It is also an excellent way to ensure that they will also participate to a long-term vision of the company.
The company has at this point several potential alternative solutions. The first solution would involve not restructuring the business, keeping the same business format, but trying to increase revenues by diversifying the portfolio and by creating new services that will provide the technological competitive advantage needed. The company does not need to outsource its call centers to India and Ireland, for example, but it can use these countries to create technological centers in these countries, so as to benefit from the cheap technology being developed in these countries.
The second alternative solution is to work exactly on the strategic plan proposed by the current management, including outsourcing and layoffs. However, this will need to be doubled by measures to counter morale decline and to ensure that the remaining employees will still be committed, despite pay cuts and renouncing several education and health benefits. The company will also need to act in order to avoid prosecution over not respecting the work contract and try to avoid conflict with the government, because the union has announced action with all means to avoid this situation (“We cannot and will not go along with this situation quietly. In fairness, I want to inform you that we will take action both through the government and all other available resources”).
Analysis of Alternative Solutions
The first solution includes retaining the current structure of the organization, but increasing investments in technology, which can also be outsourced so as to produce the best results, at lower costs. This solution scored a 2.82 in my alternative solution evaluation matrix, scoring 5 in terms of diversifying the portfolio of services, 3 in terms of increasing competitiveness and 1 in terms of reducing costs. The reason the scoring only amounted to 2.82 because the weighting was different: 3, 4 and 4 for the three goals, respectively.
The first goal was rated as 5, because outsourcing technology and further investments in this area is likely to boost competitiveness by providing new services and better technology, while simply creating new services with the help of new technology. On the other hand, increasing competitiveness was rated 3, because the company will only increase competitiveness in terms of diversifying the portfolio of services, but will still retain potential problems in terms of labor costs. Additionally, allocating new funds to technology investments will create potential problems in terms of cost imbalances and potential budgetary issues. The last goal was rated with 1, because this type of solution is more likely to increase costs rather than decrease them.
The second alternative solution received a final 3.73 rating, obtaining 3 in terms of the impact on the first issue, 4 on increasing competitiveness and 4 in reducing costs. In terms of the impact on the first issue at hand, the solution scored only a 3 because, while addressing partially the problem, it tends to focus more on the cost reduction component rather than on the actual diversifying impact that the solution is likely to have. On the other hand, it scored a 4 on the second issue because it reasonably balances both components. The final 4 is explained with the fact that, while clearly impacting cost reduction with decreasing labor, technology and innovation costs, it also partly takes into consideration additional costs, such as the social or legal costs that such a solution implies.
Risk Assessment and Mitigation Techniques
For the first alternative solution, the main risk is that the solution doesnt address the current problems of the company. Indeed, while attempting to diversify and consolidate the business, it does not address the issue of cost-reduction.
The second alternative solution, because of its complexity and implications, has more risks than the first. The first set of risks relates to the investments in the foreign countries: political, economical, social or demographical risks. In a country like Ireland, member of the European Union and a consolidated economy, these risks seem to be very low. On the other hand, in a country like India, with a population of 1 billion individuals, most of them living in poverty, and with a democracy where terrorist attacks and extremists still may have their way, this risk is much higher.
Despite higher risk levels, the best solution seems to remain the one that includes both technological and call center outsourcing.
To this, one needs to add both the internal restructuring needed (included layoffs and paycuts, if necessary), both also the additional incentives that can make this an interesting proposal for the remaining employees (profit association, financial rewards in options and company stock).
There are two important things that the company needs to ensure when implementing the selected optimal solution: measures to improve companys profitability and competitiveness on the market and internal communication. In both cases, the viability and future success of the company rely on these two measures.
The first part comprises the establishment of the call centers and technological centers in Ireland and India, corroborated with the entire mechanism of job redistribution and cost reduction. The foreign implementation will be established, first of all, at the highest echelons of the company, the upper management who will negotiate with the local governments the conditions of the investment, while the recruitment and training processes should be shared between the HR and the it departments. The actual implementation, including recruiting local workforce and opening the centers, should not take more than 4-6 months.
It is important to emphasize the need of a mechanism of feedback and control that can ensure that the company management always knows the progress on these foreign sites. This type of mechanism can include regular updates from the local managers, monthly conferences with both them and some of the employees and monthly visits from the management team that can also boost morale with the new employees.
Internally, the success of this optimal solution and of the final implementation plan again relies on two different components: incentives to boost morale and the communication plan. In terms of the incentives to boost morale, this obviously refers to the remaining employees and these are the measures by which the union can also be appeased. Incentives have to rely on associating the employees to the companys future and this can be done with both financial incentives and their managed inclusion in the decision making process.
In terms of the communication plan, the best communication channel remains the union and its representatives who, as we have seen, have remained, even in the past, open to discussion and negotiation, despite the fact that the relationship is tense at this moment. Given the information richness and the complexity of the situation, one could also suggests joint meetings between the employees and the management, in which the managerial team can better explain the long-term strategic plan for the company and obtain employee adhesion to future company goals. It is important to note that the key to making this solution functional is the appropriate communication of its positive consequences to the employees.
Evaluation of Results
The proposed goals combine financial objectives (company profitability, company viability) with HR and employee – related measures (internal social cohesion). All metrics reflection have been translated into quantitative measure, such as the stock price, the employee productivity or the number of customers. These metrics do not necessarily reflect 100% the goal that they have been matched with, but they provide a good idea/reflection on how that goal is progressing. For example, an increase in employee productivity will tend to show that the employees are satisfied with their incentives with the company and that they are translating this into good productivity levels. A measure such as the number of customers (with a 15% increase target) will also show that the companys outsourcing is paying off, that the better and cheaper services are attracting new customers.
The present case study showed a common situation where the company was no longer viable in a global market because of increasing competitiveness on the market. In order to address this problem, the suggested optimal decision combined outsourcing in countries such as Ireland and India, with better and cheaper technology, with an internal plan to retain employees and include them in future strategic development decisions.
In implementing this plan internally, the communication plan and the incentives offered to the remaining employees played a crucial role in reducing the drop in morale levels and in ensuring that the remaining employees would fully support the strategic decisions involved.
Issue and Opportunity Identification
Increasing competition on the telecommunication market, with reduced (so far) action from the management
Niche markets and new technology development
Impact on original employees
Increased internal communication