Different Contemporary Management Issues Faced By Global Organizations - Essay Example

Introduction The study is based on the discussion of different contemporary management issues faced by global organisations. Contemporary issues faced by management are the result of various past as well as current thought processes and practices. A large number of organisations across the globe are facing different contemporary issues and challenges such as economical pressure, effects of legislations, business ethics, globalization and technological advancement (McGuire, 1974). The discussion is mainly focused on a particular management issue i.e. the effect of legislation on the current workforce and management. Changing legislation to the organisations and workforce is one of the major issues faced by the human resource management. Besides the federal legislations, each state owns specific employment law and regulations which affect the functionality of human resources. The changes in federal laws generally impact the HR management of large to medium sized organisations (Nicoletti, Scarpetta & Boylaud, 1999). Human resources managers need to be well-versed with the challenges of these ever-changing employment and workforce legislations to reduce the liabilities of organisations in different aspects of human resources operations (Brown, 1999). The recent development of minimum wages law is providing some added pressure to different organisations. The US federal minimum wages act was first introduced during the depression of 1933. At that time the federal government increased the minimum wages from 25 cent to $7 per hour. By the year of 2013, the minimum wages for workers in small and medium US industries has increased by $9.47 per hour (Brown, 1999). Similarly, the federal law has conveyed that the minimum wages of employees in large industries need to be increased to $ 11 per hour by the end of 2015 (Journalist’s Resource, 2014). Though the wage hike has been proved to be beneficial for the employee loyalty and motivation programs, it is also adversely affecting the overall expenses and profit margin of organisations (Card, 1992). Various businesses in the US market are facing different challenges due to this rise in wage structure. The HR management of the Subway franchisees in Seattle is worried about the increase in organisational cost by $250 per week in terms of employee salaries (Tu, 2015). The strategic managers of Washington Lodging Association are still very confused about the effect of this legislation on the overall business activity of the organisation (Tu, 2015). Minimum wage increase also affects the product pricing strategy of the organisations. This will further decrease the profit margins of the businesses. Few of the small businesses in San Francisco need to close their under productive wings to manage the additional cost to the organisation. The management of Borderland Books in San Francisco needs to close their physical book store as the rise in wages is causing loss to the company (Root, 2015). The HR management of Wal-Mart stores need to adjust the compensation structure of employees in more than 1,434 stores to follow the state legislation. This strategic change has imposed a huge pressure on the management of the organisation (Al Jazeera America, 2015). Organisational response Organisations are measuring the effect of the increase in the minimum wages on their profitability, recruitment process and over all finances. The payroll taxes are also increasing with the rise in minimum wages. This situation is providing extra burden to the human resource management of various organisations (Sammer, 2014). Various large organisations are adopting this legislation change to ensure that their businesses comply with the state law structures. Wal-Mart Stores Inc, the biggest retail chain in US, has created a retailers memo to convey their future steps to support the minimum wage law. This memo has been circulated to all the managers of different stores across the US (Kedmey, 2014). The change procedure in the salary structure of employees is causing a huge pressure on the strategic management of the organisation as it is challenging the traditional operating model of the organisation which influences the overall cost control to attract the customers with low profits. They are also struggling to maintain their sales ratio as a certain portion of population has lost their income due to the economical crisis (Autonomous Nonprofit Organization, 2014). The current remuneration structure of the organisation is $12.92 per hour and the management has confirmed an increase of $7.25 per hour by the end of the year (Picchi, 2014). As per the memo, the organisation is minimizing the gap of remuneration between lower paid workers and premium paid higher skilled employees. The organisation is planning to combine all its lowest paid grades such as cashier, maintenance and cart pusher into one basic rate (Banjo & Morath, 2014). The wage compression strategy for the upper level employees will assist the management of Wal-Mart to absorb the cost incurred by increase in wages of lower level employees (Picchi, 2014). These strategic changes of the organisation assist the management to maintain the employee satisfaction by increasing their pay structure as per the state norms. On the other hand, the management is assuring to maintain the total profit ratio of the organisation by lowering the remuneration gap. This strategy will assist the organisation to prohibit the product price increase (Morgenson, 2014). Therefore, it will enable them to maintain their customer loyalty. The minimum wage rise in different states of the US is also affecting the management decisions of the largest fast food chains such as McDonald Corp. The management of McDonald is dealing with the dissatisfaction of different franchisee wings regarding the low profit margin and increase in complex menu. The legislation of minimum wage increase is providing an added pressure on the management of the organisation. The organisation is also facing a huge burden of promotional and renovation costs (Alexandersen, 2015). To follow the latest federal law, the organisation has adopted a strategy to increase the wages of workers in different states of the US by $7.25 per hour. This range may increase to $10.10 per hour as per the difference in legislations in various states of the US (Alexandersen, 2015). The recent wage increase strategy of the organisation may cause an additional burden to their franchisees. It can also result in financial loss and debt for the organisation (Blodget, 2013). These complications lead to delay in the implementation of this strategy. The management prefers to wait and watch the effects of legislative changes on other competitors (Gongloff, 2014). This situation has adversely affected the employee motivation as well as employee loyalty of the organisation. The expensive promotional ventures of the organisation has been criticised over different social media site (Kasperkevic, 2015). The delay in adopting the legislation is hampering the organisational structure of McDonalds. It is increasing the employee dissatisfaction. Dissatisfaction and de-motivation within workers may lead to decline in the service quality of the fast food giant. Further delay may also cause governmental penalty to the organisation. Management skills The changes in wage structure also influence the changes in the operational structure of the organisation (Huselid, Jackson & Schuler, 1997). This restructuring procedure causes a number of ethical dilemmas within the management of any organisation. Increase in cost of the organisation influences the management in massive job cut. This situation causes panic within the lower performed employees. It also causes additional pressure in the remaining workforce. The management of organisations need to posses different skills and competencies to cope up with all the changes (Fortin & Lemieux, 1997). To balance the financial outcome and avoid the massive job cuts, managements need to focus on the job restructuring procedure. Successful implementation of this strategy will require the skills of management to analyse the competencies of the employees. It will assist the management to properly relocate the employees to their suitable positions to ensure maximum productivity. This will be beneficial to increase the overall productivity of the organisation (Huselid, Jackson & Schuler, 1997). Management of any organisation which is undergoing the wage restructuring process needs to have strong financial skills. Clear idea about the financial structure of the organisation will assist the managers to weigh their decisions in terms of future monetary gain. The management should be well-versed with the skills and techniques to narrow the inequalities in income distribution (Whitley, 1989). Minimizing the differences between the wages of higher and lower level of employees can create conflict within the workforce. The management needs to be properly skilled to solve the conflicts within the employees of different levels (Whitley, 1989). The human resources managers should have good communication and interpersonal skills to successfully deliver all the required information through all the departments. This will assist the management to provide a clear idea about all the organisational changes. It will also enable them to collect employee feedbacks (Whitley, 1989). Critical thinking skill is another important feature of the managerial skills. It is essential to develop logical problem solving approach within the managers. During the wages restructuring process, most of the management faces a number of internal and external problems. The critical thinking skill will assist them to avoid all the biases. It will also help them to focus on the important data to find out right conclusion for the situation (Whitley, 1989). Conclusion The study of the contemporary issues faced by the management of different organisation has provided an in-depth view about the current legislation changes on the minimum wage structure. It has highlighted a number of real-life examples of organisations who are facing different issues due to this change in federal law. The detailed discussion of Wal-Mart and McDonalds wage restructuring strategies has conveyed various problems the organisations are facing. It has also discussed the efficiency of different managerial skills which can assist the organisation to effectively adopt the reformed legislation. References Al Jazeera America. (2015). Minimum wage hike coming at more than 1,400 Walmart stores. Retrieved from http://america.aljazeera.com/articles/2014/12/24/walmart-wages-employees.html. Alexandersen, C. (2015). Low wage is not OK': Minimum wage marchers want raise from $7.25 to $10.10. Retrieved from http://www.pennlive.com/politics/index.ssf/2015/02/lt_gov_michael_stack_join_hund.html. Autonomous Nonprofit Organization. (2014). Walmart forced to increase minimum wage at 33% of US stores. Retrieved from http://rt.com/usa/217491-walmart-increase-minimum-wage/. Banjo, S., & Morath, E. (2014). Wal-Mart Looks to Bump All Workers’ Pay Above the Minimum Wage. Retrieved from http://blogs.wsj.com/economics/2014/10/16/wal-mart-looks-to-bump-all-workers-pay-above-the-minimum-wage/. Blodget, H. (2013). 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