Industrial Relations Case Study PQHRM Module 08

BS/FO/76

Institute Of Personnel Management Sri Lanka CASE STUDY COVER PAGE NAME OF THE PROGRAMME : - PQHRM

TOPIC OF THE CASE STUDY

: - Industrial Relations

MODULE NUMBER

:- 08

Name of the Student Index Number Contact Number E-mail Date of the Examination Date of Submission NAME OF THE LECTURER

:-

For Office Use Only: 1. Final Marks : ……………………….. 2. Remarks : ………………………… (To be filled by the Examiner)

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Contents Introduction to Case Study..........................................................................................................................3 Review of the Case......................................................................................................................................4 Questions & Answers..................................................................................................................................5 Question 1: Evaluate critically the above facts and try to find out what exactly the cause for this unfortunate situation................................................................................................................................5 Answer:...................................................................................................................................................5 Question 2: Was there a way to avoid this situation?...............................................................................6 Answer:...................................................................................................................................................6 Question 3: Was there any reason for the poor industrial relations in the Bolts and Nuts Co. Ltd...........8 Answer:...................................................................................................................................................8 Question 4: Can you point your finger at the HR manager for this situation?........................................10 Answer:.................................................................................................................................................10 Question 5: Was there any way to resolve the crisis situation that arose in the company?.....................11 Answer:.................................................................................................................................................11 Question 6: Make a careful study of the above case taking into consideration the problems enumerated form 1 to 5 above and any other problems you may consider relevant, and write an analytical report embodying your findings and recommendations/ proposals…..............................................................12 Answer:.................................................................................................................................................12

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Introduction to Case Study “Bolts & Nuts” ‘Bolts & Nuts’ is a company manufacturing and marketing bolts and nuts. This manufacturer had a fair share of the market in the said product. During a time when there was a close economy with restrictions of the import of such items, the Company enjoyed a larger market and was a profit making and successful organization with around 300 employees working in the factory. A government which came into power at a latter stage advocated a free economy and liberalized the import of foreign goods. This made the market getting flooded with imported goods including bolts and nuts of a better quality at a lesser price. This change of policy of the government caused difficulties to ‘Bolts and Nuts Company’ and they gradually lost the market to a large extent as they could not compete with the imported goods which were comparably higher in quality. The company failed to take any significant steps to improve the quality of their goods. They found it difficult to improve the quality of their goods with the obsolete Plant and Machinery which were about twenty to thirty years old. The strategy of the company was to reduce the cost of production by increased production with the available resources and to supply bolts and nuts to the market at a lesser price with a view to stay in the market. The Company was always of the opinion that the labour was not giving the maximum production and was thinking of ways and means of getting a higher production from the labour.

1. Evaluate critically the above facts and try to find out what exactly the cause for this unfortunate situation. 2. Was there a way to avoid this situation? 3. Was there any reason for the poor industrial relations in the Bolts and Nuts Co. Ltd 4. Can you point your finger at the HR manager for this situation? 5. Was there any way to resolve the crisis situation that arose in the company? 6. Make a careful study of the above case taking into consideration the problems enumerated form 1 to 5 above and any other problems you may consider relevant, and write an analytical report embodying your findings and recommendations/ proposals…

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Review of the Case

Bolts & Nuts Company was manufacturing and marketing nuts and bolts and nuts. They were making profits for a while till the new government changed its economic policy and the closed economy was changed into an open economy. With this competition came in and the company was unable to face it. The company believed that the employees weren't giving their best and this finally led to the employees together as a Union going against the employer. Despite the disciplinary action taken by the employer, the employees began to strike and sabotage the company. The collective agreement made by the two parties did not stay for long. The situation got worse when the company was pressured by environmental authorities and the company made this an opportunity to change the place of the factory and to get rid of the employees. However, at this time, there was a case given to the commissioner of labour and while this was going on, the company dismissed their workers. When the workers appealed to the commissioner of labour, the company was asked to give compensation to all the employees. The company ended up having to pay millions to its employees. This report will critically analyze this situation and look at ways it could've been avoided.

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Questions & Answers Question 1: Evaluate critically the above facts and try to find out what exactly the cause for this unfortunate situation.

Answer: 1) The cause for this unfortunate situation is that the company did not have a strategic planning. They did not anticipate the change of the economic policy of the new government.

2) They did not have a proper understanding about the changing environment and also they did not anticipate to change according to the future environmental changes.

3) No proper HR practices were followed. Grievances handling was not done in a proper manner. They did not listen to their employees and had very poor industrial relations. All these together resulted in the unfortunate situation of the company. There was no good relationship between the employer and the employee.

4) They did not change according to the technological changes. If they had invested on new machinery and technology they would have been able to survive.

5) The company was not innovative, proactive and had very weak strategic planning. They were resisting to change anything they had. They were not willing to experiment

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Question 2: Was there a way to avoid this situation?

Answer: The company ideally should've been proactive in the whole thing because prevention is always better than cure. However, there were many reactive methods that could've been used. If they still used it, the situation wouldn't have become this unfortunate. When the government advocated a free economy and liberalized the import of foreign goods, the company should've used a new technology in order to improve the quality of the product.

1) Change leadership style. Provide the company with proper leaders. The managers who are appointed as leaders should follow a leadership style that leads to sustainability of the organization along with ability to change according to the environment.

(2)Bargaining Rights Bargaining rights refer to union recognition and the rights of individual workers to join together and bargain for a change in policy and organization. The employees should be facilitated in a method where they can speak up their issues.

(3) Change strategy into improving quality Just as the economic policy was changed and competition came in, the company should've improved the quality of it's product to match competitive products. They should've bought new machines and trained the employees to use them even though purchasing new machines was costly. If they made that investment then, by now they would've been back in business and making thick margins.

(4) Involve employees in decision making

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Employee involvement is creating an environment in which people have an impact on decisions and actions that affect their jobs. Employee involvement is not the goal nor is it a tool, as practiced in many organizations. The company should encourage the employees to come up with new ideas and to involve in decision making. Employees are the ones who are really in production; they would know what needs to improve in order to make production more efficient

(5) The employer should've had good HR practices and proper manpower planning The company has shown very bad HR practices. Throughout, they have not done proper human resource planning. The company has terminated the services of many of its employees as disciplinary action. The company did not have good industrial relations. The way they dealt with the trade union was not appropriate. They did not look at a win-win situation when they entered into a collective agreement with the trade union.

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Question 3: Was there any reason for the poor industrial relations in the Bolts and Nuts Co. Ltd

Answer:           

Hardened attitudes from poor pre-existing relationships; Parties avoiding meaningful bargaining by refusing to discuss. Employing an overlyaggressive or formalistic style of negotiation; Disrespectful and even outrageous behavior by negotiators; Unrealistic expectations; Incomplete information on issues being bargained; Leadership issues. Poor communications skills; Workers and management not seeing issues in the same manner . Lack of trust or credibility; Real decision-makers not being at the table, particularly in large multi-national corporations; Changes of work place and new workplace procedures (e.g. over discipline) without meaningful discussion;

The main aspects of Industrial Relations are:

I. II. III. IV. V. VI. VII.

Labor Relations, i.e. relations between union and management. Employer-employees relations, i.e. relations between management and employees. Group relations, i.e. relations between various groups of workmen. Community or Public relations, i.e. relations between industry and society. Promotions and development of healthy labor-managements relations. Maintenance of industrial peace and avoidance of industrial strife Development of true industrial Democracy.

Poor industrial relations in Bolts & Nuts affected the company in a bad way. There was a fall in normal tempo. Poor Industrial Relations adversely affect the normal tempo of work so that work far below the optimum level. Costs build up. Absenteeism and labor turnover increase. Plants discipline breaks down and both the quality and quality of production suffer.

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There was frustration and social cost. Employees come to the work place not only to earn a living. They want to satisfy his social and egoistic needs also. When they find difficulty in satisfying these needs they feel frustrated. Poor Industrial Relations takes a heavy toll in terms of human frustration. They reduce cordiality and aggravate social tension. The reasons for poor industrial relations probably were mainly because of the attitude of the employer towards the employees. They didn't trust the employees and always believed that the employees were not giving their best. Not trusting employees and not making them a part of decision making. It is stated in the case study that,

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Question 4: Can you point your finger at the HR manager for this situation?

Answer: There are many functions in an organization such as marketing, finance, Human Resource management, production, IT etc. Out of these functions, the Human Resource function is responsible for taking care of the employees. The Human Resource Manager should take care of the following,

     

Recruitment and selection Training and development Employee relations Industrial Relations Health, safety and welfare Compensation

The HR manager of Bolts and Nuts has not been doing any of these in the right way. It is true that the HR manager alone does not take strategic decisions of the company. However, it was his responsibility to ensure that the voices of the employees were heard by the top management. The HR manager is the link between the employees and the employer. The collective bargaining process was a good opportunity for the company to set things right at least to a certain extent. Unfortunately, the HR manager seems to have not had proper training on how to deal with it. The collective agreement was signed though the company was asking too much from the employees. The HR manager surely has had no intention of standing up for the employees when his whole job is to protect them. The HR manager also doesn't seem to have any knowledge about the legal aspects connected to this. Normally in an organization, it is the HR manager who advices the top management about employee laws. The company has made a huge mistake by terminating the services of all employees while there was a complaint with the commissioner of labour. This was something that they should've known. This cannot be taken as a mistake and no one can excuse the HR manager for not knowing the law. Not all companies are covered by the TEWA act. While an inquiry is going on for a matter, you cannot terminate employees. You need to pay wages even if the employees are at home. Taking all these into consideration, I would say that it is fair to point the finger at the HR manager for this situation. And the HR manager should be blamed.

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Question 6: Make a careful study of the above case taking into consideration the problems enumerated form 1 to 5 above and any other problems you may consider relevant, and write an analytical report embodying your findings and recommendations/ proposals…

Answer: The company had to reach its end due to no proper planning. The company brought this among itself through all the short-term solutions they came up with from the beginning without forecasting the future. Being a profit making company in the beginning, they lost everything in a few years because they didn't think of the long term impact of their actions and did not try to change according to environmental changes.

The company doesn't have many choices left now. What they can do is either sell the company. They should either diversify their business or merge it with another. Introduce new technology to the organization with a better and a strong plan for the future.

~ Thank You~

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