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Copperbelt University Directorate of Distance Education and Open Learning Master in Business Administration (General) GBS 750: Strategic Management TERM PAPER 2: THE SLAUGHTER HOUSE By Mandona Edith.M SIN: 21900257 Lecturer: Dr. Raj Parikh 07th December2021 Abstract Employee layoffs have become a circumstance of working life. This can come about when organisations struggle to cut costs and adjust to changing market demands. Layoffs are often executed during economic recessions as a reactive and intentional action. The Covid-19 pandemic swept through the globe and may people lost their jobs and businesses were shut down. As the Covid-19 cases were on the rise, Zambia’s unemployment rate continued to rise and ranged from 11.91% to 12. 17%, according to trading economics global macro models and analysts expectation. Zambia is predictable to hit 13.00% unemploymebnt rate by the end of 2021. Baros limited in its quest to stay afloat during this period laid off 380 employees from a total of 500 employees throughout a six-month period, from May 2021 through to October 2021 Laying off employees is a delicate matter and as such the process needs to be handled well and sensitively. Given the numerous risks, organizations ought to prudently contemplate if the layoffs are necessary and to what extent. There are many consequences of layoffs, which when improperly handled can end up in court, which is the last thing an organisation needs. Hence, the decision to layoff personnel must be conducted in a legal, ethical, and socially responsible manner. Laying off employees is rarely easy, the decision maker should carefully weigh the pros and cons of reducing personnel. The organistion ought to think critically through all possible options before commencing layoffs. Alternatives such as prolonged vacations, salary reductions, wage freeze, hire and promotion freeze, overtime, ectera. This paper will discuss layoffs and some of the associated effects of the same, illustrate the decion making styles and pinpoint some pit falls to avoid when making a decision relating to laying off employees. The slaughter house The slaughter house gathers it’s name from the gruesome act of animal slaughtering that takes place. Employee layoffs have a similar feel in there undertaking. Employees get chopped and axed out of organisations all the time. Employee layoffs have become a circumstance of working life. This can come about when organisations struggle to cut costs and adjust to changing market demands. Layoffs are often executed during economic recessions as a reactive and intentional action. When managers are faced with important issues to tackle, they have to engage in various decision-making processes to churn out conclusions with consequences. The resulting verdict may yield acceptable premise or create surprise, confusion, or even be seen as a threat . Consequences capture the effects of a decision, such as its benefits, and whether these benefits seem justified given the cost, disruptions, and distractions. The setting of the decision classifies domains of action for example top management or departmental and the type of decision, such as whether it is strategic or not, complexity, urgency, importance, uncertainty, resistance, ectera (Gandolfi, 2008).This report will explore the decision-making process in relation to laying off employees and how to do it right. It will also address the alternatives to downsizing and the consequences of a downsized workforce Background The Covid-19 pandemic swept through the globe and may people lost their jobs and businesses were shut down. As the Covid-19 cases were on the rise, Zambia’s unemployment rate continued to rise and ranged from 11.91% to 12. 17%, according to trading economics global macro models and analysts expectation. Zambia is predictable to hit 13.00% unemploymebnt rate by the end of 2021. To complicate the situation further, in August 12, 2021 Zambia held its elections and ushered in a new government. It is a well know fact that the change of government comes with various new changes and measures and Zambia was no exception. With the swearing in of the new President and other officials came new reforms and re-structing of government, particularly the ministry of infrastructure. With the new government in play all payments to infrastructure projects were put on hold to facilitate government audits on all infrastructure and road projects, Due to the freeze on all payments to contractors, infrastructure sites shut down till audits were fianlised. This had a very big impact on construction companies that were working on government projects. Baros limited is a company located in Lusaka and were adwared a government contract in Lunga dristrict to build twenty medium cost houses. Because of the above highlighted reasons, Baros limited had to lay off hundreds of workers on their sites to help stay afloat during the payment freeze and Covid era. It had proved difficult to maintain such a wage bill over time and the contractor did not know when the payment freeze would end. First, all hiring was stopped in February 2021. Subsequently, personnel numbers started to reduce. 380 employees were laid off from a total of 500 employess throughout a six-month period, from May 2021 through to October 2021. The layoffs were announced in advance and those affected were personally informed of the unfortunate situation. Terminations were on a scheduled monthly basis. Each month saw more and more employees laid off. Decision Making styles Laying off employees is a delicate matter and as such the process needs to be handled well and sensitively. Even more when conducting mass layoffs , there may be several implications for both the organisation and the employees being laid off. Given the numerous risks, organizations should prudently contemplate if the layoffs are necessary and to what extent. There are many consequences of layoffs, which when improperly handled can end up in court, which is the last thing an organisation needs at such a time. Hence, the decision to layoff personnel must be conducted in a legal, ethical, and socially responsible manner. Given the numerous risks, the decision to layoff personnel should follow some form of decision making process or style . Below are some of the decision making styles applicable to the decision making process. Rational decision-making style In this style, individuals making the decision seek relevant information and this information is gathered and processed systematically and oriented towards both internal and external sources. Possible alternatives are evaluated before making a choice and scenarios weighted by probabilities of each alternative. The ultimate alternative would be the one offering a suitable expected scenario and with highest probability of outcome (Oliveira, 2007). Intuitive decision-making style The function of intuition in decision making process can be hypothesized in a two-step course in where knowledge is primarily demonstrated with a positive or negative valence reliant on the outcome of preceding decisions and then is used to form additional decision making by means of the somatic maker (the emotional valence) associated with the knowledge (Bierman, 2005). There are three identified sources of intuitions explained by Patton (2003) The innate response instinct is an inborn institinct, it cannot be learned. While the general experience is basically accumulated life experince of everyday happenings as a human develops. Last but not least the focused learning which stems from intentional effort to cultivate habits and behaviours. Dependent Decision Making The definition is in the name, It implies the reliance of the decision maker upon the guidance and backing of others in the decision making process. Decision makers in this style always search for advice and direction from others before making critical decisions (Thunholm, 2004). Spontaneous decision-making These decisions are spontaneous and susceptible to making "snap" or "spur" of the moment. The style is branded by a feeling of immediacy and need to quickly run through the process (Sadler-Smith, 2004) Avoidant decision-making Style In this style the decision maker avoids or postpones making any decisions (Spicer & Sadler-Smith, 2005) The five decision making styles above can be used in various situations and will apply depending on a number of factors including but not limited to the situation, context, decisionmaker attributes, organizational features, process, and process tactics . All these have been found to influence the decision-making process that is made and its consequences by other researchers. To tie into the illustrated case on employee lay offs at Baros limited, the ration decision making style coupled with the dependent decision-making style is appropriate. Laying off employees is no childs play and is to be treated with atmost importance and diligence. Therefore the decision making process for this situation will require the decision making team to asses the sitution fully and rationally and logically to arrive at a viable solution. It cannot be over emphasised the importance of consultations during this phase. Mental Pitfalls in Decision-making There are numerous aspects that impact the decision-making process. These factors, including past experience, age cognitive biases, belief in personal relevance, individual differences , and an escalation of commitment (Yogendrarajah, 2014). Appreciating the factors that affect the decision-making process is imperative to comprehending the kind of decisions are made. The key to reducing failure and the possibility of a debacle, can be found in the decisionmaking practices that are used. Decision-makers are cautioned to employ practices that have a good track record and to shun those that are failure-prone. Premature commitments Managers blunder when they make premature commitments. This rush to judgment creates a commitment that is hard to back away from. Misguided pragmatism and artificial time pressure are the primary motivations for making a premature commitment (Oliveira, 2007). For example in the case of layoffs, a manager cannot just haphazardly decide to layoff an employee just because they feel like it, there is procedure even if the manager has due cause to fire an employee. There is no room for an emotionally charged decision when dealing with peoples livelihoods. As such the manager must desist from making premature judgments and commitmments Poor resource allocation and investments Managers sometimes carry out analytic evaluations. Analytic evaluations are often defensive in nature and are carried out to defend an idea that a manager has become wedded to, giving the appearance that the analysis has little purpose beyond defending what the manager wants to do (Gandolfi, 2008). Managers spend vast sums on uncovering the benefits of a proposed action, but little on anything else such as searching for a new idea. When an organisation has hit a rough patch very rarely are they looking at other alternatives for employee retention rather the first and immediate solution is to layoff workers in the quest to manage the wage bill. However mass layoff will require massive investments to settle employee benefits as well as meet statutory obligations for such layoff unless done illegally. Resources are scarce and must be properly applied as correct responses to the appropriate situations. Therefore, there is need to understand the likely consequences, unintended costs and challenges relating to this approach Failure-prone practices They occur when a manager fails to explore claims, ignores the barriers to taking action, gives ambiguous directions, becomes distracted by a quick fix, and misuses analysis. Using poor decision-making practices can make misleading associations between a decision-making practice and its results (Cascio, 1993). This prompts the manager to discard perfectly good ways of making decisions and to continue to use others that have a poor track record. Referring back to our early case study for the layoff of employees at Baros Limited. The ration decision-making style coupled with the dependent decision-making style is appropriate. Decision to lay off employees cannot be carelessly handled. It is a sensitive matter that will affects all parties involved and should be well thought out and rationally dealt with, especially when employees are being laid off due to financial issues as illustrated in the case study. Below is figure showing a plan on how to address the issue adopted from Gowan,(2009). Review the downsizing decision Identify the specific problems that downsizing is to solve. Assess the resources that can be devoted to it. Consider how downsizing will affect the company in the longer run. Explore alternatives Explore all the available alternatives. For example, extended vacations, reduced salaries, furloughs, putting a freeze on all “hiring and promotion,” and/or reducing authorized overtime. Present alternatives for scrutiny Highlighting recommendations, applicable benefits and implications of the decision. Plan the downsizing process Establish and document the criteria for deciding which employees should be laid off based on a fair and legal process consider critical skills as well as job performance. Manage the process and develop various strategies Help remaining employees to cope after the downsizing process is complete. Implement measures to instill confidence the remaining employees. Summary Layoff employees is rarely easy, the decision maker should carefully weigh the pros and cons of reducing personnel. The organistion ought to think critically through all possible options before commencing layoffs. alternatives such as prolonged vacations, salary reductions, wage freeze, hire and promotion freeze, overtime ectera. Before a company decides to try and save costs by cutting staff, there is need to understand the likely consequences, unintended costs and challenges relating to this approach. The decision-maker may have traits such as the propensity to take risks, tolerance for certainty and ambiguity, creativity, decision style, skill, need for control, power, experience, education, and values. The use of improvisation or customized, pre-established, rules to cope may be applied in the process too. These can be treated as part of the tactics applied by a decision-maker that respond to needs to manage stakeholders as the process unfolds. The methods and procedures may be applied consciously or unconsciously. This paper has discussed and elaborated employee layoffs and some of the associated effects of the same, illustrated decion making styles and some of the pit falls to avoid when making a decision to layoff employees. References Bierman, D. (2005). Intuitive decision making in complex situations: Somatic Markers. Artificial Grammar learning task, Cognitive, Affective, and Behavioral Neuroscience, 2-9. Cascio, W. (1993). Downsizing: What Do We Know? 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