Contents

1. Introduction .................................................................................................................................... 2 1.1 1.2 1.3 2. 3. 4. 5. 6. 7. Company Background ............................................................................................................. 2 Aim .......................................................................................................................................... 2 Scope ....................................................................................................................................... 3

HR implications of the CEOs announcement ................................................................................. 4 OHS concerns .................................................................................................................................. 5 Industrial action and the Union ...................................................................................................... 6 Maree resignation ........................................................................................................................... 7 Recommendations .......................................................................................................................... 8 Conclusion ....................................................................................................................................... 9

Reference .............................................................................................................................................. 10

1. Introduction
The current tendency of organizations to restructure and ultimately to downsize has a major negative impact on the organizations themselves, on their surviving and terminated employees, on the industry, and finally on society as a whole. Australian utilities industry is one of the industries that is affected by economic downturn and has to find an appropriate solution to survive. In order to overcome this tough economic climate many organisations started to react and implement different action plans and follow a variety of processes to survive and keep themselves operational in the market. One of the most absorbed decisions is downsizing. As defined by Sahdev and Vinnicombe (2000) downsizing is a technique can be used in companies that are thriving, especially when it is applied as part of a pro-active strategy to improve and enhance corporate effectiveness. This report is going to observe a case study of Australian utilities organisation called Utilities Co..

1.1

Company Background

Utilities Co. is an Australian large and previously state owned company. However, the company is facing an economic decline and big question mark about its ability to survive in response to the increasing competition in the Australian market. As a result, the CEO of Utilities Co. had an individual decision and outlined an action plan that in his opinion should help the company come out of this situation stronger and more competitive than it has ever been. The CEOs plan was to cut of 120 jobs in the company and accordingly to get rid of this significant staff number. From his vision he aimed to lay off expensive and long serving staff that he regarded as dead wood or underperforming staff with little potential for improvement or growth. They are seen to be obstacles that are impeding the companys capability to survive in the testing economic times and blocking Utilities Co. from being more efficient organisation. Although, that was the real action plan to be taken by the company, however, this image kept hidden from the companys staff. The information that was really disclosed to the employees was written in the e-mail sent by the CEO explaining that the redundancies were to be voluntary. It is a huge challenge for a giant company as Utilities Co.

1.2

Aim

The intention of writing this report is to verbosely demonstrate the situation being faced by Utilities Company, additionally, from the perspective of human resource management the report should provide a strategic HR report which can be used by the company managers and decision makers to solve or at least reduce the impact of the problems evident in their organisation. Moreover, the literature provided in this report can be used by students to help them develop their skills in the use of HRM principles, theories and models in the analysis of a typical business situation that human resource provides. The main purpose of this report is to critically analyse the current situation, illustrate and identify the main reasons of the problems, and try to recommend more efficient solution. The case study analysed and illustrated in this report could be used by many utilities companies around the world that might face the same business situation in this economic crisis era.

1.3

Scope

This report intends firstly to provide a complete study by critically analysing the HR implications of the CEOs announcement to lay off 120 staff and describing extensively the equity issues that were raised by the redundancies. Secondly, in response to the announcement the report will explain the main OHS concerns for the Staff in general and Maree Davis, HR Manager of this company, in particular. Thirdly, critically evaluating the impact of industrial action on the organization and identifying whether an alternative approach the union could have adopted to protect jobs. Finally, the report will discuss Marees decision of handing her resignation from the HR position and will try to figure out an alternative more effective way to deliver the layoff decision to the employees and managers.

2. HR implications of the CEOs announcement

When the announcement ran on the front newspapers pages it was really more shocking for the human resource management than the employees themselves. Although Maree Davis the HR Manager has been informed of this decision one week ago, still reading the headline Utilities Co. is slashing 120 jobs took her breath away. Moreover, what makes Maree occupies the worst situation in the company is the truth behind the announcement and there is a second phase of breaking off 120 roles in the organisation will take place afterwards. The truth of downsizing a quite significant number of employees out of the company and the vague information been disclosed to the employees are building up more and more pressure on her shoulders. The companys atmosphere is becoming more painful by time. Consequently, a huge number of employees started to stand in front of the HR department's workforce planning team. This number was containing managerial staff who had not fared well in the past two rounds of annual performance appraisals, as well as staff in business areas that were not regarded as core business units. What makes the situation worse is the short time Maree has been given to make comprehensive analyses of the organisations cost structure and skills profile, also to prepare her team for the challenges that waiting for them as well. And that is what Kalimo (2003) argued when referring the HR values firstly to the focus group participants related to proper treatment of staff made redundant, through the provision of outplacement advice and facilities. Secondly, other values deemed significant were integrity, honesty, and being honourable in dealings. In other words, at this critical stage Maree should keep in mind that many focus group contributors might pointed to the importance of trust, clearness, and also mentioned being forthright and fair. As a human resource manager Maree has the essential role to go through this tough stage with the least losses possible. As a new HR manager who has been employed by Utilities Co. only one year ago this was the biggest challenge in her life. As Roche, Teague, Coughlan and Fahy (2001) pointed that the HR values and formal company HR policies along with the responsibility to ensure that managers in general operated in a fair and decent manner in responding to eonomic situation pressures are being a reflection of an area identified for HR leadership. What was really surprising about Marees atitude is although she was aware of the whole plan, however, she did not think forward of phase two worst scenario and its implications. The main tasks that she should achieve are firstly to find a way to identify 120 redundant jobs, including one third of middle management positions, as well as to identify her own staff. One more task is to keep up business running as usual in addition to support her staff as well as to troubleshoot across the organization. Finally she has to cope with all the abusive e-mails that the HR department were receiving in that period as she bore the brunt of them. The main goal of the CEOs announcement is to get rid of expensive and long serving staff that from his perspective is not willing to change their ways of thinking and working with little potential for improvement or growth. He gave himself the excuse to lay off that number

of employees who as he regarded are restricting the organisations improvement and his future vision of Utilities Co. in future. Additionally, he was intending to shock staff into action by announcing a clear and public statement of cutting off 120 jobs as a first phase of the strategy. However, the most of 52 expressions of interest in voluntary redundancies that were received are from expert staff in project teams who were highly educated and have good track records that could easily get jobs elsewhere, even in an increasingly depressed labour market. Maree had argued that, from skills profile point of view, it was unwise to let these staff go. They were the current stars of the organisation and future workhorses who would ensure ongoing productivity and progress in the company. In contrast, not many of the middle managers and senior administrators who the CEO had hoped would apply for voluntary redundancies actually did. The demographic analysis profile of staff that had left on voluntary redundancies made by the equity officer proved that the majority of the staff on that list is 50 or older. Accordingly, this would easily drive the company into serious troubles with the Human Rights Commission due to the fact that laying-off this significant number of older employees out of any organisation might be considered as a discrimination action. According to Quinlan (2007), 2001 Regulations specify detailed requirements in relation to workplace consultation, for instance, workgroups represented by OHS representatives or committees should take into account the diversity of employees and their work including pattern of works in terms of the representation of part-time, short term or seasonal employees, working hours of employees including shift work, the attributes of employees including age, gender, special needs, ethnicity, and geographic location. That means, when looking to the Utilities Co. case Maree should be aware of these regulations in order to perform different types of work, taking into account the nature of hazards at the work place, and the interaction of the employees with their peers and the employers as well. Finally, when practicing on OHS Consultation in situations where changes are made to work systems, premises, plant and substances that could affect safety and health, thus, would ensure avoiding inequity by organisations.

3. OHS concerns
One of the mainly shocked and affected team by the announcement and the subsequent events in the organisation was the OHS team. As Gandolfi (2005) defined Occupational safety and health (OHS) as an area where to ensure the welfare, safety and health of individuals or employees at the workplace while undertaking work activities. In Utilities Co. situation, the OHS consultants were unable to deal with the invasion of distressed staff members. Their major concern towards employees was the rise in psychiatric illnesses, such as depression and anxiety disorders, for instance, one member became physically aggressive towards his colleagues. In addition, the OHS responsibility helping out the remaining staff who were unable or unwilling to adapt to the different workplace conditions. One more particular concern was towards the human resource manager, Maree Davis, the manager who has to

deal with the whole situation and to stay away from stress with all this pressure by keep in mind that Maree could not remember the last time she had slept through a night. Downsizing and organisational restructuring mainly entail a number of changes to work processes due to changes in job descriptions, smaller number of staff, the reallocation of task loads, multi-tasking skills challenge, and changes to supervision arrangements. As Williams (2000) explained that OHS legislation in Australia contains wide range of general duty provisions and participation or consultation requirements. However, a number of these provisions, for instance, would seem to impose obligations on employers undertaking downsizing or restructuring where these decisions cause changes to staff levels, task structures and work processes. In other words, Maree as an HR manager in Utilities Co. should consider these legislations when she is dealing with the employees feelings and emotions. The study observed by Williams (2000) can be used by Utilities Co. managers to apply a number of recommendations to meet the challenge of downsizing or restructuring. First, the organisation should amend the present general duty provisions in OHS legislation to more explicitly express employer responsibilities regarding certain work arrangements and major workplace restructuring such as downsizing and to keep a record of their compliance with these provisions. Second, the OHS team in Utilities Co. should develop a guidance note on organisational restructuring or downsizing to work out these obligations such as risk assessment, consultation, training, supervision and staffing workloads to examine how they can be met and make it as a reference to restructuring. Third, protocols should be developed for inspectors to monitor compliance by employers with their duties when undertaking redundant downsizing. Finally, Utilities Co. OHS department should dedicate more attention to analyse the effect of redundant downsizing or organisational restructuring on the information used to modify interventions and claims statistics by both prevention authorities and compensation.

4. Industrial action and the Union

As expected, a successful application had been lodged with the Fair Work Australia (FWA) for protected industrial action makes the union to send a letter to Utilities Co. informing them of the first spark of complaints wave. As Ehrlich and Russell (2005) generally viewed trade unions as an apparatus of employment regulation that provides employees a power and some voice over determining the circumstances of the employment contract. It is substantial to mention that many circumstances that were being brought by the union and industrial action in the meanwhile resulted in making the CEOs position extremely undesirable. First, the agreement of enterprise bargaining (EBA) was about to expire and more critically the union had argued that the new agreement directly related to the redundancies. Secondly, with the increasing complaints from not only the union that is inundated with employees applications, but also from the media and state politicians, as this company was previously state owned company. Thirdly and finally, the negotiations in the meeting with the union for a new EBA

which was overshadowed by ongoing industrial action were suspended indefinitely. All of these actions were sufficient reasons to get on Utilities Co. CEOs nerves and stay in everlasting conversation with the company's lawyers. In industry field and business life job termination is neither easy for the employees and their families nor cheap for the organisations as it is considered a costly business decision. Furthermore, tensions run high between management staff and trade unions over terminations and many companies resort to expensive methods to get rid of redundant workers. For example, early retirement packages may cost employers several years for paying wages in addition to mandatory severance pay obligations. Big organisations like Utilities Co. must make efforts to avoid layoffs and find other workarounds instead, some alternatives are what have been provided by Cheng and Tsai (2005) studies, such as reducing working hours, suspending renewals of temporary job contracts, restricting overtime, offering early retirement, and suspending recruitment. These actions might help in receiving affirmative reply by the employees and halting business operations. Additionally, companies should keep the opportunity and make efforts to reemploy those who laid-off within a couple of years. In other words, labour unions, which usually considered as a guardian to defend employees, shall become the major stakeholder in this downsizing strategy. This means that intervention from labour unions in Utilities Co. decision would affect the relationship between a firms responsible downsizing strategy and performance.

5. Maree resignation
While the adopted purpose of redundant downsizing wave by the CEO is meant to get rid of undesirable employees and increase competitiveness, however, the critical situation the company ended up with is raising many questions about what has been going wrong and what procedure could be adopted to result in better consequences for both the employees and Utilities Co. as discussed before the human resource managers role and tasks in this process is vital. By revising the HR managers action and response to the layoff decision many aspects could be challenged. This section will analyse the human resource managers attitude through the whole process and try to provide more efficient ways to follow in such situations. First, Maree was aware of the whole procedure from the first beginning and despite the autocratic attitude been taken by the CEO in announcing the decision, still Maree was too late to raise her own argument. As Labib and Appelbaum (2012) argued, downsizing could cause serious negative consequences not only for the employees who lose their jobs, but also for the employees who survive the restructuring process as well. So the first step should be good planning that outlines how to ensure fair treatment and equity, avoid vagueness and reduce the possibility of conflict and misunderstanding in the workplace. On the contrary, the Utilities Co. case is showing that the main purpose of the layoff was kept behind closed doors. Moreover, the employees were uncertain of what was going on and confused in addition to the fact that the 120 redundant jobs were already identified in a way not fully regarded to their skills and performance.

Secondly, redundant downsizing affects people lives and their livelihoods. Thus, besides clear and honest communication it is very important that the company tries to achieve this process as soon as possible. That means, waiting four months to hold the first meeting with the equity officer is increasing the detrimental effects the employees may suffer from. The layoff decisions should be properly documented and reviewed for compliance with personnel policies and non-discrimination policies and meet the standards of agreement with a trade union. Cascio (2009) advised that Employee representatives may be elected solely for the purpose of early consultation about selected redundancies or more efficiently they could be part of an existing elected consultative body. However Maree didnt raise any of these suggestions, in that period of time Maree as an HR manager should properly carry out the process of consultation and negotiations with a view to reach agreement with the trade union and industrial relations on key issues which they are facing. Finally, after all of the above inappropriate actions revealed, Marees resignation decision was predictable. Phase one did not overcome operational difficulties and resulted in many frustrating outcomes. For instance, some members became aggressive, feeling unsafe and lost their trust in the company. Additionally, the uncertainty and dishonesty in communicating the layoff decision to the employees and managers led to not estimated results according to the CEO intention. Instead of getting rid of long serving staff, overall 52 remarks of interest in voluntary redundancies received were mainly from expert staff that were highly educated and have good track records. As per Matree they were the current stars of the organisation that would ensure constant productivity and progress in Utilities Co. Furthermore, the possibility to roll out the redundancies list that has the majority of fifty years or older staff most probably could raise many problems with Human Rights Commission in terms of customer satisfaction or employee morale. These aspects were more than enough for Maree to hand in her resignation.

6. Recommendations
The economic recession most of the time would force the organisation to take new strategy path to recover the loss resulted after the economic crisis. The solutions provided in this report are not perfect but could be considered as the best choice in such situation. Downsizing is one of the recommended solutions provided by the report in order to reduce costs and increase competitiveness. Although there is no formal theory to suggest the extent to which layoff decisions reduce CEO utility, however, the report offered different ways to achieve the goals from downsizing. Moreover, the report linked between the successful lay-off processes with the necessity of applying equity in organisational downsizing. The studies observed by Brookman, Chang and Rennie (2007) documented that the empirical literature linking layoffs decision making to managerial compensation and firm performance by showing that companies equity incentives are linked to comparatively routine operating decisions such as layoffs, and not just to less common decisions involving voluntary liquidations, acquisitions, and seasonal equity offerings. However, lay-offs do not usually improve the financial situation of companies and fail to achieve the desirable goals such as increasing competitiveness and reducing cost. Accordingly, the results conducted by Knox (2009) are showing the weak relationship between downsizing and financial improvements and the negative correlation between stock price movement and announced layoffs. Instead, financial

measures such as return on equity, return on assets, ratio of market to book value equity, sales on total assets show that organisations that adopted the route of downsizing do not show financial improvements. Consequently, these results should drive managers to think twice about downsizing decisions and try to find alternative ways. Firstly, some recommendations may include regular attrition, early retirement, wage cut, working-hours reduction or retraining would reduce the necessity of laying staff off. Second, try to figure out if outsourcing is being considered and find out if staff within the organization can present a competitive plan. Third, ensuring that the contracting agency provide the same benefits and salary to staff. Finally, making sure to let people at all levels understand not only what is going on but also get input and feedback from all levels. To conclude, it is clear that the role of HR is not the same in all organisations; and making the HR department involved in decision making instead of just receiving orders would help develop a clearer picture and better results.

7. Conclusion
This study analysed the adopted implementation strategies of Australian Utilities Company to endure the economic crisis and tough competition Utilities Co. has gone through in that period of time. The report demonstrated the redundant downsizing process Utilities Co. went through and explained the challenges that Australian companies would experience in the middle of economic crisis waves. This report as a strategic human resource management report tried to provide sufficient literature and beneficial steps for decision makers and HR managers in order to minimize the detrimental effects resulted from organisational restructuring or downsizing. Additionally, this study outlined the circumstances that affect the downsizing process that could arise internally from changes in employees psychology in response to the new modifications in workplace besides the external factors such as Australian legislations and industrial actions. The report firstly analysed critically the implications of HR management staff shown after the CEOs announcement and the circumstances attached to the situation in terms of employees morale, workplace ethics, and equity issues. Secondly the report illustrated the main concerns that arose by Occupational Health and Safety and explained its role in that critical situation. Thirdly, through this research, the study outlined the internal and external factors that were playing an effective role in achieving the CEOs business objectives. Finally, the report provided some recommendations many companies might follow in order to minimize the undesirable results of downsizing and at the same time achieving the companys goals. Redundant downsizing or organisational lay-off is one phenomena provided as business solutions to consider alternate routes to achieve organisations targets such as social welfare, cost reduction and productivity growth.

Reference
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