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THE CASE STUDY

The traditional company hierarchy, where executives oversee managers who oversee staff, had
dominated the workplace for decades. An innovative alternative to hierarchy and its dreaded tiers
of middle management is the passing trend of flat structure. In 2015, Sena Kalyan Sangstha (SKS)
reviewed its existing structure with an external consultant group and announced that it was
breaking its tall structure to go flat. Before 2015 all industrial or production units were placed
under a single unit / department while the total marketing affair were dealt with by another
unit/department irrespective of products, but the new structure established each production to have
its own head and management under the shed of SKS. However, the central accountability remains
with the chairman SKS.

The present organogram, with less tiers, appears to be more functional since the flat channel of
command allows easy flow of information, quicker decision making and operations. In the current
scenario, a system similar to Z-theory of motivation is followed for all the employees in order to
ensure stable employment high productivity, high employee morale and satisfaction. Despite this
new structure and the significant changes, the organization has not yet attained the level of
performance, as expected after its implementation. Both SKS and consultant groups now are
questioning if the problem is elsewhere.

SENA KALYAN SANGSTHA

Sena Kalyan Sangstha is an independent legal entity. It is a Charitable Trust under a Board of
Trustees (BOT). It is an entirely self financing welfare organization for the welfare of ex-
servicemen and their dependents who are the citizen of the Peoples Republic of Bangladesh. All
expenditures on its diverse welfare activities have always been met from funds generated by its
own Industrial, Commercial and Real Estate projects.
Sena Kalyan Sangstha (SKS) started its journey with a vision to serve the entire community of the
retired armed forces personnel by generating maximum profit through commercial ventures
utilizing its resources efficiently and distributing the profit by a wide range of welfare activities,
while focusing on future growth in a sustainable manner for broader range of welfare.

The Corporate Headquarter, Dhaka has following Manpower:

Officers -95 (26 serving Military Officers, 14 Retired officers and 55 civilian Officers)
Staff 198

THE BIG CHANGE OF 2015

In year 2015 the total structure had been reviewed by an external consultant group and the new
structure had come into effect since December of 2015. As per the new structure, it ditched its
practice of placing all the production units under a single division to establish many business
divisions-each of which will deal with a product or a group of products of similar nature. Their
activity entails total affair of the product sale, employment of market force and procurement of
raw material.

Till 2015 all the functions of SKS were vested upon 3 departments:

Operation Division to facilitate production of all the industries.

Marketing Division to solely focus only on sales.

Human Resource Division for all the administrational activities.

In the earlier structure, order used to flow from the MD (now Chairman) to the operations and
finally to the marketing department and all the operations such as: cement, fan electrical items,
transformer, flour mill, SKCD etc. Were controlled by a single head.

The present Organogram, being more of a flat, appears to be more functional as they have less tier
within the organization to communicate with the top management. In the present structure, all the
operations are controlled by separate heads and the operational structure is better defined. Now all
the appointed executives know their charter of duties, channel of command and responsibilities.
During last 3-4 years SKS has acquired several new businesses and is simultaneously looking for
new business ventures like-include LP gas, edible oil, Real estate, textiles etc.
However though very few, some of the business units had to be shut down for incurring loss for
quite some time. Unlike general practices of shedding out surplus manpower due to closure or
layoff of a company SKS absorbed those personnel by adjusting them to other existing structure.
This has caused another difficulty as some of these surplus workforces inducted in different
industrial, commercial or corporate office do not fit in there with their field of experience or skill
level. While surplus manpower is a frequently talked about issue there is also outcry for addition
manpower with varied skill commensurate respective business division as per newly formed
structure.

SHORTAGE IN PERFORMANCE EXPECTATION

Despite this new structure, the organization did not yet attain the level of performance it had
forecasted upon its implementation of the structure. The problem found elsewhere-The enrolled
personnel.
Sena Kalyan Sangstha started enrolling its workforces from retired military personnel. While many
got enrolled through personal connections to appointments which required certain set of skill sets
may have been ignored in some cases.
In the context of those days these people ran the organization satisfactorily. In the courses of time,
the business pattern has changed worldwide, modern concepts and techniques have evolved in
marketing, and many new business disciplines are being taught in graduate and post graduate
levels. The modern generation business executives bear different patterns of thought and action
mode. The Sena Kalyan Sangstha executives are not much in pace with other contemporary
executives of other big corporates of the country.
Despite knowing their own duties and responsibilities, Sena Kalyan Sangstha executives are
unable to perform their duties as their support elements are not much skilled and tuned with modern
business knowledge and culture. Besides, the employees also lack creativity as they were innately
trained to follow commands rather than engage in innovative problem solving and inventions. The
performance of staff level is equally disheartening. While in-house trainings could have helped
alleviate the issues, but neither are employees skillfully or mentally ready to take this challenge.

Additionally, SKS lacks a proper performance evaluation system as the employees/officers


working in the organization for years have never been evaluated. Although the induction of new
set of senior and mid ranking military officers has added value to the organization with better
access to big corporate bodies and govt regulating agencies it still needs to optimize its capacity
to fulfill desired target.

QUESTIONS:

1. Do you think that the present older and poor performing man power should be refreshed
with the offer of golden handshake? As a team of HR, SKS wants you to design a golden
handshake process.
2. Should SKS consider possibility of lawsuit regarding golden handshake process? What
would be the strategy to tackle this kind of situation?
3. Do you want to initiate inhouse training programs for various staff levels to enhance
business skills? How can you execute these without hampering the present momentum of
business operations?

Problem Analysis:
Inefficient Workforce: The SKS workforce, from top to lower level, have been found severely
incompetent. This workforce incompetency is driven by the wrong assessment of the
employer's, top level management with lack of current business approaches and
techniques and obviously, lack of certain set of required skills.

Surplus Workforce: For expanding business entities, some turned out to be unprofitable and
eventually ending up with termination of those entities from the market. This ended up with a
huge number of surplus workforce.

Operational Incompetency: The business operations of SKS are also found incompetent.
Weak distribution channel for not meeting the sales figure, inappropriate competitor
analysis for not finding a proper USP for different and inappropriate recruitment and
assessment for inefficient workforce.
SOLUTION

1. Monthly Confidential Report (MCR): MCR is a monthly version of Annual Confidential


Report (ACR), which is widely used in defence service and government offices. Through this,
the supervisors will evaluate their subordinates by cross-checking their preset KPIs against the
extents of KPIs they will be able to fulfill.
We will monitor the employees of SKS for one month without extensive promotion. Then well
launch the information that we are going to orchestrate a HR Audit. Then well monitor them for
one more month, and then well do a comparative analysis of the latest month against the month
before the previous month. Thats how well be able to evaluate how much potential they have
and how much of it they are using.

2. Segregation into Tiers: After the comparative analysis, well divide the employees into three
tiers according to their degree of difference between the two MCRs. The segments are: Urgent,
near future and Distant Future.

3. The Golden Handshake Process: Golden handshake is a contractual clause which provides
guarantee to the employees, especially those in the executive level, to obtain the severance pay
after they quit from their job due to company restructuring or retirement.
The employees will be judged on the following criteria:
Incompetence - the incompetence of the workers will be measured using the Monthly
Confidential Report.Sacking of incompetent workers is necessary because of the existing
surplus inefficient workforce.
Age limit - Employees who are at least 50 years old will be eligible for golden handshake.
SKS should focus on removing aged employees from their workforce. The current
workforce inert to new business models, strategy and fails to make effective decisions.

Working period and position -


Top level- At least 18 years of service with the organization.
Mid-level- At least 12 years of service with the organization.
Entry level- At least 2 years of service with the organization.

4. Nullification of Legal Conflicts: The federal Worker Adjustment and Retraining Notification
(WARN) Act requires employers to give at least 60 days' notice before conducting a mass layoff.
The WARN Act requires only that employers give notice; it doesnt protect employees from
layoffs, nor does it require employers to pay any severance. Hence, SKS should not be bothered
about any unprecedented legal conflicts.

5. In-house Training Structure: After the process, we will start training the employees in-house
and the people from the Urgent tier go first, and so on.

6. Golden Parachute: When well be done with improving our existing employees and also laying
off the ones who are not complying to the standards the company wants to achieve, well go for
taking the employees of other organizations in relevant designations who have extensive
experience and accolades in respective sectors.
7. Stoppage in Expansion: SKS is not a market leader in any industry they have got into. We will
set a duration for SKS, in between which they wont be appreciated to do any kind of groundwork
on any new ventures. Rather they will focus on the existing businesses and will work on boosting
the sales and also on strengthening the business operations. The duration might be of 3 to 5 years.

Feasibility:
Feasibility of MCR:
For Performance evaluation, Monthly Confidential Report(MCR) is more feasible because the
Defense Personnel are more comfortable with it. Annual Certification Report is used by the
Defense and other government organizations to assess their workforce performance. A same
structured Certification Report, in alignment with the organizational objectives, will be prepared
for assessment, on a monthly basis.

Feasibility of Golden Handshake


For an efficient and important workforce, we need to vacate the incompetent employees. For that,
Golden Handshake will be executed in order to get incompetent and inefficient employees out of
the workforce.

Feasibility of Specific in-house training


The Three-Tier segmentation approach for training is important because:
1. The workforce who are in urgent need of training will fall under immediate training
program and the more efficient workforce will work on the other operations where
employees are absent for training .For the most training-required employees go under the
training process and the less-training required employees work on other departments, the
least efficient and the efficient employees, both get the opportunity to flourish themselves.

Feasibility of Termination of Business Expansion


Under current business environment, SKS is required to work on its existing business ventures as
none of its business ventures is market leader or not even showing much potential for being the
leaders.
So, business activities should focus on building stronger distribution channel, efficient workforce,
etc. with a view to stabilizing existing business ventures rather focusing on business expansion.
Feasibility of Interval Payment Compensation
The Compensation amount for Golden Handshake will be paid on intervals because:
1. Money paid on intervals to the individuals will make less vulnerable to financial instability.
2. A golden handshake of this amount might put the company at financial instability as well.
So, an interval payment of such will allow the company to sustain financial outflow.