POINT OF VIEW
The group decided to take the perspective of a consultant firm hired by the General Manager of Master Print Inc. (MPI).
In October 1990, an upward minimum wage adjustment of P17 roused a nationwide strike that caused traffic queues all over Metro Manila. Some offices, including MPI, closed earlier than usual to keep employees from getting caught on the road. However, it was later reported how four MPI employees who went to the beer house after office hours got into a fight while arguing over the fairness of MPI’s compensation policies. Mr Villanueva, MPI’s general manager, has to re-evaluate MPI’s existing wage incentive system to address the tension arising amongst his employees allegedly due to inconsistencies in the implementation of MPI’s compensation policies.
AREAS OF CONSIDERATION
The consulting firm has specified several key factors for Mr. Villanueva to consider:
1. The national economy’s performance in the 1990’s. This is to recognize that his workers are also members of, and thus are affected by, an entity larger than the company; that is, the country. 2. The possible psychological impact of a wage increase on his workers. Reports by popular media on wage and salary compensations may have influenced the employees’ mind set. 3. The basis for MPI’s current compensation system and how its implementation affects interactions within the firm. 4. The staffing policies being followed by the firm in recruiting selecting, training and rewarding its employees. 5. The working relationships created by the company environment. (e.g. its culture and policies)
The consulting firm made the following assumptions regarding the Master Print, Inc.’s case:
a The economy is not conducive for the wage increase given the fierce objection from the strikers. b Master Print, Inc. is capable of implementing necessary adjustments in the compensation system. c Master Print, Inc. does not have an employees association that will manage the grievances of its employees and negotiate with management to ensure equitable distribution of compensation. d Employees live inside the compound of the factory.
ALTERNATIVE COURSES OF ACTION
The management of Master Print Inc. has three choices: (1) to remove monthly allowance and base rewarding of benefits on either a tenure of 10 years or an employee’s corresponding performance, (2) to completely reorganize the allowance system, or (3) to solely base the allowance system on results of job assessment and performance evaluation.
The first option will partially standardize the basis for the provision of allowances with the exception of employees with 10 years of tenure. Implementation of this option allows the company to reduce on unnecessary costs spent on employees who receive allowances for reasons aside from being a senior employee or a well-performing worker. Standardizing also justifies the removal of allowances of other employees since it applies to all and promotes equity. However, this can be demoralizing to those whose allowances will be removed. It also does not address the internal conflict in the company arising from the lack of communication within the firm— as evidenced by Mr Alex, who was known to work quietly in his station, “griping a great deal during beer time” over his low allowance. Furthermore, job mismatch was prevalent in the firm due to very informal procedures in the hiring and training of employees. Several were recruited all due to their being relatives of the owner. Option 1 does not address these.
MPI has another option. It may altogether choose to reorganize the allowance system being implemented within the company. Reorganizing will involve auditing labour expenses, evaluating employee performance, and matching of allowance with respect to the results of the evaluation. An advantage of such course of action is its universality. It applies to all and is equitable. This can serve as a fresh new start for a company like MPI that had no particular staffing policy prior to this other than that which the owners are implementing (which was quite inconsistent). A sense of professionalism thus replaces the previous feeling of favouritism that dominated the company environment.
Growth in productivity is highly probable with employees now being motivated to work in order to get good performance appraisal results. However, one downside of this option is that it can be met by resistance from employees whose allowances will be removed. This may result to internal conflict. Furthermore, adapting to this change may be difficult for employees, specifically for those who’ve been in the company for decades, given that they were used to getting allowances without having to match it with an equally high performance.
Lastly, MPI’s third option is to make an allowance system that’s based on job assessment and performance evaluation. This is a long-term plan and will be implemented over a period of time. Employees occupying the same position will have the same salary— standardizing wage across horizontal levels in the employment hierarchy. Allowances, however, will be determined by either tenure or performance. Tenure will apply to employees who have been the company for 10 years or more. Standardizing allows for equity and universality of policies—addressing the problem of an “unfair” reward system in the company. Staffing will be re-evaluated then strictly implemented.
Supervisory positions will also be introduced. Finally, to attend to the employees is a grievance and feedback unit that will serve as a mechanism for establishing communication between the management and its employees. This option, however, requires proper selection of employees for the new supervisory position. This action can be thus costly. Furthermore, it takes time as this option is to be implemented over a period of time.
The Bangkita Group of Consultants Firm recommend that the Master Print Inc. proceed with the third course of action. As the salary is standardized according to one’s position and allowances are determined based on tenure and performance, MPI is able to address Mr Alex’s concern. Also, this prevents future conflicts of the same nature as the company will set a standard that is to be strictly followed. New wages will be based on the existing highest wage for that position. The company then has to form a grievance and feedback unit which may require some cost. However, the company should look at this as an investment to prevent issues in the future as it will bridge the gap between the employees and the employers. Effectively, the company will need to evaluate both its workers and the management. Management will assess employee performance and communicate results through the allowances while employees will evaluate the management through the grievance and feedback unit. This cross-evaluation allows for blind spots to be seen and problems to be detected before they get out of hand.
This can give the workers a sense of security and importance as the management now opens an avenue for discussion. Productivity may be indirectly affected by this and increase opportunities for growth. Also, the company is to undertake means to establish specific staffing policies to prevent issues on favouritism from arising in the future. Applicants are to be properly screened and then trained to ensure efficacy. The management should hire a separate person to take charge of human resource management. This is to take away monopoly of hiring from the owners as they prove to be quite biased. Opportunities for greater productivity and growth are available given this new policy allows more qualified people to get the job and not just those personally hand-picked by management. Also, to ensure proper supervision of operations, management must hire people for supervisory positions which did not exist prior to the case’s occurrence.
Several employees were already unofficially undertaking this job. To prevent future confusion, MPI must address by clearly defining job description and matching capacity to job position. The new staffing policies will be standardized and strictly implemented. Lastly, as employees may not be able to immediately adjust to the changes in management style, MPI is to ensure that proper procedures for integrating the new system into the company shall be undertaken. Mr Villanueva is to schedule a dialogue with his employees to discuss the rationale for the change and to orient them of what is to come in the future with the new policies in place.
This is beside the fact that the company is already planning on implementing this change over a period of time to ensure smooth integration and adjustment. As this a long term plan, MPI is to layout an official document containing the staffing policy guidelines—this is to ensure that the changes will be followed even in the future. Adjustments may be made depending on what the future manager and employees will agree upon.
Courtney from Study Moose
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