PAC Resources, Inc. A Case Study in HR Practices

PAC Resources, Inc.: A Case Study in HR Practices Strategic Management Strategic management is an “ongoing process of managing an organization strategically. This involves a set of management decisions and actions that result in formulating and implementing strategies that governs the performance and success within an organization. The focus is primarily on large-scale, future-oriented strategies that allow an organization to achieve its objectives, considering the environment in which it operates”. (Mitchell, R. PhD, 2009). Senior management should apply critical and strategic thinking in order to implement and achieve objectives within their organization. Many organization describe 5 to 6 strategic management steps. In this case the 6th step doesn’t hurt the strategic management process. “The 6 step strategic management process” (Rosenstand T. 2012) are as follows Step 1: Establish the vision, mission and goals of the organization. Step 2: Analyze opportunities & threats. Step 3: Analyze the internal strengths and potential weaknesses of the organization Step 4: Analyzing (SWOT) and begin forming the strategy Step 5: Implementing the strategy Step 6: Strategic Follow up This 6 step evaluation process will be used to define a strategic management plan for PAC Resources. Case Study Analysis PAC Resources, Inc. is a small manufacturing company founded in 2004 that specializes in making specialty components for the computer industry. Its market strengths include patented components which are ISO certified. Many manufacturers have moved overseas, while PAC still has the ability to manufacture components in the United States, of which they are very proud. 83% of PAC sales are done with one customer in the USA and the remaining 17% is done within the US and Asia. Recently sales have begun to decline with their primary customer, and internal fears about their over reliance on one customer has led to initiatives focused on developing new sales leads elsewhere. There is also a lingering discontent among PAC’s workforce stemming from prior deficiencies in the human resources department and inconsistencies in middle management. Organizational performance has been hampered by miscommunication between functional levels, and attempts by upper management to improve performance have been ineffective. Further steps meant to address employee concerns have had mixed results. Organizational Issues In an operational sense, PAC Resources has reason to be concerned. The lack of broadness has resulted in a complete dependency on customer, particularly 83% of dependency. The dependency has lead them to become vulnerable to further losses if this customer decides to branch out to other vendors. The lack of planning to address issues have been mainly hypothetical and any attempt lacks execution. There are other concerning challenges within PAC Resources. Distrust in the human resources department, combined with functional deficiencies in other areas, has created operational difficulties among all departments. When employees distrust management, management becomes less trusting of employees. Employees perceive this lack of trust and on it goes. Distrust can be considered as a virus and as it gains strength it spreads. Thus, as new employees join the organization, they learn from more seasoned co-workers that management cannot be trusted. Lastly, PAC Resources recent directives to reduce the labor force and look at reductions in benefits costs have concerned middle management. With these resulting reductions there may be a loss of productivity and of experienced employees. There have been several tactical changes, but a lack of execution has hurt all strategic focuses. SWOT Analysis A SWOT analysis was performed on two sectors of the company, PAC as an organization and PAC human resources department. One essential technique involves a discussion of an organization’s strengths, weaknesses, opportunities, and threats, commonly called SWOT Analysis. SWOT analysis has been used extensively in other industries but has not been widely used in healthcare (Kahveci and Meads 2008). SWOT analysis is a precursor to strategic planning and is performed by a panel of experts who can assess the organization from a critical perspective (Gibis et al. 2001). This assessment is useful in outlining what needs to be addressed when forming a strategic plan. The SWOT analyses for both PAC and its human resources department shows several opportunities for improvement, threats and weaknesses that need attention and rectification. A proper strategic management plan must address these issues. The SWOT analysis, however, does not offer solutions on its own; it only highlights the issued that need to be worked on (“Benefits and Limitations of SWOT Analysis”, 2014). Upon review of the SWOT analyses, it is possible to formulate a strategic plan based on a detailed review of the main issues. These issues can be divided into the following groups: Finance, Leadership, and Risk Mitigation. Recommended Actions The first recommendations to PAC will focus on the Finance category. An action plan will need to be planned and implemented that will require attempts to increase the existing customer base, including but not limited to expanding into other markets and sales channels currently not serviced by PAC. Their over reliance on one customer is a dangerous situation. To help lessen the danger, reinforcing the relationship with their largest customer by strengthening the sales and communications channels could help stem the losses incurred from previous lack of sales growth. In addition, PAC will need to seriously look at efforts to reduce expenses without resorting to a reduction in force (RIF). According to Mr. Wong, the goal of a 10% reduction in labor costs can be partially achieved without having to rely only on mass layoffs. It is imperative that PAC minimize RIF by looking for cost savings in other areas, such as the restructuring of some employee benefits. For any benefits or initiatives that are subject to restructuring, a proper Return on Investment (ROI) analysis must be done. Any layoffs that deprive PAC of experience and knowledge will ultimately be detrimental to daily operations and production. Also, past costcutting measures like the hiring freeze and restructuring of the pay scale must be analyzed. These measures, though possibly effective in reducing cost, may be negatively impacting the worker base, depriving PAC of skilled, productive workers in the name of cost savings. The next set of recommendations pertains to Leadership. A clear vision and mission statement must be drafted and communicated to all managers. Said managers must also undergo communications training in order to learn how to effectively communicate the company’s mission statement to their subordinates. The human resources department must take the lead in aligning the company’s environment and culture toward the company’s new vision. Individual meetings with managers will be held to determine how to best implement the company’s new vision. All steps must be communicated to employees in a timely fashion so as to keep them abreast of all the happenings in the company. The final recommendations concern Risk Mitigation. The threat of unionization is real and cannot be ignored. The company must draft a position statement explaining the benefits of remaining non-union and communicating it to all employees. Additionally, past missteps by human resources and management in general with regards to sexual harassment and favoritism open the door to possible litigation. Pac’s strategic plan must include educational campaigns that inform all employees of the policies of the company going forward. The message must be unified and consistent. Employee feedback must be sought out at all times. Also, a disciplinary protocol must be put in place for managers and communicated to them so that they understand the consequences of improper employee interactions. Finally, policies for preventing acts like prebooked sales must be implemented and enforced. These policies must be communicated to everyone involved so that there is no ambiguity. PAC has already started some initiatives and improvements that cross into these areas of concern, but they must be re-evaluated once the mission statement and vision are determined. If those initiatives or improvements are found to not be in line with the company’s new direction, they must either be discontinued or modified to comply with the new direction. It is imperative that everyone in PAC, from the CEO to the most junior of employees, unite to achieve the ultimate vision. Summary Strategic management is about aligning a company’s goals by helping determine what it takes to get there. The SWOT analyses provided gives valuable insight into the internal and external factors that shape the company’s daily operations. Using the results of the SWOT analyses can help focus on the areas of most trouble and shape the strategic plan for the future. Appendix A Organizational Analysis Strengths Weaknesses Departments focused on company-wide goals Patents and ISO certification Expand customer base One customer drives 83% of sales domestically and abroad Flat revenues for last 2 years Reduce expenses in facility CFO experience Weakening sales projections Past managerial experience Staffing based on sales Slow reaction to changes in marketplace 10 % reduction in force by end of fiscal year Incentive programs like bonuses Non-union labor Pride in domestic base Opportunities Regain 4th Quarter pre-booked sales Gain market share from competitors who moved operations abroad Expand and leverage knowledge management inititative Threats Small customer base Union threat Violation of policy with prebooked sales inflated previous quarter sales Decline in production Appendix A Human Resource Analysis Strengths Weaknesses Opportunities Respected employer Poor HR management, past and present New HR Initiatives (Snack and Chat, Talk to the Boss, etc) Non-union labor Accusations of favoritism HR-initiated wellness activities Lack of communication across functional levels and between departments Management training Return on Investment (ROI) on other HR initiatives like wellness program and tuition reinbursement Cost savings from reducing spending on health care (with employee input) HR hotline for any questions Employee suggestions based on independent survey In-house and external eminars used to develop employee skills and knowledge Reimbursement programs available for employees seeking higher education Managerial skills of certain individuals (Trudeau, Wong) Employment hotline for prospective employees Territorial attitudes toward job responsibilities Decrease in performance from subordinates when managers are Reducing labor cost to 10% without sacrificing jobs promoted Threats Threat of Unionization Ignored sexual harrasment allegation Increasing Workers' Compensation claims Damage to image with community Potential loss of experience and knowledge with forced layoff Animosity toward HR department Restructuring of other employee Possible loss of HR initiatives due by employees programs (bonuses, benefits) to budget cuts ROI from job hazard anaysis