Downsizing an Organization essay

Putting it simply, people couldn’t afford as much. As a result of the “ballooned” inflation levels, there was a subsequent effect on wages across the country resulting in high levels of unemployment. The situation in 1982 is a straight-forward example of supply and demand. The demand for the products that Stonewall supplies was down, the company didn’t need to produce as much and thus, not as many employees were needed. Stonewall attempted a workforce reduction (Bellower, et al 2013 Pig.

61 ) found that simply laying off employees was not financially significant enough and in order to be “lean and mean” in an attempt to remain competitive in their unstable economy, the company had to downsize operations (the case study mentions a gypsum plant). As will be discussed further in question 2, it doesn’t seem like Stonewall had been proactive in its strategic forecasting or planning. With more effecting HRS planning, the implications of the 1982 economy may not have had such negative effect(s) on the company. 2. What alternatives should the company explore prior to making its downsizing decision? 1 0 marks) It seems evident that Stonewall was ill-prepared for this situation.

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In order to remain competitive in changing environments, companies must be pro-active in their planning and forecasting. Stonewall should have had a ‘plan of action’ n place to reduce the need for changes in the company, and if changes were necessary reduce the negative impact. By completing economic forecasts they may have been able to determine if this “IoW’ business cycle would continue for a long period of time or would ease to avoid drastic downsizing measures. The text discusses three different downsizing strategies (Bellower et al, 2013 Pig. 61-263): Workforce reduction: cutting the number of employees through attrition, early retirement, voluntary severance packages, layoffs and terminations.

Stonewall did undergo a workforce reduction, but gain we only read about layoffs -were the other options offered? Work redesign: A focus on work processes, seeing if specific functions, products, and/or services should be changed or eliminated. This strategy is not something that Stonewall took advantage of. I believe this process could’ve been combined with workforce reduction resulting in less of an impact overall.

Systemic Change: A long-term strategy characterized by changing the organization’s culture and attitudes/values of employees. Don’t believe Stonewall needed to focus on this strategy specifically in 1982, but it could be meeting they work towards moving forward as a pro-active measure. Downsizing can be very costly, and as a result, it would’ve been in Stonewalls best interest to investigate alternatives. There is no mention in the case study that Stonewall explored other ‘cost-cutting/saving’ measure prior to completing their downsizing.Some strategies and considerations they should’ve made could include: Assess whether they were getting their products for the best price possible Could alternative commodities be used in their production Could production processes be “tweaked”/re-structured for efficiency Consider if all tasks being completed by the company a necessity Reductions in salary Voluntary leaves/sabbaticals Exit Incentives Hiring Freezes Mandatory Vacation/plant SSH UT downs Reduced regular hours, reduced over-time Effective HRS planning is fundamental to successful organization downsizing/ restructuring.

Because downsizing can be a very painful and difficult experience for an organization, all activities need to be well planned with consideration of the strategic direction of the organization, and recognizing the impact on the company’s human resources. (Bellower et al, 201 3 Pig. 265). Stonewall should’ve had more consideration for: ‘should we do this’, ‘when should we do it’, ‘how should we do I? , etc. (Bellower et al, 201 3 pig.

277). 3. Which plant should the company downsize? Why? 10 marks) The case study states that in 1 982, Stonewall employed 135 executives, management and staff at Corporate Office in Misgauging, 20 managers and 200 unionized employees at the Misgauging gypsum plant; 15 managers and 1 50 employees at the Plastics Division; 10 managers of 1 00 employees in Montreal; 10 managers and 110 employees in Winnipeg; 25 managers and 275 employees in Calgary; and 8 managers and 83 employees in Vancouver. 0 employees worked in the mines.

The total workforce was 1191.Bellower et al discusses that when restructuring/downsizing, it is important the company makes purposeful and targeted cuts. This allows the firm to retain the most valuable human resources, whereas across-the-board cuts may results in the loss of quality employees, thus, reducing overall effectiveness/competitiveness (Bellower et al, 2013. Pig. 275) Before selecting which plant to close, Stonewall should have accessed all locations individually to asses labor relations issues, capital costs, potential to grow, age and size of the location, etc.Items for consideration: Political/ Social dynamics in Quebec and BC – sensitivity to labor relations issues Vancouver plant Oldest, smallest, no potential for expansion Most employees have been there for 25-30 years Layoff/termination provisions very generous Highest cost of operation from both a labor and capital cost point of view (-25%) Property highly desirable in terms of real estate Calgary plant Modern equipment Lots of land for expansion Favorable business climate ? could produce and ship to BC Based on the considerations above, I believe it would be in Stonewalls best interest to look into closing the Vancouver plant.Yes, the Severance packages would be significant, but this would be off-set by the gains from selling the property, reducing their location that has the highest costs associated with it and lastly, providing greater opportunity for other locations to expand (E.

G. Calgary). Most of the individuals at the Vancouver plant had already been with the company for such a long time, many may be ready to retire anyways and thus, could rely on attrition or early retirement packages to reduce the financial impact of closing this particular location.

The case study also cuisses that the employees of the plastics division had quite a different set of competencies than those at the gypsum operations. The case study also advises that in the face of choosing an operation to close, it would be one of the gypsum operations. This could be the result of HRS planners taking into account the competencies and thus potential flexibility of the employees at the plastics plant. 4. Explain, in detail, the implications of the downsize decision. 1 0 marks) Regardless of why a company is restructuring, planning for change should include understanding the human impact, which will be fundamental to the élan’s success. As discussed in the module 3 notes, restructuring includes not only changes to reporting relationships and job design, but also changes to culture and operating procedure.

HRS planners can assist with these changes through providing clear understanding of the impact of these changes on both jobs and people.Each restructuring/downsizing strategy (see question 2) will have some human impact both in terms Of those who have been let go as well as the “survivors”. Some of these implications are discussed below (Module 3 Notes, Bellower et al, 201 3 Pig. 268-270). Implications on employees et go: May experience stress and depression – 10. 2 Pig. 270 in text discussed unemployment and suicide risk. Social withdrawal (10.

5 Pig. 79) They may be bitter and/or angry towards Stonewall – might never work for them again, may talk negatively about the company to community/media which could impact company’s image Family financially effected sees likely to be contributing to economy via new purchases (adding to lower consumer demand on a greater scale) Etc. Implications on ‘survivors’: Perceived lack of security/uncertainty in their position – greater risk of employees quitting (10. 4 ? Pig. 6) They may act in an aggressive manner to protect their position, through sabotage, insubordination, increased grievances or complaints to third parties Passive aggressive reactions – low morale, increased absenteeism, work to rule, etc. Feeling guilty for colleagues that have been let go Fear, cynicism, lack of trust, Stress (often have to juggle more work), reduced ‘risk-taking/innovation, lower job satisfaction, reduced performance, etc. Perceptions of justice and fairness (Procedural, International, Distributive) – pig. 271 Etc.

It would be helpful fifth case study discussed how Stonewall approached heir lay-off decisions as this changes the implications on all individuals involved. Were there interventions and practices in place/utilized that helped the previously employed workers adjust to their job loss? Did they have transition plans and resources/support to assist those laid off find new employment? As an HRS student, it is my hope that the company used organizational interventions/practices that included (Bellower et al, 2013 Pig. 269): Careful consideration and planning for all decisions – fair, justified, clearly communicated.Advance notification of the layoffs Severance pay and extended benefits Education and retraining programs Outplacement assistance Clear, direct, and empathetic communication of layoff decisions Above ‘human impact’ was considered as a result of the restructuring decisions, one might also need to discuss the ‘financial implications’ as well.

The whole purpose of Stonewall taking downsizing action was an attempt at financial stability in a low-demand economy. As discussed by Bellower et al, studies considering downsizing have showed some companies experience increased profitability while others have poorer financial performance.While hose are conflicting and complex results, one might deduce that Stonewalls downsizing decision resulted in positive financial stability as they were able to “fight through” the tough times and remain it’s stability as a company. In conclusion, the implications of restructuring are vast and very dynamic.

More details on the process that Stonewall took for their downsizing measures would help determine how mindful they were of these implications and how effective their strategy was. Moving forward they should activate a detailed plan which includes possible strategies in order to ‘act’ vs. ‘react’.

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