Workforce Reduction Policy
Five years ago, Wireweave, Inc. moved to a rural area 25 miles outside a large southern U.S. city. The company, formerly in the Midwestern industrial city, chose this location primarily because of the lower wage rates paid in the community, because of a nonunion tradition in the region, and because of the favorable tax situation. Wireweave, a manufacturer of wire products, has two major high-volume product lines - aluminum wire screen and dish racks, the dish racks are supplied to several appliance manufacturers for use in automatic dishwashers.
Because of intense industry competition, Wireweave's management realized several years ago that if Wireweave were to continue manufacturing aluminum wire screen and dish racks and, in fact, to stay in business, it would have to procure up to date equipment, become more automated and computerized, and even use robots for some of the hottest and dustiest jobs. After a two-year evaluation of production needs and an analysis of technologically advanced manufacturing equipment including robots, Wireweave purchased equipment that would modernize production and replace 65 employees, representing about 33 percent of the total labor force. Significant labor costs would be saved by this employment reduction. As a result, Steve Jackson, president of Wireweave, expected the company to regain its competitiveness and profitability.
The following Spring, shortly after installing the new equipment Jackson called in Muriell Fincher, Human Resource Director, and told her that the company no longer could afford to employ the unneeded workers. He requested that she decide on an acceptable plan for reducing company employment by 65 persons, and he clearly stated the sooner the better in terms of company profitability. Jackson also asked that she recommend a specific operating policy covering future workforce reductions.
Fincher had successfully handled some tough challenges as Human Resource Director, but the latest assignments from Jackson were the most difficult ones she had faced. As Fincher considered relevant options and constraints, her deliberations were dominated by three factors: (1) the company's economic and ethical responsibilities to terminated employees (2) the potential morale problems for employees who are retained (3) the pressure from Jackson for prompt decision and action.
1. Putting yourself in the position of Muriell Fincher, the Human Resource Director what actions might you recommend to reduce the company's workforce? What are you going to do now that you have been instructed to discharge 65 employees? Discuss in detail what actions you are taking.
2. From a Human Resource Planning perspective, what is your evaluation of the President Jackson's proposed actions?
The question belongs to Human Resources Management and it discusses about a small case study about a company that wants to reduce workforce by employing robots and the HR operating policy for workforce reduction.
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