Question

case in point
cutting employee compensation
the tiedown company has been an established company in the united states since 1938. it manufactures specialty fastening materials used by trucking, storage, and construction firms. it is increasingly facing competition from companies that have manufacturing facilities around the world. many of those companies have lower production costs, allowing them to undercut tiedowns prices to customers. several of tiedowns u.s. competitors have moved manufacturing facilities to other countries where wage rates are lower, whereas others have either been bought out by foreign firms or have gone out of business. tiedowns management wants to remain in the united states and retain its loyal employees, but it has to find a way to reduce costs. profits have been declining, and it is clear that major changes must be undertaken. after careful thought and study, the companys executive team has developed a strategy it believes will allow tiedown to remain in its current location, become competitive once again, and return to its previous - level of profitability over a period of five years.
as a part of its new strategy, the company will implement a major change in the way it produces its belts and fasteners. in the past, most production was handled by skilled machine operators who completed a three - year apprenticeship program before operating the manufacturing equipment on their own. a new computerized manufacturing process will allow the main production activities to be performed by people with fewer skills who require only a very short training period. that means the company will reduce the number of machine operators by 20 percent and will cut the pay rate for machine operators by $6 per hour. however, the company will need a number of computer programmers and computer technicians for the new equipment. those jobs will pay $5 per hour more than the average skilled machine operator is currently making.
tiedown will encourage the current operators to switch jobs and will provide the needed training for the new computer jobs. it is expected that nearly half of the current machine operators will be able to switch jobs if they choose to do so. the rest can be employed in the new production jobs but will have to take the lower pay rate for the job. to make the change easier for those operators, tiedown will provide a one - time payment equal to one months wages to help them with the adjustment to the new job and pay rate.
think critically

1. what is your opinion of tiedowns plans for the change to the new production equipment and jobs?
2. what would you recommend that the company do, if anything, for the machine operators who are not hired for the computer positions and choose not to accept the pay reduction?
3. as the production manager, explain how you would handle the changes described to get employee support.

Explanation:

1. TieDown's plan has both pros and cons. On one - hand, it can reduce costs by cutting operator numbers and pay rates while introducing a more cost - effective production process. On the other hand, it may face resistance from employees due to pay cuts and job changes.
2. For non - hired machine operators who don't accept pay reduction, the company could offer outplacement services such as job search assistance, resume writing workshops, and career counseling to help them find new jobs.
3. As a production manager, to gain employee support, communicate the reasons for change clearly, highlight the long - term benefits for the company and employees, offer training and development opportunities, and involve employees in the change process by soliciting their feedback.

Answer:

1. It has both advantages and potential drawbacks in terms of cost - cutting and employee impact.
2. Offer outplacement services like job search help and career counseling.
3. Communicate clearly, highlight benefits, offer training, and involve employees in the change process.