Reference no: EM132640304

Managing Human ResourceS

Social Contract

The Right Way with Employees?

As a senior manager for a global player in automobile production and sales, Jane Ellis had joined thousands of fellow employees in the excitement surrounding production of the company's new hybrid vehicles.

But barely two years into production, embarrassing component shortages, delivery delays, and a recall of the first models had a ripple effect, presenting the company with mounting concerns. In the confusion, many customers canceled orders and turned to competitors for purchase of the eco-friendly vehicles. Ellis's company was facing a financial downturn.

With three decades of service to the company, Jane led a contingent of managers intent upon keeping together as much of the company and as many employees as possible.

"We know there will be some necessary cuts," Jane admitted. "But this company has a long history of sticking by its people. Our first priority should be internal streamlining of how we do things and making sure we have the right people on board."

Many managers liked what they heard from Jane. She was well-respected and had a unequaled reputation for her leadership and collaborative skills and her ability to work with managers, as well as line workers on the factory floors. People marveled at the number of individuals she knew on a personal level throughout the company.

Drew Cunningham influenced a second contingent within the management group. A brash go-getter with a reputation for fixing companies in crisis, he proposed across-the-board cuts in employees in order to implement a solution as quickly as possible. He proposed the immediate creation of a forced ranking system in order to identify and get rid of lower-ranking employees.

Jane raised her hand and rose to her feet in objection. "So we're going to create a system to fire ..."

"I didn't say fire..."

"OK, cut our own hard-working people? It sounds like some lame government commission," Jane said. "We've got bright people. This thing simply got worse faster than we thought. We can work with the people we have in setting up more efficient workflow, establishing reasonable deadlines to increase output and ..."

"Jane, these are not the days of knowing everyone in the plant," Drew said. "You're not throwing out your uncle Harry. We're taking a serious look at what we do, how we do it, and streamlining everything by keeping the right people in the organization and cutting the rest."

Apply Your Skills: Case for Critical Analysis

The Right Way with Employees?

1. What kind of employee social contract is assumed by Jane Ellis and Drew Cunningham? Explain fully - what is the traditional social contract and what is the "new" social contract.

2. If you were an HR manager at the company, which view would you support? Why?

3. HR departments hire and develop human capital to serve the organization's strategy and drive performance. Which approach-Jane Ellis's or Drew Cunningham's - is more likely to have a greater positive impact on performance? Discuss.