Perfect Pottery (HR Objectives & Influences and Interpreting HR Data)
Specification topic: HR Objectives & Influences and Interpreting HR Data Case Study: Perfect Pottery’s imperfect strategic change Perfect Pottery are considered the benchmark for quality high-­‐end giftware. Founded more than 200 years ago, the firm has remained close to its origins with their manufacturing plant in the heart of the midlands in the UK. The firm employs 1,600 workers with the vast majority of these working on the factory floor creating a variety of pottery products for sale in the department stores such as Debenhams and House of Fraser. The firm operates a tall organisational structure with centralised decision making. Perfect Pottery’s CEO and Operations Director have both worked at the company for over 20 years and are quite autocratic in their leadership style. In 2012 the firm was bought by American Private Equity firm HBGC and the first change they made was to appoint a new HR Director, Stanley Watson. His HR objectives center on improving labour productivity which has been declining in the last three years (2009-­‐2012). He also has identified staff absenteeism as being another area of concern and wants this to improve. The average staff absenteeism rate across other HBGC firms is 1.3%. He also has noticed poor morale amongst factory workers having walked the production line and met some of employees. Stanley Watson believes consulting staff on process improvements is crucial to achieving improved results on the factory floor and this is his third objective – to empower staff and consult with them on process change. However, the one process change they have no say in is the firm’s decision to move towards the use of robotic machinery to speed up production. This has been a decision made by the new parent company in 2013 in response to worrying levels of profit and rising costs. The technological change has resulted in 630 members of staff being made redundant and the threat of even further cuts should the change result in significant cost savings over time. The machines went active at the beginning of 2014 and a full year of operations in this manner has occurred. Key Operational & HR Data Year 2012 2013 2014 Labour productivity (Per week average) 263 242 372 % Staff Absenteeism 2.1% 6% 8.2% % Defective Items 3% 7% 6% Exam-­‐style questions 1. Analyse the HR problems that Perfect Pottery is experiencing with the operational changes being made? (9 marks) 2. To what extent do you believe that the HR objectives are being achieved by Perfect Pottery? Justify your view. (16 marks) © Tutor2u Limited 2015
www.tutor2u.net
Perfect Pottery (HR Objectives & Influences and Interpreting HR Data)
1. Analyse the HR problems that Perfect Pottery is experiencing with the operational changes being made? (9 marks) Possible arguments include: •
•
•
•
Morale is suffering due to the move to robotic technology. This is evident by staff absenteeism rates increasing hugely at the same time as when the redundancies were announced. There appears to have been a lack of consultation with staff over the technological change. This is probably due to the style of leadership (autocratic) that the CEO and Operations Director have. The centralised decision making meant that this was going to be a decision that never was consulted at factory floor level The labour productivity of staff severely diminished between 2012 and 2013. This coincides with the decision to implement technological change. The operational changes have meant workers have felt more like a resources than an asset. This is a feature of Hard HRM and workers esteem needs and job security needs are not being met according to Maslow’s Hierarchy. 2. To what extent do you believe that the HR objectives are being achieved by Perfect Pottery? Justify your view. (16 marks) Possible arguments for include: •
•
Although it didn’t happen immediately, the labour productivity for Perfect Pottery improved in 2014. The use of robotic machinery has increased speed of production and at the same time, less workers are needed (redundancies occurred) so each worker is now responsible for more output as it is now a capital intensive process in the factory Possible arguments against include: •
•
•
•
Staff absenteeism has increased significantly over the three years 2012-­‐2014. This is higher than the HBGC group average of 1.3% and has been made worse by the announcement of redundancies. Although it can be argued that the absenteeism rate was due to other factors also as in 2012, it was higher than the group average and this before the announcement of redundancies was made Staff morale is suffering and this will only worsen as they have not been consulted on the changes that are occurring in the firm. Stanley Watson’s objective of empowering staff is going to be difficult to achieve because other senior managers have a different management style to him and they believe in decision making occurring higher up the chain of command (centralised HR structure). Evaluation: •
•
•
Not all of the HR Objectives have been achieved in the years 2012-­‐2014. Only labour productivity figures have improved and this only happened in 2014, it actually got worse in 2013. The operational changes have had made it difficult for the other two HR objectives to be achieved due to sensitive nature of the change (job losses etc.) It can be argued that the objectives would always be difficult to achieve due to the management style being adopted by both the CEO and the Operations Director. © Tutor2u Limited 2015
www.tutor2u.net