Employment Relations in the Innovative Electronics - Case Study Example

Employment Relations in the Innovative Electronics The Innovative Electronics, a false name of a major subsidiary of a United States multinational operating in Europe, is experiencing poor and low performance in its business for the last five years because of the market depression for some of its main products. The patchy performance of the company has resulted from economic depression in the markets of some of its main products. The problems in technological innovations, the poor management structures, and the low morale of the workers and increased threat of new competitors have challenged the established performance of the company over the years. Subsequently, these problems affected diverse business areas within the company besides affecting the stakeholders. The customers could not get their needs and demands met by the products of Innovative and hence walked away. The parent company reduced resources to the subsidiaries, affecting the motivation and reward system negatively. The management structure and the policies that the senior managers used caused mistrust and cynicism and failed to address the problems of the company since coherence and team work were affected negatively. Introduction Innovative Electronics is a company that operates in Europe, and produces sophisticated electronic control equipment used by other big companies in testing and measuring laboratory instruments, mobile phones and chemicals. The Innovative business has experienced constant problems in the past five years, resulting in a patchy performance because of the economic turmoil that rocked the world’s market for some of its important products. This paper is an integrative case study analysis of Innovative electronics in which the problem is discussed, the case data analyzed, and the main problems facing the company identified and analyzed. In addition, recommendations are made to help improve the situation that the company is in, in future. Problem (Issue) statement The Innovative Electronics is experiencing poor and low performance in its business for the last five years because of the market depression for some of its main products. The company, which had been thriving on the power of technological innovations for its business success, is also facing increased threats from its new competitors in the market because of less innovative developments that can neither attract new customers nor retain the existing ones. The management structure of the company was not well aligned to the demands and the needs of the local market, creating corporate wrangles within the senior management. The company faced management problems of implementing the strategy of the mother company at the local level. Further, there were tensions between demands for corporate control and local autonomy encountered by the senior managers of Innovative Electronics. The management team in the company failed to adopt and implement the recommendation of a team set to address the issues that affected the management and operations of the company. A discord ensured between the senior management and the middle management of the company further aggravating the problems that it had. Analyzing Case Data The Prioritized Main Problems that Innovative Electronics Face The Innovative Electronics faces several problems that have contributed to the continued decline in innovation and performance over the last years. The major problem is the less innovative developments that have resulted in increased competition from the competitors, and the inability to maintain the existing customers as well as attract new ones (Terrill and Middlebrooks 124). The company had established its reputation on technological breakthroughs as its competitive advantage. The innovative developments were the strategic direction of the organization and a source of competitive advantage for the company (Zhou 1). Second, the main problem that the company faces is the structure of the company that makes it difficult for the managers to modify the products to meet the local demand of the customers. The products and demands that the company deals in do not satisfy the customers and hence poor sales and less returns. Further, the customers cannot be retained or attracted by such products. This problem affects the sales, market share of the company, and the return on investment (Saxena 41). The third main problem in the company is the reduced morale of the employees. The financial strains reduced the expenses of the company and forced it to lay-off some workers, shelve the education and training schemes that motivated the hardworking personnel (Daft 23). The team spirit and the company cohesion were negatively affected by the competition among the departments because of fewer resources. The teams became cynical and developed mistrust because their hard sought recommendations were never implemented. The commitment of the workers, therefore, faded. Analysis of the Causes of the Problems Facing Innovative Electronics One of the causes of the problems that are facing Innovative Electronics is a patchy performance due to a market downturn of some of the company’s core products. This decline in performance has dealt the company a huge blow over the recent years given that the company had continued to enjoy reputation in technological breakthroughs and in the field of research and development. Martin (2006, 123) indicates that the company has enjoyed success since 1950 as its employees have been enjoying financial success. The patchy performance of the company significantly affected its financial position. The financial success of the company has always benefited its employees for more than five decades. The personnel enjoyed well pay and career advancement services, in form of training and education, from the financial returns of the company. Consequently, the workers were highly motivated and committed to Innovative Electronics (Martin 123) Prior to the market downturns of 2000, the employees of this company were receiving impeccable treatment through privileges and benefits, advancement of their careers, and the provision of opportunities for training and education (Maher and Fry 138). However, the market downturn witnessed at the beginning of the 21st century rendered the company unable to sustain the good treatment of its employees and this downturn forced the company to rationalize its activities. In the light of this, the company introduced compulsory lay-offs that were the first since its establishment. More lay-offs were implemented later after the headcount management of the parent company in the United States started to experience more problems. The effects of the financial restrains in the company included rationalized activities and enforced lay-offs of its employees. Moreover, the financial limitations made the company to outsource some services from its sister companies instead of the employees accomplishing these services. To ensure that the variable costs, specifically the labour costs, were maintained, local research services were minimized. Economic downturn usually makes management of organizations to implement strategies that enable the company to survive and grow, such as downsizing (Gandolfí and Oster 42). Consequently, the financial constrains hindered the company from adhering to the local product development strategy it used in the European markets. The resource constraints that the parent company of Innovative Electronics was facing in the United States, the departments of the subsidiary companies encountered problems in resource allocations. Subsequently, competition arose and the employees within the departments resulted in certain managers pursuing the departmental interests, negatively affecting the overall organizational cohesion and team spirit (Parker 101). The overall mission of the company was dented and innovation goals slowed. The budgetary reasons also affected the implementation of the recommendations of the team members of ‘Project 2006’, leading to cynicism and mistrust within the company. Competition in companies should encourage growth and innovation; however, that did not happen with Innovative (Aghion, Bloom and Blundell 702). The patchy performance of the company as well as the declining innovative developments affected several stakeholders of the company, including the workers and the senior management. The parent company suffered financially, reducing their resource allocations to the subsidiary companies. In addition, the problem made the parent company to lay-off several workers. Innovative could not afford to continue using the internal services rendered by the employees. The company was forced to make use of the main products from the parent company regardless of the products deviating from the requirements of the local market (Martin 124). Tackling the problem of ageing product range at the local level could not succeed because of demands for corporate control and sticking to the strategy of the parent company. Altering the bureaucratic structure of Innovative to improve its performance faced serious challenges, such as male dominance, discord between the actions of the senior manager and the objectives of the company. Moreover, the customers were affected such that the innovations failed to satisfy their needs. This results in customers walking away, the sales, reducing, the return on investment decreasing, and the profitability of the company is compromised (Martin 127). The management structure and the policies that the senior managers adopted increased the gap of the patchy performance the company experienced. The management defied and watered down the recommendations of the team to improve on the operations of the company because of poor teamwork and coherence among the workers (Murray 110). The scarcity of the resources was a major challenge here because the management did not accept the recommendations arguing that they were bids for resources and not cost-effective improvements that the company sought at that time. Management interfered with the teamwork and this resulted in mistrust and disharmony. The results of the team were not important for the company because they never played the role they were meant to accomplish. Improvements into the performance and operations of Innovative were overridden by the objectives that the senior management had set. The work of the team was not appreciated or rewarded by the management in any way. The middle managers differed with the senior managers and their commitment declined (Dyer and Dyer 44). The problems of the company persisted because the management had poor structures and objectives. Unattractive technical developments were another cause of the problems that Innovative Electronics was facing. In the face of the downturns in the markets, the company was also facing technical difficulties, which made its existing customers, and the new ones become wary about the company’s products (Tikoo and Ebrahim 54). These technicalities made the company unable to withstand the competition that was coming from its main rivals. Innovative developments and competition from the rivals were to blame for the losses that the company experienced during the 2000-2005 period. Martin (2006, 124) indicates that these losses amounted to millions of euros. The insistence by the parent company that was based in the United States that the company centralize its research and development service as a means of ameliorating the losses that the company was facing during the aforementioned period was also to blame for exacerbating the company’s problems (Martin 123). This is because the company kept its local research at a minimum, which became a major source of trouble for the management of innovative technologies. This trouble emanated from the fact that the company’s products that were being made in the United States did not suit the markets served by the company in Europe. Furthermore, there are problems that arose due to calibrations and standards. The company had for a long time followed a policy that aimed at encouraging the business ventures, which showed a promise to work towards the strictures of the parent company (Gourevitch and Shinn 6). The senior management at innovative electronics suffered many problems due to the tensions that were caused by the demand for local autonomy and corporate control. Particularly, fox’s leadership was characterized by the inability to implement his strategies. Fox is seen as propagating for teamwork ethics although lacking when the time for teamwork came. In case the company was faced by difficult times, which became frequent following the outset of market downturns, Fox exhibited authoritarian behaviour and a performance mentality that was on the bottom line (Kock 59). The parent company that was based in the United States was faced by resource constraints. These constraints led to the emergence of many problems as the company had to perform the task of allocating resources among the company’s departments in the face of scarcity. Moreover, the severe competition that existed among the departments of this company compelled some members in the management team to pursue other departmental interests and the interests of the staff in the departments. This move was to the detriment of the cohesion of the company and a severe damage to the company’s cohesion. Furthermore, this disintegration was the root cause of some of the leaders embarking on a move to run the departments as fiefdoms instead of offering contribution to the goals and the mission of the company (Goldratt 93). What changes would you make to improve the situation and future of Innovative Electronics? The company should continue to treat its employees the way it treated them before the outset of the market downturns. This is because the success of the company was due to the good treatment that it was offering to its employees, which made them increase their productivity. The company should not consider laying-off its employees as a move to rationalize its undertakings. The company should consider other measures such as training its employees and career development (Jones, Steffy and Bray 456). Technical developments such as innovations could help the company to ward off threats from competitors instead of having to dismiss its employees. Local research is also important as it could help the company to become aware of the needs of its consumers in the European market. The company can also look for donors in order to prevent the occurrence of financial crisis, which rendered the company’s operations a severe blow (Harvard Business School Press 8). The management of the company should ensure that the continuous improvement program is implemented again. This program will ensure that there is quality improvement, schemes concerned with the improvement of production, the development of the organization and human resource initiatives. This program is also important as it ensures that the managers in various departments are sent on courses that would help to enhance their understanding of the concept of teamwork and the furthering of team working skills (Katzenbach 49). The recommendations made by the management team should always be implemented. This is because one of the reasons that this company suffered losses was the fact that the management team made recommendations and failed to implement them. Moreover, the implementation of the recommendations can help avoid mistrust and cynicism, which had been fuelled by the failure to implement the recommendations. In relation to this, the management team’s members should be dedicated to the company’s mission and pursue the interests of the innovative electronics rather that their own interests. The senior management of the innovative electronics should ensure that efforts are expended towards culture change and training in order to return the company to its initial level of output. The parent company in the United States should embark on entrepreneurship and innovation in order to improve the company’s performance (Brannick, Salas and Prince 148). The management of the company should ensure that there is an equal allocation of resources in the company’s departments. The lack of equal allocation of resources was the root cause of the wrangles between the company’s departments, which threatened to halt the company’s operations. The management should also ensure that there is no competition among the departments as this leads to some of the team members pursuing their own interests. Competition also leads to decrease in the company’s team spirit and cohesion (Fleisher and Bensoussan). Recommendations Equal distribution of resources among the departments should be among the company’s first priorities. This is because unequal distribution of resources can lead to decline in performance of some departments, which in turn leads to financial losses. The company’s leadership should demonstrate teamwork through their actions and not to blame the rest of the members in case of the emergence of problems in the operations of the company. It is also of great importance that the company implement the improvement program which is necessary incase the company want to increase its productivity and enjoy financial success. Lastly, the company should also ensure that the employees receive a fair treatment. If possible, the company should promote its employees on the basis of merit as was the case when the company was enjoying financial success. Employees should not be laid-off in case of downturns in the market. Works Cited Aghion, Philippe, et al. 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