Situation Analysis And Problem Statement: Global Communications

Situation Analysis and Problem Statement: Global Communications

Communication and information are essential to innovation, moral, and change. Global Communications lack of understanding of worker sentiment and a failure to communicate corporate concerns led to inefficiencies in the management process.

Describe the Situation

Issue and Opportunity Identification

As global market pressures increase due to increased competitor competition, telecommunication markets vying for the same business, and new technology, labor costs has become an important concern in organizations and Global Communications (GC) is no exception. As part of efforts to enhance product market competitiveness, GC has taken steps to control compensation costs. In as much, the stock market has been closely scrutinized as market price per share depreciated more than 50 percent over a three year period. As a result of cost control efforts that will improve profitability, the company plans to cut overhead costs by downsizing their workforce and market itself more aggressively internationally by outsourcing work to India and Ireland with the goal of becoming a global resource within three years.

The psychological contract and continuance commitment are key concepts to understand the issues and opportunities facing Global Communications (GC).

The psychological contract addresses the attitude that employees have about their relationship with their employer. This involves trust, commitment, and respect that's developed over time and layoffs can create intense feelings in employees who believe that they have been wronged. These emotions may be demonstrated through angry outbursts, withdrawal, and lack of motivation to work.

GC will have major implications to downsizing the call centers giving them a unique challenge with dealing with an employee's resentment over an unwritten physiological contract rule that was breached. The front-line manager can help employees cope with the stress associated with layoffs by opening the lines of communication, reporting accurate information, and being sensitive to the issues being discussed.

Continuance commitment represents those employees who have strong emotional attachments to an organization because the costs of staying outweigh the costs of leaving. In this case, GC plans to relocate some employees to the consumer call centers with a 10% reduction in pay. Continuance commitment says that although the employee will be expected to take an average 10% salary cut it may be too costly to seek employment elsewhere. A factor leading to continuance commitment maybe the employees' perceived lack of alternatives outside of the organization. If employees believe that fewer work opportunities exist outside of the organization, the perceived costs of leaving will be higher, and they will develop a stronger sense of continuance commitment to GC.

On the other hand, GC has the opportunity to reduce unit costs for handling calls by nearly 40% by moving some of the technical call cents to India and Ireland which is advantageous to GC's bottom line, i.e. cheap and efficient workforce, technical service quality, fixed costs variable, freed up capital, and freed up human resources.

It is also important to note that outsourcing to India and Ireland may cause unwarranted situations such as GC's loss of control, dependency, and vulnerability of strategic information.

Stakeholder Perspectives/Ethical Dilemmas

GC didn't communicate enough with the union keeping them informed of the company's financial picture, pressures and challenges. The union, as an equitable partner, essentially was kept out of the loop and because of the lack of communication on managements part caused workforce reductions and those retained a loss of income.

Layoffs always hurt the reputation and image of a company in the long run. Layoffs cause major morale issues, loss of productivity and even loss of skilled, qualified individuals before time to implement plan. These issues could have been avoided by keeping the union abreast of current situations at GC. This is a crucial step as it makes the employees feel as they are apart of the company, therefore, they might have been willing to be a participant in upcoming policies, i.e. leveraged reduced benefit and labor cost, reduction of days or hours worked. Keeping them informed would have made them feel valuable as assets to the company and more likely to embrace the need to manage existing resources efficiently and help the employer reduce expenses. The employees would have had a voice. They would have readably embraced change.

This is an indication that changes are occurring in the employer-employee relationship. From the union's perspective, organizational life will never be the same, with the likely outcomes being shorter organizational tenure, as well as decreased loyalty and commitment. While virtually all organizations have been affected by skyrocketing costs of American labor, health care and other benefits, the manner in which the organization controls these costs can also send a strong "negative" message to employees. An employee would rather be an "asset" not a "liability" to a company and not hearing there voice can be detrimental to moral.

The reduction in labor force generally decreases the benefits portion of the compensation budget, by reducing the number of workers included in the organization's benefits program. Approximately 25 percent of the U.S. civilian work force is composed of what are termed "contingent workers" (Mathis & Jackson, 1994, p. 38), who regularly work only part-time or on a temporary basis. Since contingent workers are not part of the organization's full-time work force, they frequently do not receive benefits, thereby lowering overall labor costs. In an organization that does not need a long-term committed work force, such as when a low-cost strategy is employed, the replacement of full-time workers with contingent workers and outside consultants can be an effective way to reduce the benefits portion of labor costs. Prudent use of part-time workers can increase staffing flexibility, while reducing labor costs. However, it should be remembered that frequently full-time positions cut during lay-offs are later replaced by more expensive consultants. The replacement of full-time, benefited workers by consultants can often result in an overall increase, rather than decrease in actual costs (Cascio, 1993). As with any human resource practice a careful cost/benefit analysis is required to determine congruity with organizational objectives.

Allowing employees to