Introduction
The King Company is a relatively small manufacturer that provides various components for the computer industry. King focuses on a specific market niche, and hence, it may not be significantly affected by the downturn in the industry. However, the company has a narrow customer base, with eighty-three percent of sales coming from the organization. Such an approach to marketing and distribution increases the potential risk of a rapid decline in demand. Moreover, the biggest customer is affected by the current market downturn. Therefore, King considers decreasing its expenses as the primary objective. The company also utilizes a relatively unique approach to recruiting as it focuses on hiring people located in the United States, unlike other companies in the industry. Even though King has an experienced staffing team respected by the employees, its approach to human resource management (HRM) may be considered ineffective. Consequently, the company regularly faces a wide variety of related problems, including frequent HRM errors, lack of mutual trust, equal employment opportunity issues, and even fraud. It may be critical to reevaluate the company’s approach to HRM and develop a comprehensive strategy in order to address the issues mentioned above.
Reducing Costs
As the King Company is expecting a significant decline in demand for its products, the upper management has decided to reduce labor costs by approximately ten percent. Labor and material costs are the most noticeable expenses, which companies frequently try to reduce. However, a decrease in labor costs may have adverse effects on the productivity and performance of employees. Furthermore, some sources state that other categories, including energy costs and logistics, are frequently not considered (Jusko, 2011). It may be highly beneficial to analyze current expenses in the King Company in order to identify if there are other options to reduce costs. In addition, it may be possible to minimize labor costs by decreasing the working hours. Smaller demand is expected for King’s products, and hence, it may not be rational to continue the work at full capacity. Shorter working hours may allow decreasing labor costs without significantly damaging staff morale and providing opportunities for employees to have more rest or find a secondary source of income.
The Role of Job Analysis
Job analysis is an essential part of HRM and particularly during the process of staffing. Some sources state that job analysis is conducted to accumulate information regarding the requirements of a certain job (Alanis Business Academy, 2012). Such information can be used to develop a job description, which is critical for potential applicants. However, job analysis is also highly beneficial for the organization, as it identifies if the job fits the current strategy and vision (Juneja, n.d.). Comprehensive job analysis may significantly contribute to the improvement of staffing. Moreover, it may be utilized during the hiring freeze as it may provide valuable information regarding the importance of certain positions. Such knowledge may be utilized to maximize the efficiency of force reduction conducted as a cost-saving measure. It may be rational to focus on the retrenchment of workers who are not involved in the processes that maintain the main activity of the company. The same principles may be applied during the assessments related to the reduction of working hours. The staffing team of the King Company should be able to redirect their efforts on achieving these goals due to lack of hiring activity.
Downsizing Consequences
The implications of downsizing may impact the organization in various dimensions and on diverse levels. Nevertheless, the power of influence of these consequences depends significantly on the decisions taken during the process of downsizing. One of the most essential and adverse short-term implications is the potential loss of valuable labor. Therefore, it is vital to thoroughly assess the role of each employee in order to mitigate that factor. Long-term consequences may include the need to refill several jobs once the industry recovers. Moreover, downsizing may have negative effects on the company’s image in the labor market. As the King Company already faced problems related to low employee satisfaction and paper reports, it may be critical to address the issue with particular attention.
Ethical Issues and EEO Concerns
Downsizing may be closely linked with a number of controversial ethical dilemmas. The value of justice and equality may conflict with the financial interests of the company and rational decision-making. Some sources highlight that the moral mission of an organization is to provide equal opportunities for all employees (Marshall, 2010). Therefore, it is essential to treat all workers equally regardless of their background, culture, race, age, or gender.
Conclusion
The King Company faces a number of difficult circumstances that require complicated and responsible decision-making not only in HRM but also in other fields. It may be critical to evaluate the company’s core principles and strategies in order to identify potential ways of reducing the costs. It is also important to use the job analysis information to decrease working hours and conduct downsizing with minimal negative implications. Conclusively, a multi-factor approach to the development of cost-reduction strategies may be the key to successful recovery from the industry downturn.
References
Alanis Business Academy (2012). Human resource management: Human resource planning.
Juneja, P. (n.d.). Job analysis and human resource planning. Management Study Guide.
Jusko, J. (2011). Cutting costs without cutting people. Industry Week, 260(4), 30-n/a.
Marshall, P. (2010). Taking action on diversity. The Canadian Manager, 35(1), 17-18,3.