Human Resource Management and Group Dynamics: Pharmasolutions Case Study
Human resource management and group dynamics are important areas of business management. People working together in an organization bring forth their skills, energy, and experience towards the realizing the set objectives. A collective effort creates a synergy that drives the operations of the organization. The management of people working as a team or a group requires relevant skills to keep the players coherently united (Nazzaro & Strazzabosco, 2009). After working in an organization, employees accumulate valuable experience and tend to accept diversity and embrace team work. Separating individuals from such teams through termination of employment or transfers may not be an easy undertaking because of the underlying consequences (Mello & Mello, 2014). PharmaSolutions has been a successful business entity in products, which are used in supporting veterinary and animal farming operations. However, in recent years, the company has experienced a slowdown in sales and profit levels, which has triggered the intention of the CEO to adopt cost cutting measures. The analysis of the situation and the suggested cost cutting strategy will assist in the identification of the potential problems upon which suggested strategies can be highlighted.
Currently, employees at PharmaSolutions work in teams in their respective units, including research and development, fish farming product, domestic pets, dairy animals, and marketing. The teams compete with each other, a situation that has assisted the company to remain competitive over the years. Nevertheless, with the slowdown in performance, the CEO suggests the retrenchment of some employees and reorganization of the teams into groups of about 5 to 7 members, who would be drawn from different departments. The teams will have the freedom to reduce the cost of operations and make decisions because no leader will be in charge.
The suggestions are likely to serve the interests of the CEO in reducing the cost of labor and operations. The reduced cost of labor will reduce the number of expenses deducted from the revenue to determine the profit levels (Holley et al., 2016). Nonetheless, the target outcome would only be realized in case the performance of the employees and the entire team is not affected. It is important to note that the strategy can be problematic, especially when identifying some of the issues that are likely to affect the performance of the organization.
The first problem with the C.E.O’s suggestion is that it can lead to industrial dispute and potentially extend to actions such as court cases and strikes. The retrenchment will not be taken lightly by the employees and their unions. In fact, the initiative will affect the livelihood of the employees because of loss of income and hence will try to fight back in an attempt to retain their employment or get compensation for the termination of the employment (Nazzaro & Strazzabosco, 2009). The resistance is likely to arise from the labor unions whose demands such as heavy compensation may not be realizable leading to more strikes before the strategy is implemented. The strike or court cases will send a compromised publicity about the organization, which can affect its relations with partners and business associates. Additionally, the company is likely to spend more resource in meeting legal liabilities and eventually compensating the employees the amount the court is likely to award them.
The second problem concerns the loss of experienced employees. The company can succeed in retrenching employees while attempting to reduce the cost operations. The success implies that some of the team members with accumulated knowledge about the business operations will have to leave. Some of the employees who will be left behind are also likely to rethink about their engagement with PharmaSolutions and look for alternative jobs (Holley et al., 2016). The intensity of the problem will be realized when the performance in the industry improves and the company will be in need of employees with the capacity to meet the market demand. Recruiting additional employees would be an expensive affair, while acquiring employees with accumulated experience may not be easy.
Leadership is important in assisting a team or a group is realizing the set objectives. Guidance can be a form of training to the team members to ensure that they are well prepared to face challenges, while executing their duties (Morgeson, DeRue & DeRue, 2010). The leader can undertake punitive or corrective action against the members where necessary to ensure that norms, values, and guidelines are observed. Additionally, leadership is a source of morale for the team members. Therefore, a leader can use his/her power and authority to energize the team to perform well and to realize the intended objectives. The CEO suggests that the teams will not have a leader, which implies that the members are likely to lack the required guidance, motivation, and values. Individuals working in such a setup will be less committed, hence adversely affecting the overall performance of PharmaSolutions.
The other problem with the proposed setup is the absence of goals for the teams. The CEO is of the opinion that without the goals, the members will be highly flexible in performing their duties and responsibilities. The argument is made in the absence of considering the role played or the importance of goals in teams and organization. Lack of set goals can reduce the motivation of the employees because there are no compelling reasons to work hard; hence, the desire to strive for excellence is undermined. Common goals bring team members together as they collectively try to reach the expected result (Morgeson, DeRue & DeRue, 2010). With the proposed team approach, group cohesion will be largely undermined. Besides, the absence of goals implies that it would be hard to undertake performance appraisal in an objective manner. Therefore, the team members would be unable to determine the value of their roles in teams and the organization at large.
Lastly, it is clear that the constitution of the teams as proposed would be a problem towards its functionality. The members of the team are drawn from different departments, including research, product development, marketing, and accounting. Each of the departments has adopted norms and values, creating a sub-culture, which is subscribed by the members. Individuals in each unit have been working coherently to achieve underlying goals and objectives and in competition with other departments. In the suggested team setups, the members are likely to take a lot of time before getting used to each other and strive to realize common results.
In essence, it is clear from the discussion that the proposed cost cutting initiative through the retrenchment of the employees can be a problematic undertaking. Getting off some of the skilled and experienced employees can lead to challenging and significantly costly processes due to potential resistance, possible strikes, and legal liabilities. Consequently, the proposed team approach where members are drawn from different departments, the absence of goals, and lack of leadership can lead to poor performance despite the reduced cost of labor.
The identified problems from the retrenchment and the formation of the proposed teams imply that the CEO and her team should look for other strategies in cutting down the cost. The strategies are likely to reduce the negative implication of the proposal and achieve better outcomes. The first proposal would advocate for the enforcement of annual leaves to the employees during the low demand seasons. The employees with accumulated leaves over the years should be forced to take a leave for those accumulated days or months (Bussmann & Schweighofer, 2014). As a result, the company will have reduced cost in maintaining the employees and in the payment of the allowances. The adoption of the strategy will assist in the retention of the employees; therefore, the cost of retrenchment will be avoided.
Reduce working hours is another proposed strategy that PharmaSolutions can adopt. The strategy is based on the assumption that the company pays a huge amount as overtime compensation. The company has the right to reduce the working hours to regular level as legally allowed. The arrangement will be effective because the activity level has declined adequately with the slowdown in demand (Neu, 2013). Again, the approach will assist in retaining the employees and reducing the cost of labor, which are the primary objectives in cutting the cost. Besides, the issues such as strike and legal proceedings are less likely to arise.
PharmaSolutions is currently engaging both the local and expatriate employees in its operations. The engagement of employees from foreign countries is relatively expensive due to factors such as travels, work permits, and additional allowances (Bussmann & Schweighofer, 2014). Such employees should be engaged when their skills and expertise are fundamental, but cannot be sourced locally. PharmaSolutions can try to reduce the number of international employees to only the exceptional cases. The advantage of the strategy is that it can affect a few employees, but lead to a massive effect on the reduction of the cost of labor.
The above strategies can be applied because they can reduce the costs and retain the employees, but may not assist to the preferred level. Subsequently, it implies that retrenchment remains as a preferred option. The participative approach in retrenching the employees is proposed in this case (Holley et al., 2016). The key stakeholders, including the labor unions, the representatives of the employees, and the human resource management should be engaged in the analysis of the situation as well as making critical decisions. The management should be able to convince the unions and the staff of the available facts and the need to undertake the painful decision to get rid of some of the valued employees. The significance of this step is to reduce the resistance and potent industrials actions such as strike and court cases.
The discussion reveals that the proposed strategy to retrench employees from PharmaSolutions can assist in reducing the cost of labor, but it is not the best option due to the problems that are likely to arise. The approach can lead to reduced morale of the employees, legal cases, and strike, which can adversely affect the functionality of the business. The CEO should think of alternative strategies such as compulsory leaves, reduced working hours, and lowering the number of international employees.