Engineering Products - Essay Example

Engineering Products 1.0 Introduction Engineering Products produces fasteners for industrial consumption. The company had to cut many of its activities due to cost inflation and stiff competition. It cut most of its other production houses to concentrate on the automotive, defence and a few industrial services. Concentrating purely on the export market, the company relocated most of its 33,000 employees abroad. The company has a far greater presence in the automotive sector, so it’s but natural for the management to retain most of its employees in that industry. While 69% of the total workforce was stationed in Europe, an equal number of employees made up the percentage in U.S and UK. As the strength of the workforce in Europe was considerably more, it is but natural to guess that the volume of sales in Europe far exceeded that of U.S and UK at 21%. While the sales of cars varied among the countries in Europe, they were all produced in similar ways, requiring components that matched the same specifications. This led to the demand for standardisation of their operations. Since there were many multinational first-tier suppliers, Engineering Products had to get their act together to perform on par if not better to enhance their sales over others. This meant that the company had to restructure the way they operated and how its managers could inculcate more motivational strategies to bring out better performance. 2.0 Overview The impetus for change was brought about by the demands of its customers. Till then, EP served the local markets in the UK and had operated in a de-centralised manner. The challenge with internationalisation in creating management structures; senior directors had to examine new processes to adopt to meet the challenges. This called for restructuring of the current practices through a leaning process for engineers, similar to the one taught at the, ‘International College of Engineering’, and the creation of an international cadre of managers. In addition, HRM had to introduce strategies of bringing together its managers from various offshore sites to discuss initiatives and best practices, such as induction packages for graduates to problem-solving techniques. However, there were problems faced by such ambitious moves; some plant managers who worked in a familiar de-centralised atmosphere may not be willing to participate in changes that curbed their autonomy. The company practice was to take customer orders for components at the HQ, then disburse orders to various production plants. This gave the company an important source of leverage over managers at plant level, who were directly dependent on the HQ. The distribution of orders was based on comparisons of earlier performance in terms of costs and quality. With the initiative to bring changes, it brought about differences of opinion between the management and plant managers on issues related to performance-related pay (PRP) and sanctions. Internal competition to outperform other units to get more orders led to many managers to make changes to improve their performance. The power of HQ to dictate the way orders were to be disbursed led to the process of international integration in Engineering Products. It induced managers at plant level to participate in the sharing of best practice across sites and to comply with the wishes of HQ in terms of the nature of the production processes and the way in which labour was managed. These developments had a significant impact on the work of both managerial and non-managerial employees. 3.0 Analysis Ever since the company moved towards international integration, the HR programmes have been more proactive. Programmes aimed at targeting company objectives have brought about changes in the way managers and employees work. A key feature of this was the creation of structures which facilitated regular contact between managers, and management of international assignments. The only hiccup lay in bringing a balance between standardised practices and variation between production units to local factors. Differences in law, institutions and national cultures had to be overcome to streamline operations. Issues such as performance-related pay operated, equity participation among units, and employee-based policies raised objections. The American system was quite complex in that there were no formal structures through which employees could be represented; the law did not oblige management to recognise unions and nor were unions influential enough to force management to recognise them. This hampered the representation of employee grievances. Employees were left in the cold to fend for themselves, while their contemporaries in Europe and elsewhere had the luxury of being well represented. In Europe companies had to deal with unions, given their well-established position in the plants and to an extent the legal support they enjoyed. The disparity was obvious. HRM had to devise policies to balance the drive to standardise practice with adapting to local conditions. Unless employees were treated equally, there would be protests and under-performance. This led to disparity in the way the HQ distributed work to units in the U.S and Europe. For managers, implications were far more significant. They could not work with the autonomy that they had earlier. They had to change the way they worked. While for some managers, it was easy to absorb the changes and put them into practice, others found this quite annoying and intrusion into their comfort zone. A key point of international integration was that progress up the managerial hierarchy was no longer confined to countries-specific. The practice of filling senior managerial positions with natives of that particular country where the unit was located was replaced by a geocentric approach in which merit was recognised as the criteria for promotion. This was a drawback to those managers who felt that they were being overlooked by the new initiative. However, the international integration of Engineering Products gave rise to more opportunities for ambitious managers to progress beyond the plant towards senior positions in other countries and at the HQ. While this created opportunities for progression, it also imposed obligations on managers to become more geographically mobile. Managers had to comply with HQ prerogative to spend more time on overseas assignments, something that did not suit everyone. While autonomy was reduced, the company was able to streamline production and operations at all their units globally. This however, did not go down well with many managers again. Though they worked together and had the same kind of procedures to follow, plant managers felt that have had less room to manoeuvre, making them rigid and tied down. This is a factor that was most resisted. However, the continuous meetings that these managers have with HQ give them enough and more opportunity to gather important inputs on policies and guidelines that operate at the international level. It also gives them the opportunity to express their reservations or ideas that may alienate some flaws. For non-managerial employees the implication of non-representation and policies has a direct effect on their performance, as mentioned a little earlier. Besides these, there is the question of increase in competition between plants which reduces the degree of security of the plant where they work in, and consequently their job security. No employee will have the inclination or satisfaction of working qualitatively if his/her job is under scrutiny or uncertainty. Such misgivings can only bring about further lose in quality and performance. This is an area of serious concern for the management. In the case of Engineering Product, we have seen that HQ routinely uses comparisons across plants to bring pressure within the group. Such comparisons and the ability to move production from one site to another, not only reduces the bargaining power of employees, but also brings about job insecurity. The HQ move is seen as an attempt to erode potential resistance from employees and trade unions to changes. Coercive comparisons and threats of closure can weaken the hand of unions in pay negotiations, and sundries, resulting in downward pressure on pay and conditions. Another implication for employees is that they are forced to learn new operational practices, which were restricted earlier. The move was seen as an imposition of work on them. Prior to the standardisation, working practices were developed largely within each plant, and the practices were continued over a long period of time. The employees also felt comfortable working in acclamatised conditions, and changes would not be acceptable to them that easily as it involved extra effort and time. As for Engineering Products, while the introduction of new practices eroded best practice, a key development was the practice developed in one of their Spanish plants. On visiting this plant, the HR staff and engineers noticed the re-organisation of the assembly of the product from a linear production line into a U-shaped cell. Under this new form of work organisation, employees undertook a wider range of tasks than before, creating a need for multi-skilled operators who could work at any stage in the production stage. Fewer people were required to perform activities that produced same output. The practice was adopted in all of its other plants. 4.0 Conclusion From the above analysis it can be drawn that the implications for managers and employees to changes in international integration is quite contrasting. While employees felt that work ethics were being imposed on them, they had no voice of their own in many of its units in the U.S. With the new system allowing lesser employees to perform the same job, many employees felt that their jobs were in jeopardy, and were targeted for dismissal. 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