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HRM Case Study Incident Number Two Downsizing

Rose Smith

Abstract

This paper is about the International Forest Products company’s downsizing in
Ouachita County. The HR director had a meeting with the president, and the president told the HR director that the company must lay off 30 percent of the employees to reduce the cost of the company.
According to Human Resource Management, chapter one states that the most
an important factor that affects the company is capital. Capital is defined as enabling the company to generate income, increasing company stock price, “economic value,” strong positive brand identity, and a good reputation (Mondy & Martocchio 2016). There are different types of capital including financial capital (cash), equipment capital, and employees who have certain skills, knowledge, and ability in the company are called human capitals. 
 
Although capital is the main factor in HR, there are many more factors which
highly interrelated in HRM. As an HR director, he/she also need to consider the labor market, society, political parties, unions, shareholders, etc. Each of these factors can be individual or combined with others. For instance, a case study on incident number two downsizing, Scott Wheeler is a Human Resource director for International Forest Products Company (IFP), and he just had a meeting with the president (Janet Deason) and the president told Mr. Wheeler that for the company to reduce cost, it needs to lay off 30 percent of the employees. As an HR director, Mr. Wheeler must consider all of the factors that are a part of this decision.

Answers to question #1-4, Incident Two Downsizing

1. Mr. Wheeler had to lay off 30 percent of the employees. As an HR director he must measure the needs of the company and the employees then try to balance those needs. Then fulfil those need to the best of his ability so the company runs smoothly. He must also consider the dynamic of human resource management such as legal consideration, unions, shareholders etc.
Legal consideration is defined as an important external force affecting HRM which relate to such as federal, state, and local regulation. The people will be laid off based on the union’s wishes if the employees are part of a union, but they aren’t, so the union can’t make any claims for the employees. Shareholder is defined as the owner of the corporation.
2. The legitimate elements that would affect Wheeler’s suggested plan are the
community, (this action will lead to bad economy), the unions will have some concern about the amount of numbers of employees who are laid off, and lastly, the employees who are laid off will most likely have some difficulty in finding a new job because Ouachita County is a small community.
3. Based on the information in incident 2 downsizing, it is important for Mr. Wheeler to
consider shareholders. Reflect back to chapter one, it states that the shareholder is a part of the company’s capital. Therefore, for the company to generate income Mr. Wheeler must keep the shareholders interested in the company, so the shareholders will keep investing in the company.
4. Downsizing will affect corporate culture in International Forest Products company
in some negative and positive ways. Some of the employees who are not laid off could feel uncertainty which could lead to stress in the work environment. This could lead to employees becoming apathetic. On the other hand, the positive effect could be that some employees will probably try harder on their projects because they do not want to be laid off in the future.

References

Mondy, R. W., & Martocchio, J. J. (n.d.). Human Resource Management.

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