The cape Breton workers receive in the production department the following hourly wages: trainee 7 dollars / hour, assistant 9 dollars / hour and printer 11dollars / hour. Yearly increases are calculated based on the cost of living formula. According to the case info these wages are considered fair and even competitive against the wages of similar jobs in the area. The salary increases are based on linear career development.
While it was not mentioned in the case study how much the senior management team, supervisors or experts earned, it can be assumed that there is a significant difference.
This can lead to problems as the local workers may feel resentment especially towards the middle management, the supervisors as they are in the closes contact with the employees. This can be amplified by the fact that even though the supervisors were experienced in the job, even they didn’t know how to use the new machinery and thus they too had to receive training. Also the supervisors were new to the company, so they may have had difficulties in the beginning.
This can lead to negative situation where employees feel that the supervisors are unfairly compensated for their previous work experience. Also “us versus them” mentality can cause issues.
However the company has no real need to increase the wages to become a leader in pay externally. This is because even with the current wages the company is easily able to attract workers to work in the plant, the area’s high unemployment numbers is a bonus the company in this.
Also the need for qualified workers is not as critical in the future if the company is not going to expand. However if they are going to expand the plant, the higher wages could help to attract more and better qualified workers from outside the area to answer the expansion needs.
At the moment there are no benefits packages for the workers in Cape Breton Wall coverings. This has not been an issue during the start of the plant, as the company was able to attract large pool of candidates during the first recruitment phase. As the benefits package is mainly used to instill loyalty to the employees, it is understandable that the company didn’t feel need to create such expenses. However, the creation of benefits package could become necessary in the near future.
The company has used significant amount of resources to train the workers, and now when they are getting to the point where the workers are finally able to achieve the productivity numbers the company wish for, it will become important to create a significant tie to bind those skilled worker to the company. After all, even though the area has lots of available workers, training non skilled workers Is significantly more expensive than retaining the workers the company already has trained. Examples of possible benefits packages the company may wish to consider are health care packages and pension packages, as these would achieve the employee loyalty and could be given to all workers.
The Cape Breton Wall coverings don’t offer any significant incentives at the moment for workers. The only straight reward for doing the job well is a distant possibility of gaining a promotion. Also there is a small group incentive in a place, the “team approach” that John Hooker employs. With this the company tells the financial situation of the company for the workers and according to the case, the workers work proudly to lessen the inefficiencies. However as the company faces issues such as slow learning curve, low productivity, inefficiencies in production and questionable quality in the final products, there is a real need for incentive planning.
The company should consider is to offer some sort of personal and group incentive plans to workers so that they would be encourages to produce more, lessen the amount of mistakes, produce higher quality products and that the employees would be interested to use their private time to study the trade to fasten the learning curve. Possibilities that could be considered are: a group incentive planning such as gain sharing plan to reduce the overall waste, inefficiencies and costs, personal incentive plan that ties the work partly to productivity to increase the productivity and best worker prices to increase the learning curve and quality of products.
The case doesn’t specify the discipline methods used at the Cape Breton Wall coverings, but it can be assumed that most common form of discipline is critique on the production line, where the supervisor inspects the work done and gives straight feedback / critique. This is effective way of disciplines the workers colleagues and friends hear the critique, and the group pressures the worker to match the standards. However the issues with this are possible bullying and harassment by the group, and this may cause the company legal issues such as discrimination and human rights violations. Other forms of discipline that case suggests are dismissal for repetitive failures to meet the standards, or inability to fit into the group / company.
The case suggests that the employees may not have enough information on the company’s expectations, rules and policies. After all, even their closes supervisors are new to the company and they have not been taught to deal with HR issues, so it is entirely possible that they have not conveyed the necessary information to the employees, instead deciding to focus on training the employees on the trade. Because of the lack of HR training in the middle management it is also very possible that there are no set disciplinary procedures in place and thus the disciplinary actions may differ greatly between the supervisors, resulting in lack of consistency and fairness of treatment.
The case doesn’t give any insight into how the dismissals are handled, but it suggests that the employee turnover is very low. So it is possible that there are no set procedures for the situation. It there is not procedure how to handle these cases, the company may have issues in legal forth, such as lack of documentation, discrimination, human rights violations. For instance if the dismissed employee sues the company, how can they prove that the dismissal was fair and necessary without documentation? Or if there are no consistent disciplinary procedures, the employee can say that the dismissal was because of discrimination, and how could the company answer to the charges?
Legal issues ESA wages
The wages in the Cape Breton wall coverings were well within the ESA minimum wages and industry standards. According to the research the ANC consulting made, the standard wages for gravure printer is between 14-16 dollars / hours in year 2011. ( Salary expert, Gravure printer salaries. Available at: http://www.salaryexpert.com/index.cfm?fuseaction=Browse.Etcher-Gravure-Printing-salary-data-details&PositionId=19296) If we consider the inflation, we can say that the wages in Cape Breton plant in year 1989 were well within the standards and even competitive. Also the salary increases that were based on cost of living formula were within ESA standards.
The hours of work however are an issue for the Cape Breton Wall coverings. During the first year of operations the hours were 8hours shift / worker, 5 days a week resulting in 40 hours of work / week for a worker. This is completely legal and well in acceptable limits. However problems arise with the increased demand the plant is facing. The production needed to rise so the management planned to increase the work for each worker starting January 1990. The planned increase is to have the work shifts to increase to 12 hours / worker in day and to have workers work 4 of such shifts in a week, resulting in weekly work of 48 hours.
When we untangle this issue, the first thing is to note that every hour worker over the limit of 8 hours / day is in overtime pay to meet the ESA standards. For work over 8 hours this is overtime pay is 1,5 increase. Meaning that for instance the gravure printer having 11 dollars / hours on regular pay, would get for those 4 extra hours 16,5 dollars / hour. Secondly according to ESA, it is legal to have the workers work 48 hours / week if the overtime pay is paid. If there is no averaging agreement made, the company must pay 1,5 times the normal pay for every hour that exceeds the limit of 40 hours. (ESA, part 4, subsection 40).
Also ESA part 4, subsection 39 must be considered. In this piece of legislation it is said that: “employer must not require indirectly or directly employee to work excessive hours or hours detrimental to the employee’s health or safety.” This makes the hours the management is considering illegal if they will continue for a longer period. So, the Cape Breton Wall coverings cannot continue such shift arrangements for a long period or they may be facing legal issues for violating the employment standards act.
Lack of Hr Knowledge and documentation
The lack of HR department of knowledge in management and middle management is resulting in many potential legal issues. These include the multiple human rights violations in discrimination and harassment. Secondly the lack of documentation can cause legal issues if the company needs to defend its actions in court. To recap few examples: the hiring of only young workers, from ages of 20-30 years old suggest that indirect discrimination occurred during the recruitment and selection phases. Potential discrimination can also occur during the disciplinary actions, as there were no fair and consistent procedures in place and supervisors had their own style of handling the cases with no training or experience in such situations.
It can be also noted that the company is not working towards pay equity of employment equity standards. Occupational Health and Safety The cape Breton wall covering has issues in occupational health and safety of the workers. At the moment most the workers are young and still relatively inexperienced and they are working with new machinery with little training and minimal supervision.
According to OHS (Occupational health and safety) legislation young and / or new workers must receive additional with health and safety orientation and training. And according to the case study, nothing or such was arranged. This suggests that the company is in serious violation of OHS legislation. However the legislation may have changed during the years, so it is possible that in the 1990 the company didn’t violate any laws. However, even if the company was not in legal violations it can be considered unsafe workplace. Also the lack of orientation, training and regulations suggest that the safety of the workers was not a priority for the company.
Labor relations The cape Breton wall coverings didn’t employ any unionized workers; however there had been two attempts to unionize the plan by external influences. In both cases the attempt to unionize the workers had been voted down by the workers. Also relevant to the case was the managements dislike of unions. However, even though the management disliked the unions they were planning to encourage the workers to have an association. This was to give employees sense of security, consistency and ground rules. The draft for the association was in process of being drawn by the company lawyer.
However there are multiple issues in this. If they management was very open about their dislike of unions, it may be possible that the workers voted no to unions on fear of losing their jobs. And as it has already been mentioned, the jobs in the plant were very important for the Cape Bretoners. They are in very dependant relationship with the company. Thus the negative vote to unionize doesn’t tell accurately how strong the pro union sentiments among the workers are. Also it is possible that there is threat of labor unrest brewing in the Cape Breton Wall coverings, as there are multiple issues such as coming increased work hours, no comments about overtime pay to compensation, OHS violations etc.
Secondly “worker’s association” seems like surface attempt to calm down most vocal workers without offering much power for the workers. What can do one association against the important employer of the area? To give suggestions. The association would have probably very little real power to enforce its decisions. Also association couldn’t do legally strikes, which only unions are able to legally organize, to enforce the workers demands.
Also the fact that the company lawyer was responsible to draw draft for the association is in suspect, it is very possible that there was no one knowledgeable enough in the legal sense in the work force to argue against the legal text and lingo used. So basically the company could add to the draft whatever stipulations would be useful for the company while making it seems relevant to the low educated workers. This is strongly suggest that the workers had little to none power to affect their situation in Cape Breton wall covering and the company wanted to keep the situation like that to strengthen them against labor unrest.
Recommendations AN consulting group has a few recommendations on how to solve the critical issues the Cape Breton Wall Covering is facing on the future. Unskilled labor Firstly to answer the issue of unskilled labor AN Consulting recommends that the company provides the workers better qualified training. This can be done by training the supervisors in training techniques, so that they can in turn more effectively train the workers.
Secondly as the trainer / trainee ratio is only 6.7%, we recommend the company to consider hiring at least 3 more qualified supervisors to increase the ratio to 10,7%. Thirdly we recommend the company to consider providing the new workers a self study material to increase the transfer of knowledge and the learning curve. In this self study material also company expectations, policies and protocols could be added, so that the workers would have consistent and reliable source of knowledge.
Also to reduce the need for new hires, and in return their expensive training we recommend the company to consider setting up a benefits package to instill loyalty to workers. Large scale packages such as health care or even pension packages should be considered. This has also bonus of reducing the threat of labor unrest. Inefficient production To answer second issue of inefficient production, the AN consulting suggest the company to consider implementing 3 incentive plans to answer different needs. Firstly to answer the low productivity, we recommend tying 30% of the pay to performance. This is significant enough number that the workers feel need to achieve higher productivity, but not too high to cause stress and significant mistakes.
Secondly we recommend the company to consider setting up an group incentive plan called “gain sharing” where the workers would have a chance to get monetary bonus on basis how much they have managed to reduce waste and inefficiencies in the work. Thirdly we recommend and incentive plan as “best worker” to be implemented. This would reward the best performer quarterly or even annually on basis how good quality their work was and how much they have managed to learn to do the things better. This would encourage the workers to use the self study materials to do fewer mistakes and does higher quality work.
Lack of HR knowledge To answer very serious issues that the lack of HR knowledge is cause the company such as legal issues, lack of documentation, low employee motivation, inefficiencies in company procedures the AN consulting highly recommends the Cape Breton Wall coverings to increase their HR knowledge. The most effective solution would be to set up an HR department. This would be the most expensive, but in the long run it would give a chance for company to solve all their issues that are coming from their lack of HR knowledge.
However if this option is considered too expensive, the AN consulting recommends an option of Hiring HR specialist for the company. This would be cheaper option, but also the benefits of this would become in longer period and there is a chance of the HR specialist being fast overworked. Third option would be to get HR training for the line managers. This would solve the most immediate issues regarding performance management and training, but wouldn’t answer the need of lack of documentation very well or the legal concerns.
To answer the high demand some accord must be reached in Cape Breton Wall coverings. AN consulting recommends of no doing the expansion at this time, as the plant is just reaching acceptable quality work. Also AN consulting feels that if the other recommendations would be followed, there is a possibility of reaching the industry norms in productivity. The machinery after all is capable of producing much more efficient bathes of products, and the workforce is just learning to use the machinery to its capabilities. This would allow the production get closer to the demand, and even though some deals would need to be turned down, the overhead of investment could be matched. Also keeping the issues small would allow the company to solve them and improve its efficiencies.
However, if the expansion is truly the only way to match the investment cots, AN consulting recommends doing the immediate expansion with extreme caution. AN Consulting feels that it would be very risky endeavor, as the investment required for that would increase the over head to over 20 million dollars. Also the expansion would multiply the problems the company is facing, making the few relatively small issues a huge concern.
Also the already low productivity of 75% of industry standards can be estimated to drop to 50% or even less, while the amount of waste would increase. To reduce the productivity issue, AN consulting suggest that is the expansion is truly the only option, the Cape Breton Wall coverings would hire more skilled and experienced workers from outside the area, transfer already skilled workers inside the company to more demanding positions and hire new workers only to entry level positions.