AGRICO: Alternatives To Retrenchment And Benefits For Retrenched Employees

Alternatives to Retrenchment for AGRICO

AGRICO is a company based in a regional city, Bullamakanaka in NSW and it produces farm equipments such as slashers, trailers, stick rakes etc. the organization was founded in 1968 by Bruce Biggalow. The company has 150 permanent employees and the owner considers all the employees as a part of the family. The company has been able to retain its employees successfully. Even, the company has second generation employees. AGRICO is the largest employer of casual employees in that region. Casual employees are appointed during the seasonal cycle. Mostly the local TAFE and university students work as the casual employees. Bruce has been able to secure the Australian distribution rights from China to provide farm water management system which will revolutionize the irrigation management system. AGRICO will not be using any of its old manufacturing capacity as well as resources for manufacturing the new products. A group of twenty employees with different skill will be required to support this production procedure. It is predicted that local people will not have the required skills. Additionally, several years of drought has reduced the demand for the new farm equipments. AGRICO has been encountering significant loss and having excess employees. In this situation Bruce is worried to retrench some of his employees. Four alternatives to retrenchment will be provided in this section along with the pros and cons of each.

AGRICO can reduce the working hours of the employees which will eventually lead to reduce the wage of the worker (Dessler, 2000).

Advantages

• AGRICO can retain all its employees.
• The salary will be lowered which will reduce the expense of AGRICO
• The loss amount will be reduced.

Disadvantages

• Employees will be dissatisfied with the reduced salary.
• Employee dissatisfaction can affect the productivity.

Reduction in working days can be alternative to retrenchment. As the demand is low, less labor is required to meet the production target (Mondy, Noe and Gowan, 2005).

Advantages

• Employees will not be terminated.
• As number of working days reduces, the salary will also decrease.
• AGRICO can minimize its loss.

Disadvantages

• Employee morale may be affected.
• Lower salary will not encourage the employees to put the best effort.
• Employee dissatisfaction may arise which has a negative impact on the productivity.

Mutual termination of employment relationship can be a good alternative to retrenchment. AGRICO can clearly disclose its financial position to its employees and ask for voluntary termination of employment.

Advantages

• The burden of salary will be decreased for AGRICO.
• The reputation of AGRICO will not be spoiled.

Disadvantages

• AGRICO has to bear additional cost for providing voluntary retirement benefits or compensation for mutual termination of employment.
• It will be difficult for AGRICO to provide the lump sum amount at a time.

Reduction in remuneration can also be considered as alternative to retrenchment. The reduction is salary or labor cost may include reduction in the bonus, overtime payments, salary freeze etc (Sims, 2007).

Advantages

• The decreased remuneration will help to minimize the excessive cost burden.
• It can continue the employment relationship and the employees will not be affected.

Disadvantages

• Reduction in salary can lead to employee dissatisfaction.
• AGRICO may lose talent due to employee dissatisfaction (Gilmore and Williams, 2009).

These are the alternatives to retrenchment for AGRICO. Now, Bruce needs to consider the advantages as well as disadvantages of each alternative to make the appropriate decision so that the company can revive form the current financial position.

This section will focus on the benefits that must be provided to the retrenched staffs. If the present financial position of AGRICO forces Bruce to retrench some staffs, he will provide some services as a socially responsible organization that care for its employees. Four benefits are discussed in this section which will provide some benefits to the retrenched employees.

The retrenched employee must be provided with compensation package for the immature termination of employment. This will include gratuity, retirement benefits such as superannuation fund, lump sum payment etc. The compensation will be determined on the basis of the tenure of service provided by the employee and the time period he could have provided service to the organization (Mathis and Jackson, 2003).

Benefits for Retrenched Employees

Benefit:

The financial future of the employee will be in a better position. He can get adequate support until he finds another job.

The retrenched employee can be given first priority while appointing the casual staffs for the seasonal cycle. Additionally, the family members of the retrenched staff must be favored while recruiting new staffs. This will provide at least a part time job opportunity for the retrenched employees (Banach and Jeske, 2010).

Benefit:

There may be some employees who are only appropriate for this industry and unable to get job in any other companies. The retrenched employee and his family can get a support from AGRICO through part time employment opportunity.

Medical benefits can be provided to the elderly retrenched employees. Medical benefits include reimbursement of the medical expenses up to a certain limit.

Benefit:

By providing the medical benefit to the retrenched employees, AGRICO can secure the physical well being and proper medical treatment for the employees.

Retrenched employees having school going children can be supported with the expenses of education for up to two children.

Benefit:

If AGRICO bears the education expense for the children of the retrenched employees, the children will get facility to study and will not be deprived of education (Sims, 2007).

The management of the Blondeye Hotel has been concerned about the safety issues and therefore decided to install a video surveillance camera. The surveillance camera has capture some incidents which reflect the slack attitude of a bar worker, Ms M. She has been employed for the last eight years and found to be spending time unnecessarily by chatting with the clients. Additionally, it has been observed that she is not entertaining the patrons. The camera has captured a moment where Ms M was seen taking away a bag of coins which contained $50. The managing director of the hotel, Geoff Allwright wanted to dismiss Ms M. However the bar manager prevented him from taking a hasty decision. Therefore, Geoff has asked for suggestion. It is not fair to dismiss any employee by following the right way of termination. As an HR consultant, I would like to suggest the following:

Step 1:

Natural justice is a fair process which must be adopted by any decision maker for being correct and fair for all the concerned parties. The process must be based on the principles of transparency and fairness and it treats everybody equally (Library, 2014). In this case, the management of the Blondeye hotel must provide an opportunity to MS M to express his perspectives and opinions. Hence, a discussion session must be arranged where the concerned authorities will be present along with Ms. M. Thus, the management can remain unbiased and fair in making any judgment.

Step 2:

If from the discussion and the evidence, it is proved that Ms M has been found to be an offender, proper action must be taken for the willful misconduct. In this stage, the management must reach a conclusion regarding whether Ms M is truly an offender or not.

Step 3:

According to the guideline provided by the Fair Work Commission of Australia, Ms. M must be formally notified by the concerned authority and must be given a chance to improve. A counseling session can be conducted for improving the performance and attitude of Ms M (Fairwork.gov.au, 2014).

Step 4:

The activities and performance of Ms M must be monitored and any further offense or misconduct may lead to termination of employment.

A counseling session will help in changing the attitude of Ms M into the positive direction and improve the performance of the employee. The counseling plan will be developed in this section and it will address all the issues. The steps of the counseling plan and implications of each step are discussed below:

• At first, a professional counselor must be appointed to improve the attitude and performance of Ms M.
• Bar manager also has a major role to play in this situation. Along with the professional counselor, the bar manager will participate in this process.
• Initially, the case must be explained in detail to the professional counselor. This will help the counselor to get an idea about the problem and what needs to be done.
• Ms M must be allowed to open up in this session and the reasons behind such attitude of Ms M must be analyzed. This will help to improve the attitude and performance of Ms M.
• Ms M must be encouraged to perform her job role properly. She must understand that the employees are valued in the hotel and that is why she has been given an opportunity. Thus, the attitude of Ms M will be changed as she realizes the hotel is giving her a chance although she has committed crime.
• In this session, problems of Ms M can be identified and must be conveyed to the hotel authority. This will also help the hotel to take necessary action.
• The job roles need to be clarified by the bar manager so that Ms M improves her performance to achieve the benchmark (Sims, 2007).

Exit interviews are conducted when an employee terminates employment relationship with the organization. Many organizations arrange exit interviews for assessing the reason for departure of that particular employee (Griffeth and Hom, 2001). The major aim of this interview is to identify the major issues and improve the organization. In the given statement exit interviews are indicated as a waste of time. In this section the advantages as well as disadvantages of exit interviews will be discussed which will help to evaluate the given statement.

Advantages of Exit Interview

• Exit interviews are conducted for analyzing the reason behind termination of employment. The concerned authority and management get an idea about the perception of the employees and the feedback is essential for the further development of the organization. This is the major advantage of conducting an exit interview.
• The organization can utilize the feedback of the departing employee and the knowledge for retention of talent in order to improve the performance of the organization.
• The findings and analysis of the exit interview provide useful as well as relevant information for indentifying the training needs and assists in the planning of the training procedure (Harris, 2000).
• Exist interview provides relevant information which helps in improving the recruitment process along with the induction of the new employees.
• Exit interviews have a significant implication for the existing employees as they consider it as a sign off the positive culture. This helps to improve the employee morale.

Disadvantages of Exit Interview

• Conducting an exit interview as well as analyzing the results carries significant cost for the organization.
• While analyzing the responses or results of the exit interview, it becomes difficult to quantify all data.
• The result and analysis is extensively dependent on the interviewer and the human error is associated with this process.
• Sometimes the departing employees do not take the exit interview seriously and the implications of interview become insignificant.

Though there are certain disadvantages of exit interview, these can be minimized by adopting some measures. First of all, it will be better if the exit interview is conducted by someone other than the immediate supervisor of the employee who is resigning. The purpose of the exit interview must be clearly explained to the departing employee. The process must be simple as well as confidential. The information must be recorded in tabular form so that it becomes easier to assess those.

References

Banach, R. and Jeske, C. (2010). Stronger compositions for retrenchments. The Journal of Logic and Algebraic Programming, 79(3), pp.215–232.

Dessler, G. (2000). Human resource management. 1st ed. Upper Saddle River, NJ: Prentice Hall.

Fairwork.gov.au, (2014). Unfair dismissal – Ending employment – Fair Work Ombudsman. [online] Available at: https://www.fairwork.gov.au/ending-employment/unfair-dismissal [Accessed 9 Oct. 2014].

Gilmore, S. and Williams, S. (2009). Human resource management. 1st ed. Oxford: Oxford University Press.

Griffeth, R. and Hom, P. (2001). Retaining valued employees. 1st ed. Thousand Oaks, Calif.: Sage Publications, p.211.

Harris, D. (2000). The benefits of exit interviews. IEEE Engineering Management Review, 28(3), pp.63–66.

Library, L. (2014). Natural justice or procedural fairness – Preliminary Part I: HSC Legal Studies – Research guides at State Library of New South Wales. [online] Guides.sl.nsw.gov.au. Available at: https://guides.sl.nsw.gov.au/content.php?pid=293537&sid=2436829 [Accessed 9 Oct. 2014].

Mathis, R. and Jackson, J. (2003). Human resource management. 1st ed. Mason, Ohio: Thomson/South-western.

Mathis, R. and Jackson, J. (2003). Human resource management. 1st ed. Mason, Ohio: Thomson/South-western.