BACKGROUND Yummy Company is producer and marketer of fruit juices, packaged dried fruit and canned jams made from all natural exotic tropical fruit. Established since 1960 and primary plant is located in Tagaytay City, Cavite.
It distributes locally and exports dried fruits and jams to Japan. In 1990, Yummy bought 2 small canning companies in Southern Luzon. This acquisition resulted to problems on lack of performance management system, formal pay scale, hiring practices that allowed members of the family, absence of training facilities, inconsistent enforcement of employee discipline procedure and high incident of theft.
TIME CONTEXT: 2000
VIEW POINT: CEO Nicholas Santiago & VP-HR Mrs. Dela Cruz
CENTRAL PROBLEM
Managing people related issue result by company expansion. STATEMENT OF OBJECTIVE
MUST: Smooth company expansion. WANT: Want fast and smooth transition.
AREAS OF CONSIDERATION
SLabor unrest. TCultural diversity. A E R H T
and SDomestic International E I Market network. T I Productivity and Nefficiency in Uoperations. T R O P P O
SNegative of the Eimplication merger. S S E N K A E W
plant and HExisting Tfacilities. GManpower and Ntechnology. EExperience in Rpeople related Tissue on Smerger/expansion.
ALTERNATIVE COURSE OF ACTIONS 1. Proceed with the expansion to both Davao & Japan.
E 2. Improved productivity and V in canning I efficiency productions. T I 3. Governing rules and S company policy for control. Formal pay scale which will O 4.benefit the employees P 1. Diverse market network.
E 2. No guarantee transition will V smooth. I be T 3. May result to labor unrest. A G E N 1. Cultural difference.
ALTERNATIVE COURSE OF ACTIONS 2. Not to proceed with expansion.
No people E 1. management issue to V I resolved. T I 2. Save on possible S lost. O P
E 1. No growth in market. 2. No improvement in V I production and T efficiency in A operations. G E 3. No profit increase. N
ALTERNATIVE COURSE OF ACTIONS 3. Expand business in Japan only.
E V Increase market share in I 2.Japan. T I 3. Possible increase in S profit. O P 1. May diverse market reach in Japan.
E 2. Legal requirements. V in demands may I 3.notIncrease be accommodate by T existing operations. A 4. No assurance it will be G successful. E N 1. Cultural differences.
RECOMMENDATION
1 A C A
Proceed with acquisition
ACTION PLAN Person Responsible
Activities
Time Frame
CEO & VP HR
Strategic Planning: •Degree of involvement of HR (directors) of acquired company in negotiation process. •Cultural Differences •Conflict of Management styles •Diversity in Managing Human Resource, HR policies, procedures, and Hiring process •Failure to manage change resulting to loss of employee morale and productivity and key employees •Diversity of performance management systems •Downsizing of workforce
7 Days
VP HR
Pre-acquisition: 1.HR should be involved in the negotiation process in order to understand and map out the culture of both companies and if necessary, develop a culture that fits the merged entity. 2.HR will develop a new Organization Chart and detailed evaluations of the competencies of employees to link their roles and responsibilities to the new organization chart.
30 Days
VP HR
I. Cultural Integration: Ask for guidance on cultural issues. Understand that cultural differences can exist within the same country Have a strategy for overcoming cultural conflicts. Remain alert to the symptoms of the post-deal cultural clash Steps: 1. Determine degree of organizational integration 2. Assess organizational behavior 3. Develop change hypothesis 4. Determine drivers of behavioral change 5. Implement change 6. Measure and reinforce change outcomes
30 Days
ACTION PLAN Person Responsible
Activities
VP HR
II. Integration of Management styles. Existing Management style of Yummy Corporation will be applied to the newly acquired company in Davao and in Japan. The regional plant in Davao would still be headed by the existing leader. H owever, he should learn a participative type of management where subordinates are included in discussions. Greater results will be achieved if more people will contribute ideas to the success of the company.
VP HR
III. Integration of Human Resource policies and procedures. Since the Davao branch doesn’t have a clear and formal HR policies and procedures, Yummy Corporation should adopt its existing policies. An HR staff should be placed in each regional area in order to give venue for resolution of HR issues. HR should also go online in order to deliver fast response/actions to any of its regional areas.
VP HR
IV. Change management. Change management can be avoided by solving them as early as before the acquisition is finalized. Reduction of workforce due to the acquisition of new equipment in Davao and other HR related issues can be insisted by Yummy Corporation that they be settled as a pre-requisite to close the deal. Yummy should involve the management of the acquired company since they knew their people more. Bringing another leader to the acquired company m ight create resentment. The following should be done by Yummy Corporation: •Communicate with employees on the necessity of acquisition •Explain how it will benefit them •Establish a clear and visible tie between change and business improvement.
Time Frame
ACTION PLAN Person Responsible
Activities
VP HR
V. Downsizing of workforce. Since the acquisition of equipment would reduce number of persons in the company, it would be best to inform them of such downsizing ahead of time. Selection procedures of employees to be retained s hould be communicated so that the employees would be aware of where they stand. The HR should draft retrenchment packages of those who will be eliminated. Probationary period of 6 months whether or not t he equipment is operational would give employees the chance to improve themselves.
VP HR
VI. Communication 1.There should be a focal person of the acquired company of whom employees could talk and seek clarifications, and answer their queries. This person should have easy access to the Senior Management team to get their views clarified. 2. A strong communication system should be put in place. Plan of actions should be communicated to be clear. 3.If needed, external person or team could be used to act as neutral entity.
VP HR & FINANCE
VII. PAYSCALE 1.Organizational capability- whether or not the company has capacity to pay. 2.Work – intellectual, working condition, decision-making, problem solving, skills 3.Employee – education, experience, skills 4.Legal implications – Labor Code in t he Philippines, PD 4425.Market and country difference
