Malden Mills and Aaron Feuerstein - Essay Example

Malden Mills and Aaron Feuerstein Introduction: Aaron Feuerstein as a hero Aaron Feuerstein, The CEO of Malden Mills has proved his leadership skills, time and time again when his organization has been through critical conditions. The common attributes of a true leader as specified in various management books were actually reflected in his works. His conviction, communication and courage have been hailed widely and has provided as a guideline for the other entrepreneurs to follow. Aaron’s philosophy of management was different from what the others CEO round the world adopted. He treated his employees more with humanitarian views rather than only utilizing them for the sake of benefit realization. The organization faced most precarious conditions like bankruptcy and encountered considerable amount of destruction caused due to the onset of fire. The jobs of 3000 employees of the organization were at stake. But surprisingly the Aaron did not resolved to any means of employee termination rather he spent millions on the all 3000 employees and kept them on payroll for a period of three months. The result of such a step infused loyalty within the employees and the resultant production after the onset of work was much higher than the production before. This act of him prevented thousands of employees in losing their jobs and proved Aaron Feuerstein’s worth as a true leader. (Leung) He held the view of treating his employees as an asset and reflected his responsibility towards the society. He was able to think beyond the profitability and broadened his idea to deliver the best for the community by staying with the employees during such critical conditions. Aaron Feuerstein had the courage and conviction to reflect on the appropriate action and had set high values for the leaders of all the organizations to behave rationally and to implement decisions considering all the associated factors. The determination and the leadership skill as exhibited by Aaron Feuerstein is a heroic achievement. Prevention of Bankruptcy Malden mill used to operate in a 300 year old mill town. The mill went into bankruptcy in the year 1981. In order to prevent the mill from going into bankruptcy the organization could have taken some precautionary steps. The mill could have hired a budgetary advisor who could have limited the spending of the mill in comparison o the earnings. Budgetary advisor would also have provided with planning and ideas to save money by reducing unnecessary cost and other expenses. In order to pay back the debt to the creditors the mill could have sold some assets which are not in use in a great deal and this could have arranged the necessary amounts. The mill could have also entered into an agreement with the creditors to pay back the debts in installments. The mill could also have lowered the credit sales to prevent the rise in number of creditor, whom the company owes money. The proper planning could have been implemented in order to deal with the situations encountering credit sales. The time duration of repayment of credit sales should be planned keeping in account of the duration of the earnings received to prevent the possibility of occurrence of a default. In order to prevent from bankruptcy a careful review of the underlying stocks could have been conducted before ordering of credit purchase. However, malden mills did a considerable amount of recovery from the bankrupt position by investing further capital and developing two new world class products. (“Avoid Bankruptcy Consolidation Debt - 5 Ways to Get Out Of Bankruptcy”) Aaron Feuerstein’s leadership policy: In the corporate world most organization does thrive for the maximum profitability of the business and provides more importance and concern towards benefitting the shareholders. Business leaders who achieve these criteria are praised and applauded for their efforts. But the skill of true leadership skills is hardly judged by these acts. True leadership skill is tested through the decision making at times when organization is facing serious turmoil. Generally it is observed that when organizations faces bankruptcy or faces disaster like fire burn out, the most obvious step the management would take is to lay off the employees. Malden Mills faced with the above two problems mentioned within a short period of time but their leader Aaron Feuerstein provided job security to all his employees and his determination and conviction brought the organization back on the track. Aaron prevented a considerable number of people from being unemployed and proved his dedication as an entrepreneur towards the society. As a leader he focused on the humanitarian aspect of the employees. Aaron even spent millions of money for a period of over three months on his employees without any output. In the present generation of the vast competition companies look to downsize their employee strengths, search for cheap labor, and look to transport their production unit to favorable location. In this era, the method adopted by Aaron Feuerstein was certainly praise worthy. He regarded the employees working under him not as cheap labor but held them in high respect and was devoted towards their needs and betterment. The employees were hugely satisfied not to face unemployment and it improved the employee management relationship drastically. The employees in turn were hugely motivated by such policies and provided their best for the organization. The provision to stay beside the employees in critical condition hugely worked in favor of Malden mills. Social Consequence of outsourcing and plant closure In order to prevent the elimination of manufacturing jobs due to overseas outsourcing, organization may look to compensate the employees who were engaged in the process of manufacturing jobs. The shift of manufacturing jobs overseas will result in unemployment of a huge proportion of the people and will cause imbalance within the society. From the view point of organization, it should try to maintain balance between the stakeholders and should not only stress on the profitability and wealth maximization. The organization may also arrange some source of employment for the workers who are going to lose their jobs due to the transfer of the process. The shift in department of the associated employee is also an option to prevent a major setback with the employees. If the organization decides to outsource the manufacturing process in some other location, based on the location layout and facility, it can also transfer the employees of the department to that particular place of choice. In dealing with matters of plant closure, the organization may take conscientious decision relating the actual closure of the business. It should try to motivate the employees and the management overall to revive from the current position and should prevent from actual closure of the unit. The organization may get involved in another venture after the winding up of the business, but the society overall will be hampered. Keeping in view of the community and other social factors the organizations need to be enough courageous to take the risk of continuing with the business and accept the challenge of overcoming from the difficult situations. Leaders having strong determination and motivation need to evolve innovation in dealing such situations. Culture and behavior of other organization Most companies operating on a large scale is heavily concerned about their profitability of the business, and by passes other factors. Companies like IBM and AT & T believes in the mode of employee layoff to attain their aims and objectives concerning profit. Most companies fail to stay with the employees in the event of a disaster or emergency, Rather they prefer to downsize the employee strength. The companies communicate a lot but often fail to be convincing enough, due to lack of confidence and the courage to deal in tough situations. The organizations communicate the belief that employees are impermanent and disposable. They fail to introduce a sense of loyalty among the employees, which backfires when the need for commitment from the employees is needed. The organization treats the employee as cheap labor and an item of expense and does not considers humanitarian view before implementing decisions against them. The absence of sound leadership policies affects the organization considerably. A significant difference creeps in the communication of the values and their practice. Due to the difference in practice employees will decline the offer to deliver more if required and will never come through to help the management thinking from the organizations point of view. The organization looks for cost cutting measures and is always in search of locations which would bring in larger profits, without worrying about the current lot of employees. The organization opts for overseas outsourcing and this affects the overall unemployment rate. The organization also faces difficulty in the training program of the new employees as often employees fail to get accustomed to the current scenario and causes delay in the work process. Conclusion – the outcome Aaron Feuerstein’s policy regarding the employee retrieval was being admired by the employees of his organization. The courage and dedication shown by him in maintaining his commitment towards the community in general and the employees in particular has instigated a sense of loyalty among the employees. The employees were kept on payroll for a period of three months without any work to deliver as the mill was badly affected by the fire break out. The determination Aaron showed to revive back the normal course of work with his old set of employees also motivated them and infused self confidence within them. The employees dedicated themselves towards their work and the organizational goal became the goal of the employees. The increased focus on work by both the blue collar and the white collar employees improved the production rate largely. The mill started producing 230000 yards a week which was considerably higher than the previous production of the mills. The employees also happily agreed to work for extra hours without any change in their pay structure. The mill was back on track within a very short period of time. The amount of wealth deployed by Aaron in maintains his employees for the period of three months reaped huge profit for him. Aaron Feuerstein proved his effectiveness as a leader in overcoming two major difficulties faced by the organization. In both tines he was successful in lifting the organization out of trouble. In time of bankruptcy, he invested for money in the business and developed new products, polartec and polarfleece which were significant to come out of the bankruptcy and in a much stronger way. Secondly during the fire calamity his decision not to lay off the employees motivated them and resulted in increased production and profit. The dimensions set by him as a leader became inspirational for the other CEO to follow in his footsteps. (“Leadership focus”) References “Leadership focus”, opi-inc, 1996, September, 28, 2011 from: http://www.opi-inc.com/malden.htm “Avoid Bankruptcy Consolidation Debt - 5 Ways to Get out Of Bankruptcy”, zineguru, n.d, September, 28, 2011 from http://www.zineguru.com/avoid-bankruptcy.htm Leung, Rebecca, the Mensch of Malden Mills, cbsnews, 2009, September, 28, 2011 from: http://www.cbsnews.com/stories/2003/07/03/60minutes/main561656.shtml Read More