HR problems negatively impacting on the operations of CGMS - Case Study Example

?Executive summary The report sought to identify the HR problems negatively impacting on the operations of CGMS. The major problems found in this case include the following: the company is overstaffed, the company does not have a clear organizational structure and it also does not have proper job description in place. These problems are compounded by the financial crisis characterising the market since the company is spending more money on labour costs while it is generating less revenue from its operations. Downsizing and reorganizing the structure of the organization have been figured out as the most viable strategies that can salvage the company from these problems. However, the key strategy is to reorganize the structure of the company since this will help it to be in firm control of its operations. Therefore, it has been recommended that the company should reorganize its structure in order for it to regain its waning status. Introduction Consolidated Global Mining Service (CGMS) is a giant company that deals with offering services related to mining as well as manufacturing of mining equipment. This is an industry leader in this sector but of late it has been facing different HR problems which are likely to threaten its viability in the long run. In order to address these problems, a lasting solution ought to be found and implemented in order to save the organization from crumbling. Therefore, the purpose of this report is to identify the critical problems that are affecting CGMS as well as to identify the strategies that can be implemented in order to solve the issues identified. This report will finally attempt to provide necessary strategies and recommendations that may be implemented in order to address the HR problems identified. The report will also outline how the proposed strategies will be implemented in the company. Identification of problems/issues The major explicit problem in this case is that CGMS has a larger workforce than it can manage to sustain against the background of a financial crisis which has also impacted on its operations. There are two conflicting areas of interest in such a situation. The first one is the need to keep the human capital that has been very productive in the organization while the other area of conflict is related to the issue of downsizing since the company is spending a fortune on paying the interests while the revenue generated is not commensurate with the large size of staff members. The operational costs in terms of labour are higher than the revenue generated by the organisation and this is the reason why a holistic approach ought to be implemented in order to deal with the impending problem that is likely to scuttle the viability of the organization. Careel et al (1995) posits to the effect that the operational costs in terms of managing human capital should not exceed the revenue generated by the company. Such negative development requires the organization to downsize or reorganize its workforce. The other problem is that the organization does not have clearly defined structure. The issue in this case is that the organisational structure and the human resources management structures have to be standardized such that they can meet the demands of the organisation. Where there is a clearly defined organizational structure, it can be seen that there are less chances of duplication of duties since everyone is aware of what is expected of him or her in the organization. According to Wener (2007), organizational structure helps the company to define the job tasks to be performed so that the number of employees in an organization can be controlled such that they do not impact on the organization in the long run. One implicit problem bedevilling CGMS is that no one really knows his or her particular type of job description. Everything seems to be informal though the company has a very good reputation of producing the best results in its performance. Jobs need to be described and categorised so that the company can be in a position to achieve optimum results from its operations. Basically, “job description is a written statement of what a jobholder does, how it is done and why it is done,” (Robbins, 1993, p. 561). This is very important in the organization since it helps to reduce the chances of duplication of work in the organization. It can be noted from the case study that everyone works in semi autonomous teams and they yield the same power. The organization is seen as informal and this somehow impacts on its operations since it is struggling to pay some of the employees who may be redundant. Strategies and evaluation Two appropriate strategies that can be implemented to address the problems identified above are related to downsizing the workforce through redundancies as well as to reorganize the structure of the organization. As noted, the major problem is related to a blotched workforce where it can be seen that the company is struggling to pay its employees against the background of a gripping financial crisis. Whilst the company has a good reputation of excellent performance, the problem of a huge workforce as well as lack of a proper organizational structure ought to be addressed in order for the company to be in a position to turn around its fortunes. Downsizing through redundancies According to be Business Dictionary (ND), “redundancy is the elimination of jobs or job categories caused by downsizing, rightsizing or outsourcing.” Of notable concern is the fact that redundant workers are legally entitled to their pay for redundancy until they get another job. The other problem that can be encountered when this measure is implemented is that the company may lose some of the skilled workers. However, this strategy is effective for CGMS which is facing numerous problems related to human resources management. Rightsizing is the best option at the moment since the company cannot continue to fork large sums of money while its production levels do not tally with the cost of labour. The best results can be achieved through voluntary redundancy where the company makes it clear that those employees who may need to go for early retirement can do so for the sake of sustainability of the company. Conflicts are also likely to be reduced in the company uses the strategy of voluntary retirement. Voluntary retirement is feasible given that there are no forced job cancellations. This is optional and the employees going to volunteer will do at their own will. This is advantageous to the company since there will be little chances of conflicts due to favouritism or any other disgruntlements among the workers. The decision made willingly by the employees will be acceptable to all parties involved since they would have been made freely. Labour costs are likely to be reduced in the long run since the company will only be dealing with a manageable size of the workforce. This can also help the company to concentrate on its core business. However, it can be seen that this decision can be reversible should the need arise to rehire the employees who have volunteered to retire if the fortunes of the company have been turned around. A company with the right size of workforce is easy to manage and this can be an advantage to CGMS. Reorganizing the structure of the organization Basically, an organisational structure defines how job tasks are formally divided, grouped and coordinated (Robbins, Odendaal & Roodt, 2001). As noted in the case of CGMS, employees work in semi autonomous teams and it seems that they all do the same work. Whilst this strategy has helped the company to gain its reputation, it can be seen that it is problematic somehow. It is difficult to control the activities of the employees if there is no proper division of labour (Politis, 2005). There are different activities that are performed in an organization hence it may be naive to believe that every person can perform the same task. Therefore, it is imperative for the company to reorganize its structure so that work is formally divided and it can also be formally coordinated. One main advantage of having an organizational structure is that resources can be easily managed and allocated in the organization. Quality of work is improved if tasks are divided into different categories (Susan & Randal, 2000). It is also easy to identify the departments that are overstaffed if the organization is structured in a formal way. This in turn helps the company to lower its operational costs since it will be in a position to remain focused on its core business. Unproductive departments can be restructured which can positively contribute to the overall performance of the organization as a whole. In as far as the restructuring exercise has been designed to turn around the fortunes of the company, it can be noted that the decisions made will be acceptable to all stakeholders since they will immensely benefit from such strategy. Recommendations It is recommended that CGMS should reorganize its structure so that it can be in a position to formally divide job tasks. This also makes it easy for the HRM to coordinate the activities of all the employees if they are formalised. A large company like CGMS cannot operate in an informal way given that it has more than 900 employees. Without a formal structure, it becomes difficult to monitor the HRM activities in the company. With a clearly defined organizational structure, CGMS can be in a position to take stock of all its activities. This also helps it to eradicate unproductive departments that could be straining the company. This strategy also helps the company to make appropriate decisions when allocating resources to different departments. In order to implement this particular strategy, it is important for the management to use the stakeholder approach where the views of the other employees are taken into consideration with regards to division of labour. Lines of authority as well as communication should be clearly defined so that each person is fully aware of his or her expected duties in the company. Bibliography Armstrong M. (1999), Human Resources Management Practice, 7th Edition, NY, Kogan Page Limited. Business dictionary (ND) Viewed from: . Carrell, R. et al (1995). Human Resources Management: Global Strategies for managing a diverse workforce. 5th Edition. NY. Prentice Hall. 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