Reference no: EM132877863
Please answer the following questions based off the case study below:
Case Study Questions:
- Are the drivers' complaints reasonable? Why or why not?
- Identify the options Neuhurst could use to resolve this conflict (at least three options). Discuss the pros and cons, positive and negative consequences, etc. of the possible courses of action.
- Outline your advice for an HR manager at a company considering using an outsourcing arrangement rather than continuing to employ its own workers.
- Discuss your advice for a worker who is facing the transition from a traditional employee/employer relationship to an independent contractor/client relationship.
- Discuss another HR concern or issue arising from the case. Identify the issue, discuss its importance from the perspective of an HR Professional and describe your considered response to the issue.
Case Study
MedTech and Canadian Courier Ltd.
Grant Neuhurst, Senior Vice President of MedTech Canada, expected the worst from the meeting that was scheduled to begin in less than an hour. The drivers were up in arms and customers at hospitals across southern Ontario were upset too.
MedTech, one of the world's leading medical supply companies, is dedicated to helping healthcare professionals perform their jobs more efficiently while enhancing patient care. The company offers a variety of innovative medical products, including surgical and medical equipment and neurotechnology and spine products. Hospitals and health care organizations purchase MedTech products such as examination equipment and surgical instruments on a regular basis as well as custom, patient specific devices such as joint replacements on an urgent basis. Deliveries are both routine and scheduled as well as time sensitive and urgent.
Ten months ago, Neuhurst had decided to outsource MTC's delivery services and he had signed a contract with Canadian Courier Ltd., a company with offices and warehouses across the country. At the time, the companies seemed to be a good fit for each other. Canadian Courier had been founded by George Wettlaufer, who was the brother of the Director of Logistics at MedTech, and had a good reputation.
When Wettlaufer had approached Neuhurst a year ago, the sales pitch had been very attractive. Wettlaufer showed Neuhurst that by contracting with Canadian Courier, MedTech could save 25 percent of its delivery costs along with the considerable hassles of scheduling and supervising the delivery team for Ontario. "Look," Wettlaufer had said, "if you contract with my company, we will handle all of the recruiting, staffing, and administration for the drivers. We'll look after their financial management and we'll let MedTech approve any driver we place here. If he or she is not acceptable, we'll recruit another driver at our own expense. MedTech will have the highest level of delivery service available - 24/7 all year round - and at significant financial savings."
Neuhurst was sold on the idea and signed an agreement granting CCL exclusive management of the driver group according to the terms they had discussed. As is typical in such cases, the drivers would be independent contractors with CCL and CCL would be under contract with MedTech Canada. Legally, there would be no agreement of any sort between the drivers and MedTech. CCL then recruited and signed contracts with a group of drivers, ten of whom had been MedTech employees prior to the new deal.
For the first six months, things went relatively smoothly. The former employees seemed to be adjusting to the new reality of not being included in MedTech's company events and an unofficial team leader of the drivers emerged. Murray Cowan, an intelligent and charismatic leader, often spoke on behalf of the drivers to MedTech's warehouse manager and supervisors. This seemed to work well since CCL did not have supervisors on site and their office was located in Mississauga, about 50 kilometres away from the MedTech main office and logistics operation.
But then things began to change. Neuhurst's sales manager advised him that he had received complaints about delays of urgent equipment and supplies from surgeons at various hospitals. Neuhurst heard through his admin assistant that Canadian Courier's cheques to the drivers had arrived late several times and then bounced. There were rumours that CCL had lost several big accounts and were facing serious financial difficulties. The MedTech warehouse manager reported that the drivers had been gathering in the loading dock area and seemed to be having a meeting late last Friday afternoon.
This morning, the already difficult relationship between drivers and CCL reached the breaking point. CCL were insisting that drivers install GPS tracking equipment in their vans and advised that any driver who did not have the system activated by the end of the week would be cut off from deliveries with CCL. Murray Cowan was furious and had been heard shouting at Wettlaufer over the telephone, "If you can't pay us on time and treat us with the dignity and respect we deserve, you better be ready to drive titanium hip joints across the province yourself at all hours of the day and night, because we won't be doing it anymore!".
Cowan then stormed into Neuhurst's office. "CCL owes us $150,000 for last month's invoices and is treating us like dirt," he said, barely controlling his temper. "They're making us put trackers in our vehicles so they'll be able to penalize us for stopping at Timmy's or going one kilometer out of the direct route! You need to break MedTech's contract with CCL and either let us deal with you directly or bring us on as MedTech employees. All of the drivers are on side with me and so are the warehouse guys. If you don't resolve this issue my group and I are leaving at the end of the week."
Neuhurst calmed Cowan down and asked him why the drivers were so upset. Cowan explained what had been going on and said, "I don't want to put you in the middle of this, but us drivers need to pay our bills and we deserve to be treated decently. This used to be a good place to work but since CCL took us over, it sucks. The MedTech people treat us like second class citizens now too - last week one of the guys was told he couldn't use the staff room because he's not an employee and when some of us showed up for pizza at the last Pizza Day we were told it wasn't for us but we could come back and check if there were leftovers! What's next? We'll have to sit in our vans outside waiting for orders from our bosses at CCL? If you want us to represent MedTech to hospital staff out there, you better treat us like human beings! I want to have a meeting with you and the rest of my group later today, and I want to know how you're going to resolve this. I'm sending an e-mail to the local TV news show as soon as I leave your office."
Neuhurst felt he was facing a serious situation. He had no legal right to interfere with the contract Canadian Courier had with the drivers unless CCL breached its agreement with MedTech. MedTech International was relying more and more on outsourcing as a way of controlling costs and MedTech Canada had agreed to follow the corporate direction. Taking sides with a group of independent contractors against CCL could result in legal problems and hinder negotiations with other companies. On the other hand, it would be a public relations disaster if the driver group walked out. They had relationships with surgeons and staff at hospitals and could easily sway opinions to their side of the issue. If equipment and supplies were not delivered in a timely and efficient manner, hospitals would take their business to other medical equipment companies. Neuhurst felt that the future viability of MedTech Canada would be seriously compromised if he allowed the problem to move to the next stage. In addition, he knew that Cowan was capable of playing hardball.
Cowan and the drivers along with MedTech's managers of sales, logistics and HR were due in Neuhurst's office in 45 minutes. Neuhurst didn't have much time to figure out what to do.