Crisis at Harwood

Crisis at Harwood

Introduction

            Harwood Manufacturing Corporation is a company that manufacture men‘s shirts and pajamas. It has around 600 employees of which around 80%. Most of the employees are only able to reach 8th grade. The changes in the external environment (consumer taste, technology and competition) require changes within the company. Thus, the company trains the employees in order to be able to meet the demands due to changes. The company operates based on piece rate system of which some employees argue to be decreasing their earnings. On the other hand, it was found that old workers are having problem learning the new operations of the management compared to new ones. Thus, there exist both external and internal problems that the company must face.

SWOT Analysis

Strength

1. The management has attempted to improve the relationship between them and the employees therefore they are aware of the situation wherein the employee’s trusts are decreasing.

2. The management is also aware of the changes that are happening in the external environment and thus, they are willing to change the company to be able to adapt to these changes. They are helping employees to be able to cope with the change as well.

            The main strength of the company lies in the ability of the management to know the problems in and out of the company and their willingness to change the company operation for the better.

Weakness

            1. The main weakness of the company is that the most of the employees have low educational background, about 8th grade. As a result, old operators were found to have slow learning capabilities when changes have to be made.

            2. The loyalty and commitment of the employees to the company is also questionable. This can be validated due to the absenteeism and other problem in the company.

Opportunities

            1. The technological advances in the community that greatly help in the company in terms of manufacturing and other operations.

            2. It can also be said that there is high demand fro the product since they are in the garment industry. They are manufacturing two products.

Threats

            1. The main threat in the company’s operation is drastic changes in the environment such especially the taste of the consumers and thus, changes in the company’s operation is also necessary.

            2. Another threat is the level of competition because clothes industry definitely has a great number of competitors.

Problems

            1. The main problem of the company is the environmental changes and the company must be able to adapt in order to survive.

            2. Another problem is regarding the basis for the salary of employees. Because of the piece rate system of the company, the employees are forced to aim for the standard rate that weaken their loyalty and trust to the company.

            3. Another problem is the background of the employees (i.e. educational background). This also includes gender issues since it was stated that only 20% of the employees are male, 80% female, of which, there are only few female in the management position.

The changes in the external environment cannot be avoided since changes are part of everyone’s life and therefore, it is the company that must really adapt to these changes. However, the company may also opt to influence that external environment through promotion of the product, advertisements and other strategies. The two internal problems are the ones that must be taken care of by the management. These are important to ensure the stability, productivity and development of the company. Also, if the internal problems of the company are addressed properly, the company will be able to easily adapt to changes in the external environment and eventually compete in the global market. Thus, 3 solutions are proposed to solve the problems.

            The first option is to change the organizations salary system i.e. to demolish the piece rate system adopted by the company. The company can use time based salary in order to compensate for the labor of the workers. By doing so, the distrust of the employee’s will be rid off and the accusation that the management is trying to shorten their wage will solve. Good performance then will only be a basis for promotion or bonuses. The advantage of this solution is that it will regain the trust and loyalty of the employees that may encourage the employees to work harder. On the other hand it may also lessen the productivity of the employees since there is no “quota” required. Thus, this may motivate the employees to work harder for the company or a means of excuse for not working hard.

The second alternative solution that the company may do is to change the company’s structure into a learning organization in which the company will let the employees to think and be part of the workforce of the company. This will be appropriate since their product requires creative thinking from time to time. A specific time will be allotted for the employee’s recreation in which they are allowed to have some leisure time and for creative thinking. Their time will also be counted as working hours and will be paid by the company. Doing so will help the employee’s to relax and to think of ideas suitable for the company. Loyalty and trust will also be developed because they will feel important to the company. On the other hand, this will also require trust on the part of the company, to trust their employees. Also, productivity may also be affected and it will also cost the company since the time allotted for leisure time will be paid.

            The third alternative will be to lower the standard requirement for the number of units to be finished by an employee. This will lessen the pressure put on the employees. If the target output is reasonable, the employees will have no reason to think that the management does not care for their welfare. However, it will also cost more to the company since it must pay a higher salary for products above the standard unit required.

            Although the company’s employee’s can be considered inferior in terms of education, replacing the employees is something that should not be done by the company because doing so would endanger the reputation of the company; it is a very unethical thing to do. Thus, no one will be interested in working for the company.

Criteria
Acceptance to management (30%)
Score
Acceptance to employees (15%)
Score
Efficiency and effectiveness

(35%)
Score
Cost

(20%)
Score
Total
Alt 1 (change salary system)
2
0.6
2
0.3
2
0.7
1
0.2
1.8
Alt 2 (restructuring)
3
0.9
3
0.45
3
1.05
3
0.6
3
Alt 3 (lower standard unit)
1
0.3
1
0.15
1
0.35
2
0.4
1.2

            Thus, considering the criteria mentioned in the table, the best alternative that the company could do to solve their problem regarding the internal problem is to lower the quota. Although there are risks associated with the alternative, it would be better to take the risk rather than to completely lose the trust of the employees to the company.

            Before implementing the said reduced product quota, there should first be meetings between the top managers and shareholders of the company to decide on the new quota that will be impose in the company, something that will not cause loss for the company in terms of total revenue. This may require a lot of time but it should be done in the earliest time possible, before the internal problem can no longer be handled. There are certainly risks associated with the action but risks part of every business. Then, a meeting involving the employees must also be conducted to explain the changes in the quota. For about 2 months of implementation, the company must analyze the effect of the new quota to the performance and attitude of the employees and of course, the effect on the whole company. If the action does not go well for the company then the company may apply the first alternative mentioned earlier, to base the salary on the working hours in the job.

            Addressing the internal conflicts within an organization must given priority. These kinds of problems may be even harder to tackle because the persons involve in the conflict are all members of the organization. Thus, it is important for the Harwood Manufacturing Corporation management to address the internal problems of the company for the sake of the company itself.

Reference

Bersin, Josh. (2008). Top Trends in e-learning and Corporate Training. Retrieved August 28

2008 from http://www.hrmreport.com/pastissue/article.asp?art=270152&issue=203

BRS Inc. (2008). Devising Business Plan Strategies. Retrieved August 28, 2008 from

            http://www.planware.org/businessstrategies.htm

McNamara, Carter. (2008). Business Ethics in the Workplace and Social Responsibility.

            Retrieved August 28, 2008 from http://www.managementhelp.org/ethics/ethics.htm

Zimmerer, Thomas W. and Norman Scarborough. Essentials of Entrepreneurship and Small

            Business Management. 3rd edition. New ersey, USA: Prentice Hall.