Babson Manufacturing, Essay Example

Like other commercial entities, Babson Manufacturing is also being adversely affected by the difficult economic environment. The company’s President expects to lay off 300 people immediately and possibly 100 later on. The fate of the 100 people who are currently working on a project is less certain though. The company President wants to fulfill his obligations towards his shareholders but at the same time, he also wants to be honest with his subordinates and possibly avoid the guilt of misleading them.

The first option is not to tell the 100 employees about potential layoff. The benefit will be that they will continue to dedicate their full commitment to the project and will not be distracted by any layoff worries. This may also ensure that the employees will perform at their best because employees usually believe that good performance goes a long way towards improving job security in difficult economic climates and enhance their value to the employer. The downside is that once the employees come to know, the reputation of the management will suffer and the remaining employees may be less willing to trust the management’s words in the future. The morale of remaining employees (who remains after the rest 100 have been laid off) will go down and their commitment to the organization will become weak.

The second option is to tell the 100 employees that they may be laid after the completion of the project. The benefit of this option will be that the management will come as honest and trustable. The remaining employees will at least admire the management for not being misleading and, thus, would be willing to trust management’s words in events of uncertainty or rumors. The downside of this option is that the commitment of the 100 employees to the project will weaken and their priority will now be just to get the job done instead of getting the job done in the best possible way. They may also start looking for new jobs, weakening their commitment to the project and possibly extending the completion time beyond the original schedule. It is also possible that some left even before the completion, creating further problems for the management.

The third and possibly a better option is to be honest and pragmatic at the same time. The management should let the 100 employees know of the possibility of a lay-off but at the same time, inform them of the steps it has been taking to avoid such an action. The management should have open mind that the things may turn out to be different and different in a positive way. The management should also realize that difficult times also present valuable opportunities to build employees’ commitment to the organization and strengthen the organization’s reputation as an employer of choice. The 100 employees may appreciate the honestly and since they will be aware of the management’s efforts to avoid the layoff, they may work even harder on the project to justify their continuous employment. It is also possible that they may offer valuable suggestions such as payoff’s cut that yields multiple benefits for the organization. Not only it is able to retain them but also increase goodwill in the process. At the same time, the management’s reputation will improve.

It is common for the optimism regarding the future to go down in difficult economic climates but the management should not lose sight of the long term in trying to deal with short term challenges. It may cost the firm to keep the employees and not lay-off them but when times improve, the organization will not only have a more committed workforce but will also be able to avoid recruiting and re-training costs. In addition, the job security will attract higher quality applicants to the organization.