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Strategic Human Resource Management 2010
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›gnite ›ndustries Ltd.mm mm

Strategic Human Resource Management 2010


›gnite ›ndustries Ltd. (fictitious name) a government company, which operates in textile and
clothing sector, is presently facing many problems. The change in government has reduced
budgetary allocation and has increased pressure to attain transparency and accountability. The
employees are dissatisfied with previous restructures and have become unclear about their
responsibilities. The present report focuses on different issues faced by the company. We have
proposed various suggestions, so that the company overcomes the problems. We propose that
company adopt restructuring again. Though there have been negative consequences of the
previous restructuring process, we feel that the restructuring process if implemented properly this
time, will surely help the company. We propose to carry an operational restructuring. A few of
the recommendations include recruiting young talent, resizing, designing performance
management system that is transparent and clear, delayering the organization, outsourcing least
important processes, etc.

We have provided a step by step implementation procedure to carry out the restructuring. We
have also identified that, there is bound to be opposition for this process and we have given ways
to reduce this opposition. We have finally concluded that the organization can overcome
turbulent times through restructuring. However the success of restructuring lies with
participation of employees and clear communication.

›gnite ›ndustries Ltd.mm mm

Strategic Human Resource Management 2010
Overview of Agency

›gnite ›ndustries Ltd is a government company established in 1953 and is main player in textile
and clothing industry. ›gnite ›ndustries Ltd is a globally known textile and clothing
manufacturing with state-of-art facilities by following best corporate practices. The company has
shown consistent growth over the years. The company has been profitable from last three

The company has a separate Human Resource Department directly under the jurisdiction of
Human Resource Director. The company has a mix of blue collared and white collared
employees. The government has large control over the operation of company. The company has
faced turbulent times and have recovered through restructuring. Currently the parent company
has over 850 employees. The company follows government regulations in terms of employing
workforce these includes state reservations. The company has established its brand image and
holds major market share. The company has entered into retail sector by establishing exclusive
showrooms. ›gnite ›ndustries being a government owned company; the operations follow various
government regulations. The government policies largely affect the organizational decisions. The
company is one of the star performers in government controlled companies. The recent recession
however has affected the company hard. The company has for the first time shown negative

The liberalisation of ›ndian company has opened up ›ndian economy for many global players;
there have many players entering into this sector and are proving a threat to the company. The
increased competition has made it mandatory for company to expand, the company has
expansions plan in mind; however, it had held it back due to recent elections. The expansion plan
requires large budgetary support from the government. The structural changes in company¶s
operations have left employees into dismay regarding their roles and positions. The company is
also facing internal problems that have affected the operational efficiency of the company. The
management is not able to take corrective decisions or aggressive actions due to work unions.
Further, the company¶s workforce operates in way that is more conventional and it is not open to

›gnite ›ndustries Ltd.mm mm

Strategic Human Resource Management 2010
There were elections held recently and there has been change in government. Due to change of
government, there have been several changes in governmental policies affecting the company¶s
operations. The new government focus on operational efficiency has made company to redress it
operations in new dimensions to be more productive. There have also been talks of government
planning to divest it stake in the company by going to capital markets.

Issues to Be Addressed

The issues to be addressed are as follows,

m There has change in government due to recent elections which has caused decrease in
budget and pressure to increase accountability.
m The age profile of the company is very high and there is need to promote youth
m The employees have seen many restructuring and have now become disillusioned.
m Many employees are facing higher level of stress and burnout.

The company has a multilayered and hierarchical organizational structure. We propose that the
company should use restructuring strategy. However it is necessary that the senior staffs are
involved in the restructuring process and there is a need for proper communication channel to
explain the need of restructuring needs to employees. The restructuring process can be carried
out through following measures,

m Streamlining production process.

m Rationalizing supply chain and better inventory management.
m Downsizing and
m Looking for enhanced flexibility.

›gnite ›ndustries Ltd.mm mm

Strategic Human Resource Management 2010
roposed HR Strategies

We would like to propose various HR strategies not only to cut costs but also to promote young
talent. The various strategies proposed are a mix of long term as well as short term. The aim of
the short term policy is,

m To increase the number of young staff by carrying out recruitment process.

m Cut costs through innovative processes.
m ›ncrease number of client.
m ›mprove workplace environment to reduce stress.

There are long term strategies proposed which are aimed to achieve,

m Smooth exit of aged employees.

m Designing a clear performance management system to increase transparency and
m Reduce number of layers to create flatter organization, which would help in quick
decision making.

Short Term Strategies


Restructuring can be of three types, portfolio, financial and organizational restructuring. The
public sector company can easily adopt organizational restructuring. The organizational
restructuring process is aimed at reducing the number of aged employees and increasing the
number of youth employees. The other aim is to eliminate the non-core businesses and outsource
non critical services. The company should conduct recruitment programs at all management
levels. There is need to recruit people at middle and top level as there is large number of aged
population. The Key result areas KRA of this growing aged population should be redefined.
They should be assigned mentoring roles and training the young talent. The company should
identify processes which involves large cost and requires accuracy. The cost associated with

›gnite ›ndustries Ltd.mm mm

Strategic Human Resource Management 2010
those processes can be reduced by using better technologies. All the processes in the
organization should be redesigned to reduce the costs and achieve efficiency (Gauld, 2003).

Finally, the aim of restructuring is to achieve following goals,

m ñuild transparent communication system.

m Ônhance learning through teamwork.
m Creating environment which encourages innovation and creativity.
m Develop customer centric approach at all levels.
m Develop flatter organization structure with focus on learning and knowledge

Recruitment and Resizing

The company should conduct campus recruitment programs in top management colleges to
acquire top talent of the country, which will be able to operate in top level management. The
company should clearly convey the work culture, career path and development opportunities to
the potential employees. The company should try to become µemployer of choice¶ by promoting
the organizational work culture. The company can source the candidates from sources like job
portals, consultancies, campus placements, etc. However we feel that company should primarily
use internal source, like references from employees. This will help in reducing cost as well as
make employees feel that they are important for the company.

The company should use employee reduction; however, large-scale layoffs should be avoided.
The company cannot go for large scale layoffs due to work union pressure. The layoffs should
take in systematic manner. ›nitially we should develop strategy, determine the persons to be
involved in this process, prepare a plan for layoffs, determine the criteria and then execute the
layoffs. The aged population should be reduced gradually. The company should introduce
programs like Voluntary retirement schemes (VRS). The VRS schemes should be introduced on
deferred payment system. This will not only avoid immediate cash out flow but will also create a
win-win situation for both employer and employee (Gibbs, Lee, & Lin, 2008).

The HR professional should identify those top-level employees that are less efficient or not
required in organization. The HR professional should then use counselling for those employees

›gnite ›ndustries Ltd.mm mm

Strategic Human Resource Management 2010
to make them µgolden handshake¶ being offered. This will ensure that the aged employees leave
the company and there is a smooth exit of these employees. The company should carry out
operational restructuring to increase efficiency, control costs and cope with changing business
environment. The company should redesign the workforce size and skills required according to
capacity and location of plant. The company should re-assess all the functions and the manpower
required in that processes. The aim should be at identifying activities where there is overstaffing.
The employees in overstaffed departments should be relocated. The company should encourage
job rotation for these employees (Heugens & Schenk, 2004).

¦ost retrenchment
The change in government has reduced budgetary allocation for the company. This means that
company has manage its present activities with less budget. The company can obtain the extra
money by cost retrenchment. ›n case of lower performance and less support from government,
cost retrenchment will help to conserve the cash flow. The company should identify processes
which have large costs associated with it. These processes should be modified to reduce the cost.
For example, the company can use centralised buying system to procure raw materials and then
pass it on to different units where there is a requirement. A significant cost cutting can come
from human resources. As discussed above, resizing the organization is also one of the ways to
reduce costs. The other ways to achieve cost reduction is through liquidating out dated inventory,
combining functions and asset downsizing (Howard, 2002). The company can outsource
functions like transportation to reduce costs. The company should identify functions which are
less important and outsource them to reduce costs. The company should focus on supply chain
management to reduce storage costs.

The training function becomes important in turbulent time, as there is need to train employees to
increase knowledge base and skills, which are in line with changing environment. Training is
also important as it shows that the company is committed towards the employees. Training
becomes an important option before and after the restructuring process. ñefore restructuring the
company helps the employees to build upon their skills and increase their employability. After
the restructuring has taken place the training is aimed to assimilate the change which has taken
place (Raman & Singh, 2005). Change management is extremely difficult. There is a possibility

›gnite ›ndustries Ltd.mm mm

Strategic Human Resource Management 2010
that employees may leave the organization. The training function helps the employees to reduce
stress. ›t helps to develop leadership skills and motivates them to take new responsibilities. The
employees who are laid off should be treated with dignity and they should be provided with
outplacement services. The outplacement service helps to prevent mental breakdown of the

Improve workplace environment

The employees have disillusioned by restructuring which have taken place over the years. This
has caused increase in stress and burnout. There is a need to improve the workplace
environment. The HR professional should arrange counselling for the employees which feel
higher degree of stress. The employees should be motivated through rewards and their work
should be recognized. The HR professional should try to build a workplace which promotes
learning. The company can introduce innovative workplace practices which have been
implemented in other companies. The HR professional should conduct training programs to
inculcate better stress management.

Long Term Strategies


Reduce number of layers

The company can restructure the various job positions. Wherever possible the company should
try to club jobs. The employees should be given proper training which would help them to
prioritise work and gain assistance from other employees. The company has a traditional
hierarchical, multilayered structure. The company should reduce the number of layers so that this
reduces the bureaucracy involved and helps in faster decision making. ›f we consider the
company to have a pyramid structure with about seven layers, the company should try to bring
this to four or five levels. The employees in the layers which are reduced should be relocated to
other divisions. The position of employees in the new flatter structure should be redefined. The
employees should be informed properly about the need to reduce levels. ›mproper
communication may lead in employees getting de-motivated. The company policies should aim
to include commercialization, corporatization, devolve management responsibilities, shift focus
from input to outcome measurement, strict performance measurement and outsourcing different

›gnite ›ndustries Ltd.mm mm

Strategic Human Resource Management 2010
The restructuring will cause increase in work stress due to increase in span of control and
responsibilities. The reduction in staff also cause increase in work stress. The role of HR
managers becomes important in this case. The HR managers should have greater flexibility and
adaptability to manage greater number of staff. Further, the HR managers should closely work in
liaison with work unions to address the employee grievances. They should also have strategic
orientation and broad knowledge of whatever is happening in the organization (Taplin, 2006).
We propose to reduce the layers in the organizational structure. However, with this management
training and development will gain importance. The employees will have added responsibilities
and training will help them to acquire skill essential to perform that job.

erformance management
The previous restructuring have caused confusion among the employees regarding the areas they
are responsible for. The restructuring will cause clubbing of jobs, moving employees to new
positions, redefining roles, etc. The company has to clearly convey the key responsibility areas to
the employees. The employees should be clear about what they are accountable for. The
company should involve the employees while discussing about the key result areas. The
employees should be encouraged to choose specific responsibilities and they should be hold
accountable for that responsibility. This will make employees feel that they are part of decision
making and increase accountability. The reward process should be aligned to organizational
strategy. The employees who work for company¶s interest and perform well continuously should
be rewarded appropriately. We recommend that company should use high wages and promotions
to reward the best performers. The promotions in this case mean adding responsibilities to best
performers. The company should introduce performance appraisal system which clearly
differentiates the performance of employees and act as agent to bring about positive or negative
reinforcement. The company can use new tools like 360 degree performance evaluation and
balanced score card approach to assess the readiness to future growth. The company should use
360 degree feedback as there is emphasis on teamwork and it promotes participative
management (Tomasko, 1992).

›gnite ›ndustries Ltd.mm mm

Strategic Human Resource Management 2010
Step by Step Implementation

We propose that the company uses following steps to complete the restructuring process and
overcome the problems which it is facing,

m ›dentify the number of aged employees at different levels.

m The best of the employees from this aged population should be retained and promoted at
top management level. These employees should be given mentoring roles.
m The jobs and different positions should be redesigned. Various job positions should be
m Carry out recruitment process to recruit young talent at the middle management level.
The candidates who can handle stress and accept challenging roles should be hired.
m The Performance management system should be redesigned in such a way that the
employees are clear about their Key result areas.
m Ôstablish proper communication channel to inform the employees about restructuring.
m ›ntroduce VRS schemes and the employees who are not required in the company should
be laid off.
m A lay off program should be prepared and it should take place gradually.
m ›mplement innovative workplace practices to reduce the stress level among the
m Arrange training programs to impart the employees skills required to carry out new roles
and manage stress.
m ·se activities like role plays, group discussions, etc so that the need for restructuring is
communicated properly to the employees.
m ›nvolve the employees in the restructuring and the employees parting away should be
treated with dignity.
m ›dentify the organization structure and devise a way to reduce the number of levels to
create a flatter organization. This will helps in faster decision making.
m ›dentify less important functions and outsource those functions.

›gnite ›ndustries Ltd.mm mm

Strategic Human Resource Management 2010
„eans to reduce Opposition to Restructuring

The company has already seen many restructuring process. So, while restructuring the
organization there can be oppositions. However we propose to reduce the opposition by
following ways,

m The need for restructuring process should be communicated as clearly and honestly as
possible. The HR professional should demonstrate that they care for their employees.
m The HR managers should articulate the need of restructuring to the union leaders
explaining them the importance of increased efficiency to survive in competitive market.
m ·se company¶s monthly newsletter to communicate the company¶s direction. ·sing
bulletins during times when there is rapid development.
m ñefore announcing major decisions related to restructuring, the management staff should
act quickly and create good relations with the employees.
m ›t is possibility that employees may leave the company during the restructuring process.
Those employees who remain with the company should be rewarded adequately and
motivated to work further in the interest of company.
m The line managers should identify employees who can take added responsibilities and
promote them.
m Make use of brain storming sessions to foster creativity and communication to generate
employee ideas. The employee who brings good ideas should be rewarded.
m rganize events like role plays to communicate the need for restructuring. The
employees at all the levels should be a part of restructuring process.

Recommendation & ¦onclusion


The company has undergone restructuring a number of times in previous years. Now, while
restructuring the company this time, there may be opposition from the employees. The key for
successful restructuring lies with participation of employees and clear communication. The
company should carry out self analysis to find out the different processes and functions which
required restructuring. The company needs to reduce costs, which it can do through operational

›gnite ›ndustries Ltd.mm mm

Strategic Human Resource Management 2010
restructuring. Also redesigning different processes will help to reduce costs. The important part
is to carry out recruitment process and acquire young talent. The company should promote the
workplace environment and career development opportunities. This can be bundled with offering
higher pays. The aged employees should be promoted to higher roles and they should be given
mentoring roles. The middle level management job roles and responsibilities should be
redesigned. The roles can be clubbed and the employees who are promoted can be given added
responsibilities. The employees in the middle management should be trained to acquire skills
required for new responsibilities.

Finally we conclude that organizational restructuring can be successful if there is participation of

employees and proper communication channel. ›gnite ›ndustries Ltd. will certainly overcome the
problems it has been facing, if the recommendations are followed properly.

›gnite ›ndustries Ltd.mm mm

Strategic Human Resource Management 2010

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›gnite ›ndustries Ltd.mm mm