Aerospace Inc. is a manufacturing firm that produces various mechanical parts mostly for the aerospace and automotive industries. The company is headquartered in Houston, Texas. The firm is headed by Robert Anderson, as its CEO. It has three manufacturing subsidiaries located in the Southwestern U.S. All these subsidiaries are very similar with regards to their organizational structure - physical layout, operations, size, and organizational design - to the headquarters in Houston (Dietz, 2013, p.1) Additionally, the three subsidiaries have a striking similarity in terms of employee composition and profiles level of education, gender, time in the company, and age. However, the operations in all the three subsidiaries are independent of each other. This implies that each subsidiary has its own day-to-day managers, employ numbers, operational procedures, short-term and long-term targets, as well as clientele base. It is important to note, although, that the plants each employee almost the same number of employees, and most, if not all the employees are either unskilled or semi-skilled laborers earning an hourly wage. Some of the employees are those doing clerical work and also earn an hourly wage, while there are low-level managers. For instance, in the subsidiary with 64 employees, five of the employees are low-level managers, 47 are semi-skilled and unskilled laborers working in the production department, while the remaining 12 are clerks.
The firm, Aerospace, Inc. is currently faced with a difficult top-management decision with regards to all of its three subsidiaries. The management is concerned with and considers employee theft as a serious concern. Although there are no accurate figures with regards to what is considered employee theft, available statistics indicate that in the U.S. alone, there is an estimated annual loss of more than $40 billion per annum attributed to employee theft. The firm recognizes the difficulty in distinguishing between what is lost as a result of employee theft and those as a result of customer shoplifting. In the recent past, however, the firm has lost two large contracts in two of its three subsidiaries. As a result, the CEO, Anderson is faced, as already noted, with a decision of reducing the firms payroll, either through laying off some employees or cutting down employees pay by 15%, across the board. Laying off employees is not option according to the CEO, thus, the solution to be implement will be effecting a 15% pay cut on all employees (Dietz, 2013, p.2).
Implementing a 15% pay cut is likely to have various effects especially if not well received by the employees. It might lead to employees underperforming or engaging in theft by stealing supplies and tools. Therefore, in order to make evidence-based decision on how best to convey the pay-cut decision to its employees, the firm have to research, gather evidence, and determine what percentage of the plant-level shrinkage data kept by the accounting department are attributed to employee theft (Dietz, 2013, p.2). The firm considers shrinkage as an indication that employees are stealing tools or supplies. Therefore, it is important for Aerospace, Inc. to research and find evidence that implementing a pay cut might result in negative reactions such as employees getting back at the firm through stealing before it go forward with implementing its decision. Further, the CEO must find adequate explanation to offer his employees when conveying the firms decision not to lay off but to cut pay by 15%.
Dietz, J. (2013). Compensation Contraction in Houston. University of Lausanne.
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