Issues

Naza Automotive Manufacturing lays off 300 staff.

Naza Automotive Manufacturing (NAM) has laid off 300 workers at its assembly

plant in Gurun, Kedah. The lay-off at NAM involved 225 staff members as well as 30

from the NAM Committee, with the remainder being administration staff.

Causes

1. Economic Downturn

The ringgit depreciation as a symptom of declining export revenues, capital outflows,

and worsening investor sentiment toward Malaysia. This scenario proved that the

Malaysian economys is heavily dependent on commodities, especially petroleum and

palm oil. These two commodities are the main exports from Malaysia, with severe

negative ramifications from the global price of oil plummeting, as the nation depends

on oil for about 30% of its revenue.

2. Good and Services Tax (GST)

Upon GST implementation, Malaysians have taken their bills seriously and perhaps

now noticed there is a service charge on their bills. Vehicle sales in Malaysia fell

nearly 33 per cent in April following the introduction of the Goods and Services Tax

(GST), in a further indication of the effects of the new consumption tax on the
 economy. Combined private and commercial vehicle sales dropped from 67,314 to

45,187 during the space of a month, with the main variable being the new tax that

replaces the previous Sales and Services Tax (SST).

Effects

1. Former workers are jobless.

The workers are jobless. It is hard to find job these days due to the economic

downturn.

2. Emotional impact on workers

People experience many emotional reactions to a layoff. Indeed, just the word

layoff generates waves of emotion for many people. These are some of the

emotional impacts:

i. Sadness and depression - A layoff can shake our feelings of self-worth,

personal security and personal control. In addition, people may have to

give up activities or certain roles, have fewer social contacts, face

disruption in daily routines, and find themselves separated from roles

and rewards that give meaning or purpose to their lives. These self-

doubts and changes can lead to feelings of helplessness and depression.

ii. Shock, Disbelief and Denial - These feelings are frequently expressed

in the thoughts such as: This cant be happening; There must be some

mistake; This is just a bad dream and everything will be okay when I

wake up.

iii. Shame - This feeling is often related to beliefs we have and

assumptions we make about our situation. Sometimes shame relates to

the belief that we may have failed as a provider, parent or person. It

 may result from the view that our job, as an indicator of social status

and respectability, is now lost.

3. Workers Loss income

The people who lose jobs also lose incomes, so they spend less. people worry

about obtaining income, paying the bills, and readjusting their household

budget to account for their new economic reality. Once a plan and new budget

are in place, concern shifts to the long-term economic impacts of the layoff.

4. Direct Costs

One of the things a business owner considers when they need to save money at

a company is laying off staff in anticipation of saving money on payroll and

benefits. However, the company often ends up incurring costs as a result of the

layoff that minimize the savings. For example, the company may have to issue

severance pay to outgoing employees, pay overtime wages to remaining

employees and use placement services for temporary help.

5. Sales drops due to decrease customer loyalty

Laying off employees can have a significant negative effect on customer

retention. Every customer is an asset to any company, and the employer must

find ways to retain each of them. When a company lays off its employees it

sends out a message to customers that it is undergoing some sort of crisis.

Fewer employees could mean delays in the delivery of goods and services,

further alienating customers, therefore the sales of the company dropped.

Findings

From The Rakyat Post news dated 27 August 2015 it stated that Naza Automotive

Manufacturing (NAM) laid off 300 of its employees in a cost-cutting exercise. In an e-mail to

The Rakyat Post, Naza Group corporate communications said that it had undertaken

the exercise to rationalize the staff strength due to the current poor economic situation that has

seen the ringgit, domestic and export demands severely affected. It was also stated that the

group would continue to address measures of cost efficiency, without compromising

its quality of service. According to the programmers itinerary, those laid off consisted of 255

staff, 30 from the NAM committee and the rest from the administration.
Strategic Management :

SWOT Analysis of the Financial Crisis

A SWOT (Strengths, Weaknesses, Opportunities, and Threats) analysis, long used by

businesses large and small, is particularly relevant in periods of financial crisis and down

economies. SWOT evaluations often provide a snapshot of the "state of a business," and the

basis for a "road map" to help management plan future direction.

Strengths

The financial crisis identified some surprising strengths in many businesses. Down economies

reward companies that exhibit creativity, expense control, boldness, fearlessness, and

confidence. Companies unafraid to introduce new products, manage (or raise) prices, upgrade

customer service, and conserve capital often uncover strengths they didn't realize they

possessed. Common strengths that are valuable during a financial crisis include fair prices,

quality products, superior customer service, and a brand that consumers trust.

Weaknesses

SWOT identifies both internal and external weaknesses. Unfortunately, during a financial

crisis, internal weaknesses are not only exposed, they are often magnified. Among the most

common shortcomings during down economies are marginal customer service, product

quality deficiencies, and lack of superior financial controls. Lack of "staying power" has led

to the demise of numerous entities during financial crises. Common weaknesses during a

financial crisis involves having too much debt and too few cash reserves. However,

identifying weaknesses also offers companies the ability to address and correct issues that

could pose survival challenges during a financial crisis.

Opportunities

A SWOT analysis points out external opportunities, sometimes hidden, during financial

crises. Opportunities to target a different group of customers, sell new products and services,

and open new geographical markets often "magically" appear during down economies.

Consumers still need products and, when some of their former sources disappear, they will

turn to other companies to fill the gap. Reaching out to potential customers with profiles

different from those historically consistent demographics can also present both a short- and

long-term opportunity. Examining new geographic markets, domestically and internationally,

often replaces revenue lost during a financial crisis.

Threats

Down economies produce multiple threats to businesses, large and small. Identifying and

minimizing these roadblocks is critical. Inability or unwillingness of consumers to purchase

your products and services during a financial crisis is the most dangerous threat.

Understanding the real cause of this threat can help companies address this challenge and

survive. As employees are laid off or downsized, these consumers no longer have the

discretionary income (unencumbered dollars that people can spend on items not classified as

necessities) to purchase many products. Those workers that still have jobs become reluctant to

spend, as they worry they may suffer layoff or downsizing in the near future. Conserving cash

for emergencies becomes their primary concern. Changing your pricing structure, identifying

additional customers, and opening new markets can help meet and defeat this threat.
Expert Insight

SWOT analysis, used by many companies since the 1970s, is particularly beneficial during a

regional, national, or global financial crisis. A SWOT analysis showed that, along with the

many threats (external) and exposed weaknesses (internal), the financial crisis also forced

businesses to acknowledge their strengths (internal) and identify new opportunities (external)

to help them, not only to survive, but to prosper.

Chapter 3: Solution

3.1 RECOMMENDATION AND SOLUTION

Naza Manufacturing Company represented stated, our priority and focus is to assist and

support where we can, those affected, to ensure that their welfare is well managed and taken

care of. We have provided a separation package to enable them to plan their future

endeavours.

Meanwhile, we shall continuously address measures of cost efficiency without compromising

our quality of service to our customers.

3 WAYS TO HELP EMPLOYEES YOU'RE ABOUT TO LAY OFF

EVEN WHEN YOU HAVE TO LET PEOPLE GO, YOU CAN MAKE THE TRANSITION
SMOOTHER FOR EVERYONE.

Letting go of employees is never easy, but having a good outplacement plan can help make

the transition smoother. Instead of a one-time cash payment, outplacement services allow

displaced workers to utilize services like career counseling, interview coaching, and resume

advice, all of which allow the organization to help them get back on their feet and move

forward.

I. OFFER CAREER COUNSELING

Its great to help displaced employees network and find opportunities, but companies should

also make sure they have the tools to pursue those opportunities. In addition, many displaced

employees may feel overwhelmed and unsure of what their next step should be.
Offering career counseling can be a good way to mitigate those fears and help workers figure

out their next move while also providing insight into creating resumes and handling job

interviews. To avoid awkwardness, consider outsourcing the counseling through a third party

or offering a program online.

II. HELP WITH NETWORKING

Employees who have been working the same job consistently or are new to the

workforce may not have developed an extensive network. Helping them with

networking can make their job search easier .

This could be anything from offering advice on how to network to connecting

displaced employees with alumni willing to provide mentorship. Adding technology

solutions to your outplacement plan can help with this as well, allowing individuals to

keep their contacts in one places and connect with a larger network.

In addition, hosting a networking event is a good way to connect displaced employees

with potential employers, as well as assisting in setting up LinkedIn pages.

III. EXIT INCENTIVES

This option envisions offering employees incentives to leave the organization in the

form of severance or early retirement packages. This strategy permits better targeting

of jobs and units, it recognizes employees for their past commitment to the

organization, and helps retain the remaining employees. On the other hand, exit

incentives are expensive, create future expectations and an entitlement mentality, and

discourage workers from leaving the organization in the future.

3.2 IMPLEMENTATION AND JUSTIFICATION

Naza Automotive Manufacturing lays off 300 staff :How to implement and achieve it.

After assessing the magnitude of the economic downturn and likely duration of the strategy to

be implemented, evaluating the costs and savings, and considering any legal ramifications, an

employer next must decide on what strategy(s) will best address its situation.

Communicate with employees to gain their support and obtain their ideas

No matter what strategy an employer utilizes, results will hinge on the level of

communication with the workforce. As early as possible after the necessity for cost-saving

measures is identified, educate employees about the state of the company and possibly

about what alternatives to layoff are being considered. Ideas about what could shave

expenditures should then be solicited from the employees through surveys, emails, focus

groups and interviews. Not only do employees often offer innovative ideas when their

jobs are directly implicated, but morale will be bolstered by managements display of

confidence in the workforce. The stronger the communication process, the less likely that

employees will choose to leave the company.These how we can related with the

recommedation of the offer career counseling,which employer communicate with

employees to gain their support and give the ideas.

3.3 DESIRE IMPACT

Layoffs Affect to Employees and Employers

Its not only employees who suffer when there are layoffs off but the firms responsible for

handing them the pink slips can take a beating, too. The people who lose jobs also lose

incomes, so they spend less. Even workers who dont lose their jobs but are simply fearful of

layoffs are likely to cut back on spending too. With less aggregate demand in the economy,

sales fall. With smaller sales, companies lay off more people, and the cycle continues.

The layoff of one individual in a company may appear minor, but it often causes a ripple

effect in an organization where employees work together to achieve a common goal. A layoff

introduces a missing link in the team, which affects the organization in several ways. The

company faces a greater challenge when layoffs occur.

Direct Costs

One of the things a business owner considers when he needs to save money at a company is

laying off staff in anticipation of saving money on payroll and benefits. However, the

company often ends up incurring costs as a result of the layoff that minimize the savings. For

example, the company may have to issue severance pay to outgoing employees, pay overtime

wages to remaining employees and use placement services for temporary help.

Increased Turnover

Business owners who execute layoffs in their companies frequently see additional employees

resign from their jobs. Layoffs can disillusion top-ranking employees who then opt to leave

the company. Watching a colleague leave involuntarily could cause an employee to consider

job offers from other companies seriously or to actively seek new job opportunities.

Decreased Customer Loyalty

Laying off employees can have a significant negative effect on customer retention. Every

customer is an asset to any company, and the employer must find ways to retain each of them.

When a company lays off its employees it sends out a message to customers that it is

undergoing some sort of crisis. Fewer employees could mean delays in the delivery of goods

and services, further alienating customers.

Emotional Distress

The person who is laid off suffers the most distress, but remaining employees suffer

emotionally as well. Because the layoff disrupts the status quo, employees have to pick up

extra responsibilities and form new work relationships, which can cause stress. The

productivity level of employees who work in fear is likely to go down. The situation is even

more damaging to the company when the person who has lost his job stays around until the

date of termination of his contract.

3.4 CONTROL AND EVALUATION

I. Ask employees for ideas.

olicit suggestions from staff about how to cut costs and improve productivity. Even if what

you save doesnt meet your shortfall expectations, getting employees involved can ease

insecurity and promote solidarity.

II. Cut out the extras.

Freeze additional hiring and cut bonuses, raises, unnecessary travel and overtime. Postpone

non-vital equipment upgrades. Nix office perks like bottled water and seasonal office parties,

or find cheaper alternatives.

III. Offer extra days of unpaid leave.

Extra vacation time is something many employees will find agreeable, even if its unpaid.

IV. Exchange workers with other employers.

Larger companies do this within their own umbrella of subsidiaries. Smaller firms can choose

partner companies or vendors. Ideally, the host firm would pay employee salaries and get the

use of a skill set like marketing that it might not have on staff. The mutual benefits are a cross

pollination of skills, retention of employees and temporary wage relief.

V. Consider wage or benefit cuts.

Such moves go over better when they start at the top. Some experts say it can help pad the

blow if senior management takes a bigger cut than the rest of the company. You can also offer

buyouts for employees with longer tenures.