Reference no: EM133043006

Amanda is a human resources manager with a large company that sells lawn equipment. A well-known consulting firm, in cooperation with the company's executive, recently completed a detailed audit of operations. As a result of the audit, selected departments (including the customer service team) were targeted for restructuring. The consultants made it clear in their report that they believed that the budget allocation for the customer service team was "adequate." The consultant recommended that the department receive a 1.5 percent annual increase in funding for the next two years. Note that operating costs for the department are projected to increase at a rate of about 3.5 percent annually.

Amanda has been given the responsibility of managing the restructuring in the customer service department. The company did not direct her to cut a specific number of jobs. Amanda has been asked to develop a restructuring strategy that will meet the company's mission of "providing quality service to its customers in a cost-effective manner." She is currently reviewing the operating policies in the customer service department.

The customer service team is responsible for tasks such as customer inquiries, order-tracking and customer satisfaction. At the present time, employees work in one of two subunits: customer service or customer orders. Each of the subunits is housed in a separate building and has its own equipment, supplies, and operating budget. As well, while employees can formally apply to transfer to a different subunit, the managers of the subunits involved and the VP (who is responsible for the overall operation of the department) must all agree. Unless a vacancy at one of the subunits arises, any employee transfer between units will rarely be approved.

In 2012, the department underwent a considerable down-sizing, and 4 percent of its permanent positions were cut. Also, the department stopped its practice of hiring summer students from local universities to cut costs. Before this, students were employed over the summer to help with increased sales during the busy months and to cover vacation periods for full-time employees. In 2015, a smaller cutback of 2 percent of the workforce took place.

In 2016, the company brought back the practice of hiring summer students. This decision was welcomed by the full-time employees, in particular, because it allows the employees much more flexibility in selecting their vacation time. From 2012 to 2015, the company put many restrictions on when employees could go on vacation. Employees with 10 or more years of service could have a maximum of one week's holiday in the summer. Further, employees with less than 10 years of service were not permitted to go on vacation during the busy months. Under the existing employment terms, the company management has the right to determine the vacation schedule of employees. In reviewing turnover data for the department, Amanda found that very few full-time employees quit their jobs to pursue other employment opportunities. Also, dismissals for cause were rare; over the past 10 years, only two employees were terminated for cause.

Since the early 2000s, the company has had a local consulting firm conduct surveys of both employees and customers. A summary of the findings from the employee survey is contained in Table 1. Note that each of the items (such as employee morale) is measured on a 5-point scale (1 very low; 5 very high). Similarly, Table 2 contains summary information from the survey of customers concerning the performance of the company. Again, respondents were asked to reply using a 5-point scale (1 very low;5 very high). Note that on both surveys, there were only minor differences in the results when the data were broken down by subunit (customer service and customer orders).

-Read the case study below.

-Describe the critical organizational issues HR should consider before designing a restructuring strategy.

-Describe restructuring options for the department.