Employee Resourcing for Factory Relocation

Introduction

The aim of this report is to review the employee resourcing issues that affect a factory as a result of relocation of the employees. The report is based on a case study of Hertford Shelving Systems Ltd, which is medium-sized engineering firm in London and it is addressed to the Director of Human Resources.

Background study

The background information of this report is based on the issues that arose in Hertfordshire Shelving Systems Ltd as a result of the implementation of relocation programme. The problems that were experienced by the company mainly arose as the company started experiencing hardships in the market and found it necessary to relocate its employees to overcome the stiff competition. The company encountered challenges before and after it has applied the relocation programme. Before the relocation, the management had issues in trying to establish the most appropriate way to establish its new site and carry out its operations without affecting the profitability of the company.

The company had been affected by the destabilization of the pricing structure and this made it to alter its retail prices to survive in the changing market environment. Issues that arose after the programme had been put in place included identifying the right employees to relocate and at the same time be able to cater for the prevailing market demand. Most of the employees relocated did not effectively work in the new sites and this brought challenges to the company’s management. The employees had been relocated to the new factory located in Stoke-on-Trent but most objected this deployment and felt that they could perform as well as while in Watford.

This report uses these issues to come up with policies that could be implemented by the company to prevent such circumstances occurring in future. The policies and proposals derived take into consideration the issues that arose during and after the relocation programme had been established in Hertfordshire Ltd.

Employee resourcing issues affecting the company before the decision to relocate

At the beginning of the year 2000, Hertfordshire Shelving Systems Ltd had started experiencing market pressures especially as other companies had started venturing in the same business and competition was dramatically rising. For instance, a UK-based company dealing in similar shelving products had come up and had risen as it gained support from China’s manufacturing firm. Another company in Germany, and which sourced its products from Hungary, was also slowly coming up and taking course in the market. The presence of these companies in the shelving systems market proved a challenge to Hertfordshire and it tended to cause a destabilization in the market pricing structure.

Issues encountered

As a result of this destabilization, the company’s major retail stores adopted new purchasing strategies that forced the company to lower their prices. The company felt that in order to maintain its profitability and raise its revenues, it had to identify new cost-reduction policies. It developed programmes that would work towards successfully enhancing the implementation of these policies and these programmes included; rationalization of the range of products and identifying those products that could more profitably be obtained through outsourcing to other suppliers and those which could be more profitably produced by the company rather than through outsourcing. Where the company identified the products that it could manufacture internally, it felt that there was need to establish strategies that could improve the quality of the products so as to be able to win larger markets over its competitors.

In order to enhance the quality of the products that the company would itself produce, it was decided that improvements could only be made in one of the company’s factories and not in both. The factories had become expensive to maintain and their internal structure was not relatively flexible to allow for re-adjustment of their internal layout to modern manufacturing methods. On the other hand, major re-structuring and re-construction would mean that the company incurs large amounts of expenditure and the factories would have to be closed down for a relatively long period in order to allow for these processes.

When the company made its analysis, it identified that the factory at Watford was much larger than that at Devon. The management therefore decided to acquire a new factory site that was at least half the size of Watford factory, where the company would relocate its production processes. A survey was carried out and after taking into consideration the transportation expenses that would be incurred, it was decided that the company would relocate to Midlands, where the warehouse was located so that there would be easier access of the firm to the warehouse. The company acquired an unoccupied factory that had just been built in Staffordshire.

The company had to develop means of reducing the labor expenses and it decided to relocate some of its employees and to re-organize its production strategies. This was to be done through reducing the number of employees and lowering the wage levels for those that would be retained. The company was faced with the challenge of deciding the employees that would be relocated and those that would remain unaffected by the strategy. The company would have to develop strategies that would balance the external and organizational priorities so that the relocation would not negatively affect the employee resourcing strategies and this would mean ensuring that the morale of employees who will not be affected by the relocation is maintained.

The idea of relocating employees would imply that the company changes the resource requirements and this was likely to lead to making inappropriate decisions that would result in long term implications of both the company and its employees. The company therefore required to develop a well structured and clear understanding of the deployment practices so that the company may be able to overcome the rising competition and at the same time increase its sales revenue.

Reasons why these issues were encountered

The following are the possible reasons why the company experienced the above issues while coming up with the relocation programme:

1. It had not fully prepared itself for the market uncertainties that were likely to come up. The company had gained a sufficiently large market and had not taken enough precautions to prevent it from experiencing hardships in the event of market instabilities.
2. The relocation programme had been formulated so suddenly that the company and the employees had not sufficient time to adjust to these decisions. When the company made its analysis, it was found out that carrying out a re-construction and restructuring in both factories would involve great costs being incurred and one reason for this was because the factory’s internal structure had been rigidly structured and could not allow for re-adjustment.
3. The fact that the company did not know the employees to relocate and those to retain was also another issue. The company had no clear strategy of employee relocation, which is important for the proper employee resourcing process.
4. The company also lacked a clear strategy that would create a balance between the external and the internal organization’s priorities especially in respect to employee resourcing. This therefore created a negative perspective of the employees regarding the relocation process and hence affected their relationship with the company’s management.

Employee resourcing issues facing the company in relation to and arising from the relocation

In 2000, the Watford factory had about 150 employees, most of whom were direct laborers, especially machine attendants. The factory organized its workers in teams and each team was assigned specific tasks. The company’s employees worked in shifts; the morning and afternoon shifts. The company’s production process had been organized into a system that ensured the implementation of the just-in-time strategies and which ensured that the ordering system would increase the production of products from the warehouse to the factory and finally to the finished products stores.

Even though most employees were unskilled, they had to employ their literacy levels in order to be able to operate the slot cards that were being used in the factory to determine the number of goods produced and also to be able to maintain accurate records. The operations of the factory also required that machines be operated while standing and to keenly monitor all the processes. There were also employees who were worked as truck drivers and who were involved in transporting raw materials to the factory and finished products to the various stores.

Issues encountered

The process of relocating employees to the new factory meant that the production processes in the Watford factory be re-structured in order to enhance efficiency. It meant that machines would have to strategically put in place so that the issue of having excess buffer stocks of work-in-progress would be minimized. This would also mean that employees would more efficiently be able to attend to other machines.

The re-organization of the factory’s operations resulted in the reduction of the direct workers from 120 to about 80. The factory operations were however still carried out in two shifts. The company developed a strategy where about 65 of the total employees were permanently employed while the rest were recruited through a temporary employment agency system. Some of the temporarily employed workers were identified as “core temps” employees, where they had the benefit of getting guaranteed for working for longer durations than the rest. The “core temps” employees were also provided with working attire and the policy of the “core temps” stated that when a permanent worker left employment, the opportunity would be given to one of the core temps employees.

This strategy was not fully effective because the number of the permanently employed workers who were leaving employment was very low. Employees found themselves retaining the positions for temporary employment for very long periods and this was greatly affecting their motivation in the factory. Workers were beginning to develop a negative attitude towards work and the company was also failing in enhancing good relations with the employees. It was clear that the relationship between the management and the employees and also among the employees themselves greatly changed with the relocation programme.

During the relocation period, the key employees from the larger factory were deployed to the new factory where they were to work on voluntary basis; the company only providing their living and travelling costs. They were later to be compensated for the disruption that had been caused. Through this process new employees were to be recruited through the local employment agencies. This however became a major challenge to the company, mainly because the agencies did not provide enough employees and those that were recruited proved to be unqualified or ineffective. On the other hand, due to the relocation, workers who were using the public means of transport often arrived late especially for the morning shift.

The employees working in the new site were not effective in their work and most of them normally left their work without informing their team leaders, while others simply left the machines unattended and this proved a great challenge to the factory. The Job Centre and the employment agency would be said to partly be responsible for this because the problem arose from the workers that it had recruited and this had not been experienced in the other factories of the Shelving Systems Company.

It was also noted that even if the cost of living was relatively lower in Stroke-on-Trent, many people did not want to permanently be deployed. The production operations carried out at Devon, also, had to be stopped and these were replaced by outsourcing in other manufacturing firms.

Reasons

Some of the reasons why the company faced these challenges include:

1. The fact that the company had employed a large number of employees and did not take into consideration what would happen if the management adopted new technology in the factories. Most of the employees therefore had to be forced to leave employment because their services were no longer required.
2. As a way to handle the large number of employees, the company worked in shifts and it grouped workers into the permanently employed and the temporarily employed. This also became an issue of concern because the temporarily employed hardly had any chance to be permanently employed. This may have affected the employees such that they objected to being relocated to the new site. The company did not consider the temporarily employed workers in the relocation process and hence the possible reason why those relocated did not perform as expected.
3. The company did not provide or cater sufficiently for the employees’ needs once they had been relocated. Most workers felt that they could not adjust to the new environment especially because the company only catered for their travelling and living expenses only. This was not enough and hence most of them objected the deployment.
4. The recruitment of employees through the Job Centre was another reason why issues arose. Most of the employees recruited through the agencies normally were not efficient and did not have the proper qualities to work in the factory. The agencies did not take into consideration the competencies of the employees recruited and this ended up affecting the factory’s productivity.

Proposals for policies and practices to be put in place to address the employee resourcing issues

The policies and proposals here are based on the issues that the company experienced during the entire relocation process. Other organizations have encountered related issues and they have looked for policy solutions that will prevent such issues from re-occurring. These policies and proposals are cost-effective and they have taken into consideration time as a limited factor.

During the initial relocation period

During the relocation process, the company faced major issues especially relating to making the most appropriate decisions. The following proposals can be enforced in the company to overcome such issues in future:

1. The management should put in mind that taking the company through a relocation process does not have to be negatively perceived or taken to be destructive. Proper management is the key to ensuring the company does not go through challenges in handling its employees. When Hertfordshire realized that there were foreseen market challenges, there was need to identify ways in which it could have engaged both its internal and external stakeholders to come up with the most appropriate ways of handling the situation. Therefore, proper communication to all stakeholders was necessary so that they are made aware of the situations surrounding the company and which are likely to affect its future development. This will help the stakeholders to play their role in promoting the growth of the company.
2. Provide a restructuring process that will prevent employees from objecting the changes made in the resource requirement strategies. Payne (2005) in his book, Managing Redundancy, notes that if an organization is taken through a redundancy-oriented restructuring process, it is likely to take the events that will occur positively. The Shelving Systems Company did not orient the workers once it discovered the challenges that were facing it and this resulted in most workers losing trust in the company’s relocation programme that was to be enforced. The workers developed a negative attitude before the programme was enhanced and this affected their reaction when it was later implemented.
3. The company should also develop sufficient future resource requirements that will be able to meet the unforeseen changing demands in market as well as organizational structures. This will ensure that the company does not experience challenges that are likely to affect the future success of the company and cause greater redundancies of employees. When relocation strategies are being implemented, the company should bring out those policies that are long term and those that will ensure employees do not face a similar problem in the future. The relocation strategies need also to be focused towards creating an optimum team of employees who are capable of delivering the company’s objectives.

After the relocation strategy

Once the relocation strategy had been put into force, the company still experienced issues, which were mainly connected to re-structuring the factories, both at Watford and in Stoke-on-Trent. As proposal ideas, the company would be recommended to implement the following:

1. The company needs to select the most appropriate candidate for relocation. The Shelving Systems Company had selected the permanent workers for relocation. However, there was still objection from most of them, who felt that the relocation was not the best for them. At the same time, some of the workers that had been recruited by the employment agencies and relocated to the new factory proved incompetent and this made the company to experience stiff challenges in its human resource management policies. Every now and then companies relocate employees with an expectation that they will achieve the company’s desired goals, only to discover that the employees could not perform properly. Hence a company should establish employee assessment strategies to ensure that a company gets the best candidates before investing a lot of money and time on inefficient workers.
2. Another way of overcoming the employee resourcing issues after relocation strategies have been implemented is through offering training to employees. A study carried out by McKinsey & Company shows that a company needs to support its training programmes in order to promote diversity among employees. An employee will require being well skilled to be productive in areas that he/she will be relocated to. This will mean that the company will not have to incur greater costs recruiting new workers to occupy the new factories that the company relocates to. Hertfordshire experienced problems trying to obtain new employees from the Job Centre and the employees ended up leaving the factory abruptly or showed little interest in the work. If the company had trained its own workers, it would not have experienced the problem and would have succeeded in its relocation strategy.
3. The company needs to enhance a transparent and critically objective strategy that will ensure employees are not unfairly selected for relocation. The Shelving Systems Company employed the criteria where employees were ranked as permanently employed and temporarily employed and those that were permanently employed were given priority over the temporarily employed workers. Some of the workers felt that there were unfair selection criteria and hence the reason for diminishing good relationships in the company. Payne (2005) in the Managing Redundancy emphasizes on using relocation and redundancy selection criteria that is unambiguous and that is applied justly and with consistency. This will work effectively towards achieving the desired goals while still meeting the requirements of the company.
4. The company should also develop destination or the settling-in services that will help the workers relocated to adapt well to the new factory. It is important for the company to know that the idea of relocation should be to put the employee back into his/her position and back to being productive. Destination services include providing sufficient information in respect to resources so that employees are able to focus on commitment and hence report to work on time and to dedicate their working time fully to productivity.

Conclusion and recommendations

Conclusion

In conclusion, it is clear that relocation of employees may result either in positive or negative impact on employee resourcing in a company. Hertfordshire Shelving System Ltd has had challenging issues while implementing the relocation programme both during the initial stages and after the policies had been fully implemented. The company needs to enforce the appropriate policies in order to ensure that the issues it experienced are unlikely to occur in future. While applying a relocation programme in future, the company should put into greater consideration the effect that it is likely to have on employees. Other factors that should be put into consideration are the effects of the relocation on the company’s operations and productivity and Hertfordshire Ltd had tried to emphasis on these even if it still encountered a number of challenges.

Recommendations

1. The company should come up with a well established relocation policy is well researched upon and that ensures:

• Employees are not made worse of financially after relocation.
• The relocation process is undertaken in a way that it has been agreed upon by all the workers involved so that no objection will be experienced and those relocated agree to fully commit their work to improving production and respecting the company’s operations. This will prevent employees leaving the workplace without informing the management.
• The total costs that are incurred by the company in the relocation process are realistic and worth of the relocation.
• Employees who have been relocated are effective and adapt well to the new factory as quickly as possible. This will prevent the company from going through a long unproductive period.

2. The relocation process should also involve the management clearly defining the positions that are available for the relocation so that employees know their responsibilities and are able to respect these responsibilities. This will reduce the possibilities of employees leaving their work pending or before the right time.
3. The company should also provide its own means of transport for those employees who have no private means. It was observed that employees were getting late for work because of the inefficient public transport timetables and if the company would offer to transport its workers to and from the new site, then the problem of lateness would be overcome.
4. It is also necessary that the company provides financial assistance to employees during the initial stages of the relocation process. Since the relocation was planned to take six months, the company should provide a basic pay to the employees in addition to the living and travelling costs. This will encourage those employees who are unwilling to relocate.
5. Alternatively, the management may implement new recruitment strategies to obtain employees who will take over the positions of those workers who are unwilling to relocate. Initially the company had been using the Job Centre and the local employment agency to recruit new employees but it has been noted that the employees recruited are not competent and they tend to leave their jobs without informing their team leaders while others left the machines unattended. The company should therefore come up with its own way of recruiting competent employees. This would be through retaining its employees while promoting those that are at lower levels and have gained the relevant skills. They could also recruit new workers directly through advertising for posts and then offering proper training so that the workers can have a deeper understanding of their duties and responsibilities. The company should avoid dealing with the Job Centre or the local agency to recruit new employees because it was not giving competent candidates.
6. The Human Resources administrator did not wish to relocate due to family commitments. The company should not overlook the fact that the relocation process is likely to affect the employees’ family members as well. There is need therefore to take into consideration the impact the relocation strategy will have on the family members. The company may need to offer career assistance so that the administrator and other employees are able to understand clearly the way to handle their family commitments while still committing themselves to relocate to new areas.
7. Disciplinary actions may also be taken on those employees who do not respect their work and who tend to come late or leave their jobs without good reasons. This would be through penalties or relieving off their duties and withdrawing their pay.