ChoCo Plant Managers Develop HR Strategies in an Uncertain Organisational Climate. As one Britain’s largest chocolate confectionery companies ChoCo made profits of £530 million in 1997-98. Its shares outperformed the UK food sector from mid 1996. Until 1995 the company had impressed the City with the quality of it managers, its tight focus on core business and its strong commitment to product innovation and brand support. However, in 1993 the company’s image and share price slipped, raising long term doubts about its future. Key economic commentators suggested that the company had out grown the UK but lacked a convincing international expansion strategy and that to secure future growth a bold strategic initiative would be necessary. It is within this uncertain climate that we can explore some of the difficulties managers face in developing HR strategies. The corporate culture of ChoCo is a result of its traditionally paternalistic employment practices. From the late 1980s the company sought to distance itself from the history, adopting what senior managers regarded as a sophisticated solution to the problem of managing employees across several sites. ChoCo had traditionally adopted a common approach to employee relations across the different factories within the company. However, in an attempt to break away from this in 1997 the company decentralised collective bargaining to each factory. Senior executives believed that this would allow the different sites to recast their employment strategies more in line with their needs. Two factories in particular, AssortedChoc and BarChoc, developed very different solution to the challenges they faced. When Doug McCaffer took up his appointment as factory manager of AssortedChoc in 1996 he had been working at ChocCo for 26 years. In his most recent post in the buying office his role had been to ‘introduce competition’. when appointed to his new job the managing director had told him, ‘it’s a shambles, get in there and sort it out’. In the three years before his arrival the factory had lost £7 million. In describing how he had begun to turn around the factory, McCaffer admitted. ‘my basic style is one of hands-on management and I tend to be autocratic rather than democratic’. His first act was to call together the factory management committee to inform them they has six weeks to persuade him to keep them. McCaffer explained that he held managers personally responsible for permitting the situation of high earnings, high overtime and a high level of absenteeism to develop. Initially, he tried to persuade the trade unions to ‘come on-board’ and plan future changes. When this failed he cut the number of shop stewards from 50 to 20 and the number of convenors from five to one. The production process at AssortCo was labour intensive, employing mainly unskilled female workers with seasonal variations in the amount of labour needed. When McCaffer took over the factory there was a mixture of full-time and part-time workers frequently retained even during periods of low demand. Overtime was high, quality was low and there were piecemeal elements in the payment system. Historically, managers had made few attempts to involve employees in decisions. In the opinion of McCaffer the company was a deeply autocratic one and would intervene in any development it did not favour. He was unsure about the extent to which the company was serious in its statements about employee participation. In 1997, after he had informally chatted with staff, he attempted to get the company to spend £500,000 on a new air-conditioning unit for the packaging department. The board rejected this and the best he could do was to prop the door open. although ChoCo formally decentralised pay bargaining to the factories, when he was willing to meet the union demand for a 4 per cent pay increase in 1997 the company refused him permission to make this deal. The company personnel department had taken over when the union called a strike ballot in response. McCaffer had become increasingly cynical about the company for which he worked and the job they were asking him to do. In many respects he was receiving mixed messages from the company. On the one hand it considered itself up to the mark with current progressive management ideas and practices. However, a previous attempt to launch a company-wide total quality management (TQM) programme had failed when the company had been too prescriptive in its approach. McCaffer had become a harsh disciplinarian, had appointed a production manager as his personnel manager, drastically reduced over time working and shortened the contracts and average tenure of shopfloor employees. In contrast to AssortedChoc, the BarChoc factory was a high technology plant employing permanent (mainly male) skilled workers. The key element that triggered change was a threat by the US distributors not to renew the company’s contract due to the poor quality of some products. In response the factory manager, Jim Graves, introduced the Excellent Manufacturing Programme and sought to develop new employee involvement programmes and the unions themselves ran a quality group on health and safety issues. Individuals tried to solve production problems in numerous newly created problem-solving groups. Although Graves himself had become firmly committed to a high-involvement route, he faced several problems. The first was in convincing the company of his approach, a second problem occurred when the company introduced its company-wide quality programme two years after the factory’s own. The company’s scheme concentrated on management’s processes rather than shopfloor involvement. Graves received a deputation from his manufacturing managers who explained that having both systems was too much, with production variances becoming erratic. As the share prices fell in the city of London in 1996, as described at the start of the case, a third problem developed. The board issued immediate action to reduce costs. This meant an immediate cut in 78 jobs at BarChoc. Graves found this very difficult to explain to the trade unions because it was not being forced on them directly by the performance of competitors but resulted from internal financial pressures. Thus far the unions have supported Graves in the changes he had introduced, but how could he retain their trust and a good working relationship? Graves wondered whether he would have to get tougher with the unions and follow the line set down in other factories. Discussion Questions 1) Give a brief summary of what you would expect the HR strategies in each of the two factories to be like. What working patterns and terms and conditions do you think are on offer? How do you think each factory organises pay? How do they manage commitment? What roles would you expect first-line managers to be playing in each of the factories. 2) What does this tell us about the importance of management style in how HR policies are selected and developed? 3) What insights does this case give us into two of the ideas currently very popular with managers: decentralisation and enpowerment? 4) What do you think it is like to be a manager in this company considering the question of appropriate HR strategy? What do you think it might be like to be a line manager in the two factories? 5) In developing HR strategies, who would you say was exercising most power in ChoCo? Do you think this would be a representative picture of other companies.