The aim of the report is to provide some possible options that Bon Bon is open to regarding the course of action that must now be taken because of the various problems its is now facing.

University Degree Business and Administrative studies

This report has been written for the Chief Executive of Bon Bon Confectionery Co Ltd.

In order to critically assess and make recommendations, I would like firstly to give a brief description of the crisis Bon Bon Confectionery Co Ltd (Bon Bon) is facing and the subsequent need for change in its overall business strategy.

Recently, Bon Bon has been suffering a steady decline; the company has seen an operating loss for the first time ever and the same in anticipated for the current financial year.

As the overdraft size increases, the Bank is showing its concern about the company and with immediate effect has asked Bon Bon to produce some evidence as to how they are dealing and will respond to the organisations problems.

Customers are switching to alternative products because their tasted have changed and Bon Bon is not catering for their tastes as they have a “tired” product change.

Terms of Reference

As the successful appointee for the post of Personnel Manager, I have been given the task of producing a report for the Chief Executive. The report will require a thorough investigation into the companies’ problems and then allow me to address the following:

Recommended course of action for reducing the number of employees, voluntarily or otherwise, in as peaceful manner as possible.

Likely impact both internally and externally for Bon Bon.

Demonstrate how this impact may be reduced.

What Human Resource issues Bon Bon are likely to face over the next five years?

Strategies that will allow Bon Bon to resolve these issues.

Contents

This report is divided into 6 sections, they are as follows:

Section 1

In this section recommendations will be made as to how the number of employees could be reduced. For each recommendation made a procedure i.e. laws, will follow and an outline of implications and policies involved will also be included.

Section 2

In this section the internal and external impact on Bon Bon will be discussed. The internal factors will be ones that Bon Bon have control over.

External factors will be those that influence that are outside Bon Bon’s control.

Section 3

After discussing what internal and external impacts are influencing Bon Bon, this section will include measures of how this impact can be minimised to the least and steps Bon Bon must take in order to do this.

Section 4

This section will include the function of the Human Resources Department and the changes it will undergo over a five year period and how these will affect the overall business and what issues may arise over this time.

Section 5

Strategies to compete with the issues raised in Section 4 will have to be identified. In this section there will be Short-Term, Medium-Term and Long-Term strategies that Bon Bon could adopt to resolve these issues.

Section 6

This section will include recommendation that could accompany Bon Bon in being as successful as it was once. These recommendations will be derived from the issues discussed in Section’s 1 – 5.

Section 1 – Indicate a recommended course of action for reducing the number of employees, voluntarily or otherwise, in as peaceful manner as possible.

Bon Bon Confectionery Co Ltd is legally obliged to avoid compulsory redundancies whenever possible. We can consider:

Early Retirements
Voluntary Redundancies
Cutting overtime, temporary and contract labour
Laying-off
Redundancy – should be the last option considered.

In any of these situations the legal rights of employees must always be protected in any reduction.

EARLY RETIREMENTS

This package would be suitable for those who are nearing the retirement age.

In the case of TECO Energy, a unit of People Gas, qualifying employees were offered voluntary retirement and separation packages as a result of management’s discontinue effective July. (See Appendices 1)

To discuss what will be included in this package it is necessary for Bon Bon’s management to arrange a meeting that will allow them to discuss contents and the benefits for the employees who decide to take this package. Bearing in mind that most of the employees have served long years this package must be enhanced to benefit the employee as a return for their service.

Under the Employment Rights Act 1996 employees who have reached the age of retirement cannot claim for unfair dismissal and also are exempt from redundancy pay, thus, most of the longer-serving employees may take this package as an alternative.

VOLUNTARY REDUNDANCIES

In the case of voluntary redundancies, Bon Bon should collectively inform the entire staff of its intentions and initially leave the option open for staff to volunteer.

Since this option will be offered to all staff, it is necessary for Bon Bon to introduce certain criteria and checks, for instance if only the managers took the option then Bon Bon would face the prospect of being left with an inexperienced team.

In the case of Ford, which employs 26,000 people in the UK, they were reportedly planning to offer voluntary redundancies as an alternative to have to make compulsory redundancies. (See Appendices 2) The same could be considered at Bon Bon.

Recently KPMG had the nightmare of managing 700 redundancies, they tried to offer the best possible redundancy payments in addition the programme offered employees access to a website, which chartered the daily progress of the program, job opportunity packages and an advice line. (See Appendices 3)

This is a good example of the way to deal with voluntary redundancies at Bon Bon. The package offered by Bon Bon must be fair and transparent and the employees must be treated with dignity as employees are increasingly more aware of the terms set out in redundancy packages. (See Appendices 4)

LAYING-OFF

As temporary measure, laying off may become necessary for those employees whose work has diminished or because of temporary affects that are affecting business operations. However, using this alternative Bon Bon will have to pay the employer a Guarantee Payment for five days in a period of three months.

However, laid off employees with more than three months continuous service become legally entitled to redundancy pay when they receive no wages or less than half a weeks pay, for four consecutive weeks or six out of thirteen.

Again it will be up to Bon Bon’s managers to set criteria for the most suitable employees for the selection of laying-off.

COMPULSORY REDUNDANCIES

In a situation like Bon Bon’s where the need for redundancies may arise as a result of market fall in demand for the firms products, Bon Bon is obliged to meet obligations imposed by the law on redundancy, as set out in the Employment Protection Act 1975, the Employment (Consolidation) Act 1978.

Before commencing the process of selection for redundancy, Bon Bon must make sure that there is a consistent set of rules by which they will make selections (e.g. last in first out).

Ideally Bon Bon would have to tell the whole staff of cut backs, interviews would have to be carried out to produce consistent comparison of information from each employee.

Bon Bon must consult with individuals, the actions to be taken and the timing of each action. The actions and timings will differ according to the amount of redundancies to be made. (See Appendices 5)

Before notice of termination is served it is important that consultations take place. (See Appendices 6)

Consultations should begin with any recognised independent trade unions, employee representatives (if no union is recognised or employees are not members), or with employees themselves if no representatives have been elected.

Selection criteria

It is necessary for Bon Bon to determine the selection criteria for redundancy, where there is a 'pool' of employees from whom a number will need to be selected; selection criteria could include the following:

length of service (last in, first out);
disciplinary record;
skills / qualifications;
attendance record;
timekeeping record;

They should be applied consistently and objectively to avoid a claim on the grounds of discrimination. The criteria must be capable of objective verification and must be fairly applied. Bon Bon should avoid criteria that could be regarded as directly or indirectly discriminatory such as:

Part-timers first;
Sex (see Appendices 7: Sex Discrimination Act 1975)
Race (see Appendices 8 : Race Relations Act 1976)
Disability (see Appendices 9 : Disability Discrimination Act 1995)

Alternative employment

An alternative to redundancy which may suit Bon Bon and the employees is the

transfer to an alternative role. Bon Bon must be pro-active when looking for alternative employment and must not make assumptions about what the employee will or won't accept.

Redundancy Pay

This will be based upon the employee’s age and length of service as at the date the notice period expires.

Confirmation

Bon Bon must confirm in writing the decision to dismiss an employee on the grounds of redundancy, explaining why he/she is being made redundant, what the terms are and the right of appeal. The confirmation of redundancy is carried out is very important, in the case of KMPG staff were set an email that they were earmarked for redundancy,

(See Appendices 10), this is one case that Bon Bon should not adopt.

If Bon Bon decides that redundancies are the best option then, to make collective redundancies The Collective Redundancies and Transfer of Undertakings (Protection of Employment) (Amendment) Regulations 1995 legally oblige Bon Bon to consult whenever they are proposing to dismiss as redundant 20 or more employees at one establishment within 90 day period. Bon Bon must also inform the Department of Trade and Industry of proposed dismissals

Even if Bon Bon is considering two options, and only one of which is redundancies, then the obligation to consult still applies.

Section 2 – Indicates the likely impact both internally and externally for Bon Bon Confectionery Co Ltd.

INTERNAL IMPACT

Downsizing (reducing the size of the firm by cutting staff) may have an adverse effect on Bon Bon’s employees. A lack of job security can be crippling to the employees who gave been bought up to see the traditional pattern of “job for life”

During organisational downsizing there may be a decrease in morale and a sense of insecurity amongst the employees. The decrease in morale will not only felt by the employees but by everyone within the company at all levels. A decrease in employee loyalty and a feeling of resentment towards the company may result in lower productivities and higher turnover rates. In some cases the quality of produce being produced can also decrease as a result of employee attitudes. Once the expectation of secure employment has been violated, fear creeps into each employee’s consciousness and continues to eat away at confidence, motivation, trust, commitment, and self-esteem, all of which are factors Abraham Maslow (1908-70) identified as ‘Levels of Human Needs’ in the “Hierarchy of Needs.”

(See Appendices 11)

Due to downsizing the organisational structure will also go through vast changes. Bon Bon is very power cultured, thus power lies in the hands of a central figure. Many employees will feel resistance to change after all there has been a long tradition where employees has just got on with there job without any feedback. Due to this many layers from the organisations hierarchy may be removed, which may lead to reduced supervision and perhaps more stress. The leadership style of Bon Bon, paternalistic and autocratic will have key impact as to the how the change ...