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Management Issue

In: Business and Management

Submitted By ramarama
Words 3075
Pages 13
Dealing with a Management Issue
An Assignment Submitted by
Name of Student
Name of Establishment
Class XXXX, Section XXXX, Summer 2012

Table of Contents Purpose 3 The background of the issue 4 Research procedure used to make the decision 6 The process chosen to resolve the problem: downsizing 7 Undertaking the decision to downsize 8 Planning downsizing 9 Announcing the downsizing 9 Implementing the downsizing at Hp 10 Proposed evaluation system to assess the effectiveness of downsizing 11 Conclusion 12 References 13

Purpose
The purpose of this paper is to describe and analyze an issue, experienced by your organization, which requires, required, or will require a resolution to be determined through the decision-making process. Accordingly, the paper will describe and analyze the issue of downsizing within Hp.

Introduction
Employee downsizing is usually undertaken by companies during economic recession such the recent global financial recession as a reactive and tactical decision. However, some successful organizations apply downsizing as a strategic move aimed at restructuring their entire human resource strategy. Downsizing is just one of the alternatives available for an organization to improve its performance. Some companies use downsizing as a way of improving their medium and long term competency through well structured coaching and career management.
Hp Company that downsized 25,000 employees in 2008 again faces the issue of downsizing this year (Thibodeau, 2012). This has come due to the continued loss of revenue that the company has recorded for the past three years. Accordingly, the company plans to lay-off 30,000 employees, of its 350,000 global workforce (Thibodeau, 2012). The downsizing is to be undertaken in line with the vision of the company of improving its profitability and market share. It is against this background that this paper as sought to tackle this issue in a practical organization.
Accordingly, this paper will analyze the issue of downsizing at HP, a leading multinational Information Technology Company. The paper will start by giving the background of the issue, and subsequent sections will discusses the concept and models the company has used in its downsizing.
The background of the issue
In May this year when Hp was giving its financial report for the third quarter, it reported that its revenue had decreased. This was associated with reduce sales volume in its core businesses, huge net loss due to accounting write downs resulting from lays , and failed acquisition.
Though the new chief executive Ms. Whitman has tried to improve Hp’s accounts from previous loss recorded in the past quarters, she predicted that the company will continue to record poor financial returns in the coming years (Hardy, 2012). This is because of projected low sales in personal computers as well as printers, once the highest sold products for the company. Ms Whitman admitted that she was under pressure to turn around the fortunes of the company (Hardy, 2012).
According to the financial report, the Hp recorded a drop of 10% in its personal computer business, while it suffered 3% drop in its printer business when compared to the same quarter the previous year (Hardy, 2012).
The poor financial performance of the company can as well be traced to its acquisition of Data Systems it purchase in 2011 at $13.9 billion (Hardy, 2012). However, the acquisition did not produce the expected revenues, making it difficult to for the company in terms of profitability.
Accordingly, to ease the financial burden the company is carrying and to improve its financial performance, the opted to downsize it employees. The company expects to layoff 25,000 employees within 2 years (from 2012-2014) (Hardy, 2012). After this downsizing, Hp expects to improve its revenues; however, downsizing does not come cheap, and the company has set aside $1 billion for this process.
There has also been increased competition from Hp’s competitors. Market research by Pc world indicated that in second quarter of this current financial year (2011/2012). Hp sold 13.4 million personal computers out of a total of 86.7 million PCs sold across the world. This was 13.4%, down from 17.6%, the company sold the previous year (Hardy, 2012). The global demand for PCs is generally flat, indicating that customers are moving towards smart-phones and tablets, Market niche that Hp has failed to capture. Though it tried to enter this market when it bought Palm for $1.2 billion in 2010, it was not successful (Hardy, 2012).
Statement of Problem
Decision making process in a business falls in the hands of the management, who are expected to makes decisions that will improve the performance of the organization. All managers understand the painful necessity of making a choice. In addition, choices must be reached without due delays (Kahneman, et al, 1982). Indeed, what determines the success or failure of a business depends on the decisions reached.
This is the situation Hp is facing; it has to make hard decisions about its direction in the face of declining profits and increased competitions. To respond to this situation, the company has decided to downsize, which is a very difficult decision to make. However, a number of studies have noted that downsizing though challenging can be used to lower costs, improve productivity and enhance operation efficiencies. However, downsizing presents both challenges and opportunities to an organization. As such, Hp understands that if it effectively handles downsizing, it will exploit the opportunities that comes with lean workforce.
Freeman & Cameron (1993) explains that Downsizing becomes beneficial when organizations wishing to lower their operations costs, close some plants, adopt new technologies, do away with unprofitable businesses or increase its revenue. If the organization effectively managers downsizing, it will be in a position to reap from reduced costs and lean workforce.
On the other, downsizing can result in lost business arising from reduced sales force, lack of creativity, due to loss of innovative minds, and low productivity because of low morale. Such outcomes have a considerable negative effect on the company. More such large lay-off of 30,000 people is bound to reduce employee commitment.
The above overview of the issue underscores the complexity of the downsizing issue. As Freeman & Cameron (1993) asserts, downsizing presents a double edged knife; thus the challenge of downsizing is lay-off employees, while retaining the best skills and not creating insecurity among those remaining.
Research procedure used to make the decision
To reach on the decision to downsize, the company used the financial performance and indicators of previous three years. The financial reports showed that company’s revenue has been on the decline for the past three years. In addition, the sales volume and market share of its main products, personal computers and printers were shrinking.
The above findings informed the company based on rational organizational factors to decide that the best cause of action was to downsize its employees. As presented by Gandolfi & Neck (2003), the main reasons for organizational downsizing are based on rational paradigm. This means that companies just like in the case of Hp downsize because they want to lower costs and enhance efficiency and profitability. The main assumptions of rational paradigm are based on the fact that companies are rational and self-centred driven. Thus, Hp as a rational organization, adopted strategies that effectively respond to the complex business environment that it is currently facing, that can enable it maintain its internal operations.
There are several main rational organizational reasons that have resulted in Hp downsizing; these include failed acquisitions, underperforming of its core businesses, change in technologies and consumer trends and the sheer workforce size of the company. To improve the efficiency of its workforce who stands at about 350,000 employees, the company feels that their need to downsize (Hardy, 2012).
In addition, from the financial reports findings, the company is reacting to the business environment as well. For instance, the sales have personal computers, core business for the company are falling because consumers are going for smart-phones and tablets (Hardy, 2012). In addition, the America and Europe are still facing economic turbulence. Thus, need to downsize to improve internal efficiency. All these aspects were established through the financial reports of the company, which as stated before informed the company to take this decision of downsizing its workforce.
In doing the research that resulted in the company adopted downsizing approach; the company involved the management and the employees. These two groups were important because they are directly impacted by downsizing issue and therefore, their participation is necessary for the success of the strategies adopted to address diversity management.
The process chosen to resolve the problem: downsizing
To carry out the downsizing process, the company plans to follow four steps. These include; Undertaking the decision to downsize; planning the proposed downsizing; announcing the downsizing; and implementing the downsizing, each of these phases comprises of various activities outlined below.
Undertaking the decision to downsize
The initial step in downsizing process is reaching a decision to undertake it. However, before this hard decision is made, it is critical to examine other possible alternatives (Freeman & Cameron, 1993). Downsizing is used as the last option. Accordingly, the company is in the processing of examining the other alternatives, which include freezing hiring, pay cuts, ending overtime and ending of bonuses.
Freezing hiring: this option will mean that number of workers will stop to increase and start to reduce as employees retire, pass on or voluntarily leave. Though this practice causes the lowest level of dissatisfaction, it is considered to be very slow by the company.
Ending overtime: this is among the first ways applied by several companies to prevent downsizing. Through this practice, a company can reduce its costs since overtime work is costly. In addition, ending overtime may allow allocating some duties among employees who may be marked for laying-off.
Voluntary leave: the company considered offering financial inducement to encourage employees to voluntary leave or retire. However, this approach was seen as very costly, and the company is not able to afford the costs involved, bearing in mind that it is going its revenues are continuing to decrease.
The company analyzed the above alternatives and established that it could not attain its goals by implementing any of them; therefore, it undertook the decision to downsize. Accordingly, the reasons for deciding to downsize, were clearly outlined by the management. More so, downsizing has been undertaken as a long term solution. Indeed, downsizing at Hp has been incorporated in the new vision of the company in line with the new CEO‘s vision of turning around the company (Hardy, 2012).
Planning downsizing
Before announcing the downsizing, Hp has laid down plans on how to do it. As stated before, the company plans to lay-off 30,000 employees in duration of 2 years (Hardy, 2012). Some issues considers during the planning of downsizing were, the focus of the downsizing, the persons who carryout the downsizing, how the employees to be downsized will be identified, the amount those leaving will receive, when and how jobs will be restructured, and the training required. It is clear that a lot of activities were required to be undertaken during the planning of the downsizing. For the company to successfully complete this process, it has formed cross-functional teams, sort expert advice, is in the process of training its managers, has identified all the constituents, and has supplied information regarding the various businesses of the company.
Announcing the downsizing
As explained by Freeman & Cameron (1993) the key activities carried out in this stage include, explaining the business rationale for downsizing, announcing the downsizing decision, and informing the concerned. To start with, the management of Hp have explained the reasons behind its downsizing decision and how it is going to carryout the process. The explanation by the management that downsizing was due to market changes and reduction in profits has helped the employees to understand it’s not them who caused the downsizing.
The company announced the downsizing decision concurrently to all the concerned parties through the company’s communication channels. Indeed, employees need to get first hand information instead of hearing the downsize decision from outside sources such as the newspapers. At the same time, the company as well announced its new vision for the company, this is meant to reassure those employees who will not be affected. However, the company has not fully disclosed the benefits that those leaving will receive.
Implementing the downsizing at Hp
According to Garrido (2001) the first three stages discussed before are very critical for successful downsizing; however the last stage is where initial preparations and assurances are to be achieved. The company understands that the communication and employee participation are the main aspects in implementation process.
During the implementation, the company plans to address the concerns and demands of employees and inform them the state of company. To effectively communicate with the employees, the company plans to hold a direct meeting (face-to-face) with the employees, and provide honest answers to all their questions.
As noted by Garrido (2001) an effective and well executed downsizing process calls for employee participation. Those employees who remain in the company normally offer good ideas on how to reorganize their jobs and enhance internal processes, thus, they need also to participate in the implementation process. According to Gandolfi & Neck (2003) a well executed downsizing focuses on laying-off employees as well as changing job design. Involving employees, who remain in job design, believe that the future of the company is in their hands. In the course of implementation, the company plans to offer career counseling those employees marked for downsizing. However, this counseling is as well necessary for those employees remaining with the company. This is because the remaining employees will judge the company‘s future relationship on the basis of how it treats those leaving the company, an aspect that the company understands very well. The company knows that if it treats the laid-off employees well, those remaining will be more committed and productive. To prevent any negative aspects which are normally associated with survivors (Gandolfi & Neck, 2003), the company has organized a series of survivors programs. These programs are meant to assist the employees effectively deal with the changes occurring and to agree to new responsibilities they will be given. Since the company plans to adopt some new technologies by producing innovative products, it as well plans to train those employees who will remain with the company. The training is meant improve the competency and skills of the employees.
Proposed evaluation system to assess the effectiveness of downsizing
Evaluating and assessing the effectiveness of downsizing is difficulty and requires much time. However, to effectively measure the outcomes of downsizing, the company will have to implement different initiatives to assess and evaluate its downsizing initiatives. There are several methods that can be used; these include financial performance of the company and employee survey and employee surveys. The most effective way to evaluate the effectiveness of downsizing will be through the financial performance of the company, since the main reason for downsizing is to improve the financial position of the company. The company can use quarterly and annual financial performance reports to establish if the various business units within the organization are achieving profitable performance and operational efficiency projected by the company. The results can be used by the management to improve on how it addresses the downsizing issue.
Apart from financial performance, another effective way the company can use is employee surveys, this can be done by collecting data to establish employee’s views about downsizing, and these surveys have to be carried out before, during and after downsizing. Data gathered from these employee surveys will provide the company a basis to make yearly comparisons about its the effectiveness of its downsizing program, bearing in mind that it is a process that will be carried out for a couple of years. In addition, this information can be reviewed to establish performance in areas such as job design, turnover rates and employee retention. More so, data can be used to establish if the company still has got the right skills and numbers.
Conclusion
All decision made arise from issues (what can be termed as problems or opportunities). There are three contexts that help to understand the issue and how to approach it. These include macro-context (macro economic), which external issues of the organization. In addition, we have global issues, for example, exchange rate, and lastly internal issues, which concerns the organization for example processes, product range or employee issues (Plous, 1993).
Downsizing has become a challenging issue for many organizations. Indeed, Downsizing t is a complex issue that requires effective strategies to deal with it. Companies that are able to deal effectively with Downsizing are able to create lower cost and improve their productivity. As seen in this paper, Hp has plans to downsize as a response to the current business environment and dwindling revenues. However, this paper indicates that such a decision is normally hard to reach and the company made it on the basis of rational paradigm.
Form this paper, its certain that Hp provides a good example of how downsizing is a complex issue that requires rational thinking. Indeed, other companies can use this case study as an example of how they should address the issue of downsizing in their companies.

References Freeman S & Cameron K (1993). Organizational downsizing: A convergence and reorientation framework: Organization science, Vol. 4, No. 1 Gandolfi, F & Neck P. (2003). Organisational downsizing: A review of the background, its developments and current status: Australasian Journal of Business & Social Inquiry, Volume 1, Number 4 Garrido J.P (2001). A research agenda on the adoption of downsizing programs: IESE Business School, University of Navarra, Hardy, Q (2012).Weak Sales and a Large Write-Down Give H.P. a Loss: The New York Times: Retrieved on 2nd October, 2012 from: http://www.nytimes.com/2012/08/23/technology/weak-sales-hurt-hp-in-quarter.html?_r=0 Hp (2012): website, www.hp.com Kahneman, D., Slovic, P & Tversky, A (1982) Judgement under Uncertainty: Heuristics and Biases. New York: Cambridge University Press, 1982. Plous, S (1993). The Psychology of Judgment and Decision Making: Philadelphia: Temple University Press. Thibodeau, T (2012). HP plans massive layoff, say reports: Computer world: Retrieved on 2nd October, 2012 from: http://www.computerworld.com/s/article/9227264/HP_plans_massive_layoff_say_reports

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...STRATEGIC ISSUE MANAGEMENT PRACTICES AT THE KENYA POWER & LIGHTING COMPANY LTD BY BETTY MWENDE KAUMBUTHU A RESEARCH PROJECT PRESENTED IN PARTIAL FULFILMENT OF THE REQUIREMENTS FOR THE AWARD OF MASTERS OF BUSINESS ADMINISTRATION DEGREE, SCHOOL OF BUSINESS, UNIVERSITY OF NAIROBI NOVEMBER 2013 DECLARATION This research project is my own original work and has not been presented for a degree in any other University or Institution of higher learning. SIGNED ………………………………………… DATE ………………….. BETTY MWENDE KAUMBUTHU D61/71576/2008 This research project has been submitted for Examination with my approval as University Supervisor. SIGNED: ………………………………………… DATE: ……………………. MR. JEREMIAH KAGWE Lecturer School of Business University of Nairobi ii DEDICATION This study is dedicated to my parents and friends who bring me immense source of joy and fulfilment. iii ACKNOWLEDGEMENTS I am deeply indebted to Mr. Jeremiah Kagwe for his guidance, patience and insightful input from the commencement of this project to its completion. I wish also to express my appreciation to the School of Business, MBA lecturers without whose enormous contribution in class sessions, this work would have not been possible. I am also grateful to my entire family members. Their encouragement, patience and understanding were attributes without which I would not have successfully completed the project. I have also received support and motivation from several fellow MBA students during class sessions, group discussions...

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Key It Management Issues

...technology and management issues 2011–2012: an international study Jerry Luftman1, Hossein S Zadeh2, Barry Derksen3, Martin Santana4, Eduardo Henrique Rigoni5, Zhengwei (David) Huang6 1 2 Global Institute for IT Management, Fort Lee, NJ, USA; DIBA Group Pty Ltd, Melbourne, Australia; 3 Business & IT Trends Institute, University of Amsterdam (VU), Amsterdam, The Netherlands; 4 Graduate School of Business, ESAN University, Lima, Peru; 5 ˜ Universidade do Vale do Rio dos Sinos, Sao Leopoldo, Brazil; 6 College of Economics and Management, Three Gorges University, China Three Gorges University, Yichang City, Hubei, China Correspondence: J Luftman, Global Institute for IT Management, Suite 15L, Fort Lee, NJ 07024, USA. Tel: þ 612 6128 7323 Abstract The importance of the impact of IT for organizations around the world, especially in light of a very slow recovery from the global financial crisis, has amplified the need to provide a better understanding of the specific geographic similarities and differences of IT managerial and technical trends. Going beyond identifying these influential factors is also the need to understand the considerations for addressing them in light of recognizing the respective local characteristics, especially when operating in a globally linked environment, although somehow heavily influenced locally. By comparing and contrasting IT trends from different geographies, this paper presents important local and international factors (e.g., management concerns,...

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