Question

MGT324 Public Management

Apply critical thinking to make and defend business decisions (Lo 2.4)

PROBLEM SOLVING & DECISION MAKING CASE STUDY

The following case has been extracted from the South-East Asia

Change is always inevitable. People were hopeful that in the next general elections, the opposition party will get a clear mandate of the people and they will be able to form a popular government. People were hopeful that it will be the rule of the people. The time came and the government changed, new policies were introduced, to the dismay of the people demonetization was implemented first. This resulted in slowing down of the economy. Businesses were affected, people were out of job, and there was hue and cry all over the country. Reforms in tax rates were introduced, which resulted in the higher tax rates. Times were slow for the economy. The economy was trying to revive, then again a new decision was taken by the government that was the implementation of GST (Goods and service tax), that stunned the economy.

The situation

Your company was no exception right now, with the economic slowdown and the rising costs of materials and wages, your profits are going down and is at an all-time low. Because of these unfortunate happenings, you have to let some employees go. The senior management team, of which you are a member, has prepared a list of employees whose employment will be terminated within two weeks from today. It is kept confidential and the people on the list will not know until the day of the termination.

You have called a meeting of your department managers and supervisors. The managers and supervisors are not aware that a termination list has been prepared, so you will need to let them know this at some point in the meeting. Also, they will not be able to see the list until the day of the terminations. Apparently, this is a very confidential topic and must not be shared with anybody outside of this meeting.

Your purpose of today’s meeting is to tell the group and convince them that none of them are on the list. You also want to get their responses & feedback on how the affected general employee will react to the termination in two weeks. Next, you’d like to understand and anticipate any questions that they believe will arise so that appropriate answers can be prepared.

Finally, you would like to prepare an action plan for the day after the event. What you can tell the managers is the number of people they will each be losing. Here is the breakdown:

Marketing and Order Processing department will lose 5 of its 12 people Finance and Human Resources will lose three of its six people Operations & Production will lose eight of its 40 people.

Questions:

Q1: Critically examine the situation in this case and its impact on the company. (Learning Outcome 2.4)

Q2: What can be the issues in initiating and implementing the management decision? (Learning Outcome 2.4)

Q3: What steps should be undertaken by departmental managers for an effective plan? (Learning Outcome 2.4)

Answer 1

1. The given case talks about the impact of several external factors on its business. During any business process analysis there is always an insight sought with regards to the government policies and political factors which can impact the business and in this case this has impacted the organization severely. The company is also facing severe effects of the many changes and reforms started by government and wants to lay-off few employees to reduce the operational costs. The senior management has already identified the list of employees who will terminated. The employees will not be made aware of the decision till the day of their termination. If we look at this incident from an employee point of view, this is not a comfortable situation. For employee to accept this and look for an alternative job in a very slow economy might be very difficult. There might be dependencies and liabilities on him which can get impacted by this. When removing several employees from organization it will create a hysteria and mindset of panic and fear among the employees. They will constantly be on the thought that they could be next in line. Having a demotivated workforce will severely impact the business. The long term sustainability and growth of the company is hugely dependent on the capability and the mindset of the internal resources and if they are not in the right state it can severely damage the organization`s long term aspirations. Also it sends a bad message to the industry that while facing any similar issues there might be similar incidents which will keep good candidates from working for the organization. In the short term the impact might not be much since other staff will cover up the duties and responsibilities of the employees who are being terminated. But in the long term it can severely affect the reputation as well the sustainability of the company.


2. Terminating an employee is always a critical situation which requires utmost care and confidentiality. Removing them in a bad economy and market condition would be even worse considering the fact that employee might not get a similar job in the declining industry. For a manager whose team is dependent on them and who is supposed to protect the team, this will be a very difficult moment. There can be instances that remaining team members might lose the confidence in the manager and organizational policy. There will be demotivated employees and unhappy workforce. The working culture will be severely impacted and the morale of employees across organization will also go down. For managers getting the work done from the demotivated staff will be very difficult task and if they are not able to complete the assignments it can lead to further actions. There can also be resistance from managers to implement this and they might want the leadership team to re-think this move since it will impact the organization highly. There can also be resistance from employees to accept it and since a large group is being asked to move out, they can threated legal actions. To avoid all these organizations need to empathize with employees and identify ways in which the employees can still earn minimum wage till they find an alternate job.

3. The departmental managers will also be impacted by this decision. They are losing team members and the work load on the remaining team will increase. For any manager the team will have a high impact on their professional life and asking them to move out will be a hard decision. But being a manager they would have to take these decisions for the long term sustainability of the company in an unfavorable market. The managers can plan out one-to-one discussion and offer their support to the employees to get new jobs using their network and connections. They can also plan out a brief session with employees and senior management team to ensure that if the market conditions improve they can explore the possibility of taking them back. Managers will have to take time to do detailed discussion with the team on areas they can focus. In parallel the manager should ensure the all the members within the team are able to cover up all the functions in the department so that the work will not stop and they can complete the assigned tasks successfully. They should also ensure that all the documentation and other important materials will be shared within the team so that there is no dependency on the members who might be removed from the company. After the day of termination, managers should ensure that the remaining members do not lose motivation and can complete the work properly.