Solutions to Business Inefficiency

Published: 2019-10-11 11:00:00
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XYZ Widget Company being the only provider of widgets inventory and having operated for several years in the industry has a well-developed market for the products. Since the company is no longer efficient as it used to be, the management has several alternatives to choose to bring it back to its efficiency level. There are several effects on every option concerning ethics and perception of the employees. These are some of the viable options that the management can take.

XYZ Widget can invest in technology for improved efficiency. Investment in new technology that spurs the improvement of effectiveness would lead to less cost of operation as well as return the company to profitability level (Carroll & Buchholtz, 2012, p. 43). The improved technology would reduce cost by helping the company utilize the available resources efficiently, and also the salaries of the employees would reduce. In the plan to have an improved technology, there would be a need for hiring new staff that are young and understand the new technology. The improved technology would require intense training for the staff and hence it would not be viable for the company to train staff members who are almost retiring. In the plan, to ensure that the number of employees is reduced, the company can introduce a voluntary retirement plan. In the plan to improve technology, hire new employees and offer voluntary retirement for the existing employees so that the effect of reduced number of employees and new hiring can be accommodated, the employees would be concerned. The current employees are expected to resist change because of their long lasting positions in the company. In the decision, it is expected the employees would understand the action and take voluntary retirement because of the affection they have with the company and their will to see the company survive for a long time. The decision considers the position of the employees and the possible labor union conflicts if the employees are laid down instead of improving the efficiency of the company and ensuring a smooth transition from the old operation to the new one.

In another alternative, XYZ Widget can decide to move off-shores or outsource the work done in the current operation in the United States to a Less Developed Country (LCD), and close the old operation. The cost of operation would reduce because the high cost of operation in the United States as a result of strict rules and tight regulations would be eliminated. In this case, the company will also enjoy low labor cost as the old accumulated benefits would be eliminated and the LDCs are characterized with low wage bills (Carroll & Buchholtz, 2012, p. 232). The option would face resistance from the current employees, government, and labor union. The workers would find it hard to accept the decision because they would lose their employment and hence the labor union campaign against the move as they look for ways of safeguarding the employees wishes. The movement of the operations to LCD would deny the government income taxes, hence unethical because of the market the company enjoys in the US. Taking away employment opportunity in a country is not ethical, and therefore, though the alternative is good for the company profitability it may not be taken lightly by the employees and the government.

The company management can change the business structure and the remuneration methods in place. The employees in the company have been working for a long time in the company and hence, their motivation to improve production and their personal skills may be relatively low. The reduced efficiency may have resulted from the familiarity of the processes and procedures, and hence, need for change to ensure that the traditions they are used to are broken to allow managers to make a decision that changes the way of production. The change of the structure will affect the process of administration and affect some managerial position and the general decision-making process. The best change of structure in the case of XYZ Widget Company should ensure that the decision-making process in the production is simple to correct any inefficiencies noticed without a lot of delays. A line organizational structure would assist the top management to carry out close supervision for fast decision making (Raj & Bisschoff, 2009, p. 69). The employees of the organization may find the change of structure non-friendly because of the have some resistance that may slow down the process. Managers who may find their powers reduced or their positions no longer required in the company may sue the company and seek the assistance of the labor union.

Investing in the new technology would provide the company with a long-term solution to the efficiency issue. Improved technology would enable effective production with lower costs that would be favorable for the operation. The alternative provides the existing employees an opportunity to choose early retirement and hence the possible conflict resulting from lying off may not come up. The staff that would choose early retirement would create space for new employees who understand the new technology and with the minimized possible conflict makes the alternative better.

References

Carroll, A. & Buchholtz, A. (2012). Business & society. Australia: South-Western, Cengage Learning.

Oakey, R. (2010). New technology-based firms in the new millennium. Bingley, U.K.: Emerald.

Raj, M. & Bisschoff, T. (2009). Financial school management explained. Cape Town: Pearson Education.

sheldon

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