PAC Resources is an American manufacturing company specializing in the production of high-quality hardware. It was founded in 1994 by current CEO David Dukakis and now has 835 full-time employees. For years, it has been relying on one customer as the main source of income, but with the recent decline in their sales, PAC is now expecting a decrease in contracts and payments. To tackle the problem, the management has decided to direct the company’s main funds to explore new markets and increase the customer base (Gusdorf, 2011). These changes in the financial policy, paired with the unsuccessful employee management strategy of recent years, caused a wide range of problems in all areas of human resources management. A new strategy needs to be developed to address these issues. The purpose of this paper is to discuss the disadvantages of PAC’s current employee relations strategy and propose a solution.
Employee Relations Issues
The employee relations team is a part of the Human Resources Department. Its role is to assist employees with all types of work-related issues, enhance the relations between employees and the management, and across departments, and maintain a positive work environment. At the moment, it faces several major challenges and most of them are connected to employee dissatisfaction with aspects of the company’s policies. Employee complaints include poor management, inconsistently enforced policies, unfair practices, as well as controversies surrounding unionization initiatives. The employee relations team has already undertaken several initiatives, most of which proved to be unsuccessful.
The first issue that the Human Resources Department is concerned with is employee dissatisfaction with the company’s compensation system. The system was restructured two years ago, and the reform was followed by some resistance among employees who were not pleased with the changes. There have been complaints of managers issuing bonuses to their favorite employees, regardless of longevity or job performance (Gusdorf, 2011). The recent cutdown in payments and the forthcoming salary freeze, together with the management’s failure to address individual complaints, increased discontent. The cutdown was accompanied by sudden and unexpected cancellation of tuition reimbursement, which caused distress among employees whose education was paid for by the company. These employees found themselves faced with the dilemma of having to pay for their education themselves or dropping out. The management failed to handle these issues properly and faced accusations of favoritism (Gusdorf, 2011). To address inequity claims, the management provided employees with information about the new compensation system sometime after it was introduced. However, the recent changes, including the cancellation of tuition reimbursement, have not been explained properly.
The second issue that the employee relations department has to face is unionization initiatives that have been gaining more and more support among employees. Three years ago, the company faced a period of employee unrest along with the calls for union organization. The turmoil has been softened by the management’s efforts; however, as Wilson claims, “there is still an undercurrent for unionization,” and he fears that “any cost-cutting will turn the undercurrent into a landslide” (Gusdorf, 2011). The recent efforts to prevent unionization included the production foreman Dick Remington changing his employees’ lunch schedule to break up the group discussing union organization. The move was perceived by employees as an unfair labor practice and caused additional tension. Essentially, the recent unionization initiatives have not been addressed properly by the company’s management.
The third issue that the employee relations department needs to address is the complaints about lack of communication within the company. The most common problems include cases of favoritism, unfair practices, questionable management decisions, unanswered complaints to the HR department, and conflicts between employees and managers. The underlying cause is the lack of transparent communication channels within the company and a clear, consistent policy of addressing questionable matters.
Some steps have already been taken to improve communication within the company and address employees’ concerns.
- First, a comprehensive survey was conducted to get employees’ opinions on a variety of issues, including the compensation policy, career development opportunities, job equity, employee-management relations, and overall job satisfaction. Based on survey results, some minor changes were implemented that slightly improved the work climate (Gusdorf, 2011).
- Second, skip-level interviews were introduced, allowing employees to address their questions to higher management without fear of reprisal. That seemed to help, although the initiative was not supported by some managers who felt threatened that their subordinates would talk to the boss behind their back.
- Third, the criticism of the Human Resources Department for lack of communication was addressed with the introduction of an HR hotline that was available for employees 24/7.
- Fourth, several employee involvement teams were organized within the company. They have their forum and have been encouraged to make suggestions for productivity improvements. However, they have not been given much freedom, and their activities have been closely monitored by the head of the employee relations department.
- Fifth, manager training programs were implemented that concentrated on discrimination and harassment. They aimed to provide managers with the understanding of their complex responsibilities as intermediaries between the management and employees and ensure consistent implementation of the company’s policies across departments (Gusdorf, 2011).
While all these initiatives signified positive changes in the company’s employee relations policy, neither of them has been fully developed and implemented to provide a significant boost. Overall, the company’s management strives to make positive changes under difficult circumstances but fails to explain them to employees and adequately respond to their concerns. It results in an increasing level of employee dissatisfaction; employees feel insecure, do not trust the management, and feel like they are being fooled. It causes a decrease in productivity, high employee turnover, and more conflicts at the workplace.
The new employee relations strategy should be based on transparency at all levels of the company. First, all employees should be informed about the market challenges that PAC faces at the moment and the initiatives that the management plans to introduce regarding the company’s financial and staff policies. This decision may seem controversial; however, considering the tensions within the company, with rumors spreading around across all departments, putting some clarity in the situation should be a must for the new head of HR.
Second, a team should be formed comprised of human relations managers to address employee questions and complaints and develop a new employee relations policy. The new policy should be based on transparency and the protection of employees’ interests. The team’s primary concern should be the cases of favoritism, harassment, unfair labor practice, and the company’s failure to fulfill its obligations towards employees. With the compensation policy being changed, it should be explained to employees by the management, and the controversies should also be addressed by the team.
Third, employee involvement teams should be given more power and encouraged to propose changes to the company’s employee relations policy. The company has never paid much attention to employees’ needs and concerns, and providing them with an opportunity to improve the situation seems like a good solution. The unionization initiative group should also be encouraged to participate in the decision-making process to direct their efforts into the initiative that would be beneficial to the company.
The proposed strategy can cause a negative reaction both among employees and managers. The managers would not want to change their habitual practices towards a more transparent approach, while employees would be dissatisfied with upcoming reductions. However, it will also help to distinguish the people who would not be loyal to the company under new circumstances and put together a pool of candidates for the upcoming downsizing.
PAC’s current employee relations strategy fails to address the problems of unionization, employee dissatisfaction with the new compensation system, and lack of communication within the company. The proposed strategy includes the development of a new employee relations policy, the organization of a designated team to deal with employee complaints, the enforcement of employee involvement teams, and the increase in communication transparency. By improving communication between the management and employees and employee involvement in the decision-making process, the foundation of the company’s revival can be established. Careful analysis of the problematic issues, transparency, implementation of fair job practices, and consistent employee relations policies are the keys to building a successful work environment that can be implemented in any company.
Gusdorf, M. (2011). PAC Resources, Inc.: A case study in HR practices. Society for Human Resource Management.