CASE1 by keralaguest



         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.

To top