged with Fair Work Australia for the protected industrial action. As indicated in the case the present Enterprise Bargaining Agreement (EAB) was at the point of expiring. The union felt that the redundancies were directly responsible for the delayed negotiations of a new agreement. In order to save the situation the company CEO was in constant meetings with the lawyers. On the other hand Maree the company Human Resource Manager worked tirelessly forcing her to forego her sleep for two nights. As a result of the union campaign there developed an intent attention from the media as well as the state politicians. This is because the Utilities Company was a previously large state owned company. The company received expressions from a number of staff who were interested in voluntary redundancies. The expressions received were however from the proficient employees in the project teams with good education background as well as records of accomplishment. These employees could be highly competitive in the labour market. From the view of skills profile, losing such a workforce would impact the organization deeply (Marchington and Gemgulis, 2000). Such employees are perceived as the contemporary stars of any company who would ensure improvement and high productivity (Ulrich, 1998). Maree felt that this is a workforce that was not supposed to be lost if the Utility company was willing to remain productive and highly competitive in the global market. Contrary, to what the company’s CEO had hoped for, not many of his senior administrators and the middle managers who he termed as non-performers applied for the voluntary redundancies. This meant that the company would continue not performing as expected. Besides, the negotiations in search of a new Enterprise Bargaining Agreement became hostile as they were eclipsed by the underway industrial action. This industrial action became very disruptive and it hugely affected the delivery of services. Moreover, the company continued to face more and more complaints and the acquisition of new customers was nearly impossible since the constant negative press was still taking effect. Apparently, most of the human resource employees received abusive mails and this was highly demoralizing to the staff. Maree felt the impact of these mails to her staff and it made her feel sick. In the end, the negotiations of the Enterprise Bargaining Agreement were indefinitely suspended. Moreover, the OHS team of the human resource department was largely affected by the announcement of the layoff and the subsequent events that took place for instance the customer complaints. As is evident from past research, announcements of layoffs lead to high levels of psychological stress in employees (Boxall and Steenveld, 1999). In the work situation, some stress is inherent. At moderate levels, it is not harmful to the company but functional and natural as the employees aim at achieving the most challenging goals (Wright et al, 1994). The level of employee anxiety is anything but functional (Byars and Rue, 2006). Keeping people nervous about their work believing that it will induce them to work and improve their productivity is just but a management misconception (Nolo's Lawyer Directory, 2012). On the contrary job stress makes the workers to shift their attention to the current tenuous situations instead of ensuring that their tasks are performed effectively and efficiently (Marchington and Gemgulis, 2000). At its worst, the dread that an employee could lose his job results to paralysis at work. Moreover, experts have revealed that great stress have deleterious impacts on the physical health of the employee. A good example put forth by the researchers is that the people who are exposed to long term job related stress are at the risk of experiencing heart attacks at least twice as much as other workers (Nolo's Lawyer Directory, 2012). It is estimated by the American Psychological Association that job related stress costs the United States Companies approximately 300 billion US dollars in productivity loss, absenteeism and health care costs (Marchingtonand Gemgulis, 2000). Therefore, extreme job stress is harmful to the worker as well as the business (Boxall and Steenveld, 1999). In our case, claims related to stress were on the increase in the Utilities Company and the OHS consultants were not in a position to address the ambush of the distressed employees. Of great concern was the high rise of the Psychiatric illnesses for instance depression and anxiety disorders. In a critical case one of the employees became physically ferocious towards his fellow staff members. The staffs whose voluntary redundancies had been approved were already leaving the company. As a result the company faced cutbacks in the customer service areas. The staffs were relocated within the organization to ensure that work continued affectively. However the remaining staffs was not willing to adjust to the changes due to too much work and this caused Maree sleepless nights. Are the implications surprising? Given the situation, the implications experienced by the company are not so surprising. According to past researches, workforce optimization and downsizing became fashionable in the 1990s and the studies of their impact indicated that only a third of the employees who perform these industrial actions are successful and enhance their productivity (Wright et al, 1994). OHS concerns as a result of the layoff announcements Staff in general The OHS team of the human resource department was largely affected by the announcement of the layoff and the subsequent events that took place for instance the customer complaints. Claims related to stress were on the increase in the Utilities Company and the OHS consultants were not in a position to address the ambush of the distressed employees. Of great concern was the high rise of the Psychiatric illnesses for instance depression and anxiety disorders. In a critical case one of the employees became physically ferocious towards his fellow staff members. Maree Due to the leave of some staff whose voluntary redundancies had been approved, the Company was forced to move the front line workers across different locations as a result of the cutbacks in the customer service areas. This was so as to ensure that service delivery continued as planned. Work was therefore redistributed arbitrary and this overworked the employees who were unable to even adjust to the changes at their workplaces. Maree had no option but to offer support to her employees while at the same time troubleshooting across the organization to ensure everything runs as planned. As a result, Maree was not having enough sleep and this was a threat to her health. Ways in which the organization and Maree dealt with the concerns Equity issues as a result of the redundancies It is apparent that the equity officer had evaluated the demographic profiles of the employees who had left the utility company on voluntary redundancies. The officer reported that most of the staff who had taken redundancies was the younger employees and women. Of great concern is however, the reason given by some women who had taken the voluntary redundancies that they are not ready to work for an organization that does not treats its employees with respect. This notwithstanding, the company’s CEO felt that they should go ahead with phase two of the redundancies and phase off the targeted employees as it could not get any worse in terms of employee morale and customer satisfaction. Maree felt that this was not right, as it would seem as if the company is discriminating the older people in the organization and as a result land them to problems with the Human Rights commission Risk implications for the organization Due to the fact that the company showed little respect for its employees, it would be so hard for them to retain employees. Studies indicate that human capital is the core to the success of any company (Wright et al, 1994). A company should make sure that it highly values its employees as their productivity is largely linked to how they are treated (Nankervis et al, 2011). The Utilities Company would lose its employees as layoffs always create a sense among the employees that they are commodities that can easily be disposed (Boxall and Steenveld, 1999). The redundancies are also causes employees to be assigned tasks, which barely meet their motivation. As a result the employees are not motivated to work and do not enjoy their daily activity (Clark, 1993). This could force them to look for employment elsewhere where they will work on the jobs fitting their personalities. Moreover, the utilities company would lose its customers due to poor service delivery. Studies reveal that good and timely service delivery helps in customer retention (Nankervis et al, 2011). Apparently, the customer had lost the highly skilled employees with a record of good performance who are highly competitive in the labour market. As a result of this, the company experienced a reduction in its productivity. Consequently, there were flooding customer complaints and this is not good as it destroyed the brand image of the large previously state owned company. Besides, the company is likely to face added costs in addressing the health issues of its employees (Nankervis et al, 2011).Due to the situation at the company claims related to stress were on the increase. Of great concern was the high rise of the Psychiatric illnesses for instance depression and anxiety disorders. Researchers have revealed that negative stress as a result poor management is deleterious to the company. This is due to the fact that stressed staffs perform their tasks less properly as well as with reduced energy. Additionally, they suffer health consequences and as a result reduced productivity. Communicating employee lay off to managers and staff It is always hard to tell the employees that their job is going to be terminated (Nolo's Lawyer Directory, 2012). Often, the company receives anxiety and guilt for having to undertake the industrial action. Therefore, the company needs to understand that these feelings are normal and hence they should treat their employees with respect and compassionately to be able to lighten the situation and make the situation tolerable for the organization and employees (Boxall and Steenveld, 1999). In order to effectively communicate the layoff, Work together with Employee and Labour relations to come up with a plan on how to communicate about the impending staff and layoffs to the management and staff (Nolo's Lawyer Directory, 2012). Discuss logistical considerations for instance the last day of work as well as the handing over of keys (Nolo's Lawyer Directory, 2012). Implementing the layoff When communicating to the employees; Speak to them in a private place of the situation of the company and the need to undertake the layoff Acknowledge the contribution of the employees to the company and treat them humanely Describe the available resource through the human resource Take time to listen to the employee and await their response without being defensive Avail yourself to address the issues and concerns of the employees about the layoffs. (Nolo's Lawyer Directory, 2012) After the layoff, the management ought to address the feelings of the remaining employees and communicate a positive image for the company for future (Wright et al, 1994). The management should hold meetings regularly to ensure effective communication (Wright et al, 1994). Most importantly, the management should ensure that: It recognizes that anxiety is normal during these trying times Elucidate the reorganization of the departments and redefine roles Deliberate any implications on the workflow or workload Guarantee the remaining staff members that their positions will not be affected and that they are highly valued. Assure the employees that there are available services for them if they find it hard adjusting to the changes. Ensure that you uphold an open door policy for employees to come for guidance and support when they are stuck (Boxall, 1998). The reason why Maree resigned It is apparent that due to the pressures of the workload in the Utilities Company Maree resigned. With the company having some employees quitting employment, it was forced to move the front line workers across different locations as a result of the cutbacks in the customer service areas. Due to this Maree had no option but to offer support to her employees while at the same time troubleshooting across the organization to ensure everything runs as planned. As a result, Maree was not having enough sleep and this was a threat to her health. Moreover, her contributions were no longer being honoured. For instance, when the company’s CEO suggested that she should go ahead and move to phase two where she was supposed to focus on the targeted redundancies, she said that this was not an ideal decision as most of the staff on the list were more than 50 years and laying them off would land the company to problems with the Human rights commission. This angered the CEO and he claimed that this was a lie as they are being laid off because they cannot deliver and he later left the room with no other word. In my opinion, I would also resign from the job, as it is very hard to work in an environment full of stress and where the employees are not valued and respected. Conclusion This report has encompassed an introduction to human resource management. Apparently, Human resource leaders are currently under amplified pressure to express outcomes from their employees’ policies and practices. Nevertheless, to ensure productivity and efficiency of the organization, human resource managers should put into effect strategies to ensure efficient management of people. The report has identified such implications as reduced productivity as a result of the employee lay off, complaints from its customers and the negative effects of the media. The employees also faced stress as a result of the lay off and their morale went down. Additionally, he OHS team of the human resource department was largely affected by the announcement of the layoff and the subsequent events that took place for instance the customer complaints. Furthermore, equity officer evaluated the demographic profiles of the employees who had left the utility company on voluntary redundancies. He indicated that the employees reported that they are not ready to work in a company that does not value its employees. In conclusion, the report has recommended that the company should treat their employees with respect and compassionately to be able to lighten the situation and make the situation tolerable for the organization and employees if the layoff is investable. References Boxall, P. 1998. Achieving competitive advantage through human resource strategy: Towards a theory of industry dynamics. Human Resource Management Review, vol. 8, no. 3, pp. 265 – 88. Boxall, P. and Steenveld, M., 1999. Human resource strategy and competitive advantage: A longitudinal study of engineering consultancies. Journal of Management Studies, vol. 36, no. 4, pp. 443 – 63. Byars, L. & Rue, L., 2006, Human Resource Management; 8th Ed. Boston, McGraw-Hill. Clark, J. 1993, Managing people in a time of technical change: conclusions and implications. In Clark, J. (ed.), Human Resource Management & Technical Change SAGE Publications. pp. 212–223. Marchington, M. and Gemgulis, I., 2000. Best practice, human resource management perfect opportunity or dangerous illusion. International Journal of Human Resource Management, vol. 11, no. 6, pp. 1104-1124. Nankervis, A. R., Compton, R., and Coffey, J., 2011, Human resource management: strategy and practice, 7th Ed, London, Cengage learning. Nolo's Lawyer Directory, 2012, Making Layoff Decisions. Accessed on March 25, 2012, http://www.nolo.com/legal-encyclopedia/making-layoff-decisions-29949.html Raymond, S., Managing Human Resources, 3rd Ed. John Wiley & Sons Australia, p. 589-590. Ulrich, D., 1998. A new mandate for human resources. Harvard Business Review, vol. 76, no. 1, pp. 124- 134. Wright, P.M., McMahan, G.C. and McWilliams, A., 1994. Human resources and sustained competitive advantage: a resource-based perspective. International Journal of Human Resource Management, vol. 5, no. 2, pp. 301-326. Read More