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Industrial Relations

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INDUSTRIAL RELATIONS

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Acknowledgement……………………………………………………...02 Executive summary……………………………………………………..03 Question 01……………………………………………………………..04 Question 02……………………………………………………………..06 Question 03……………………………………………………………..07 Question 04……………………………………………………………..08 Question 05……………………………………………………………..09 Conclusion……………………………………………………………...10
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Executive summary Transition from closed economic system to an open economic system invariably has its positives and negatives. Most importantly if manufacturing companies do not completely read the signs of the times and completely respond adequately to this transition this can have heavy toll on the company. What happened to the Bolts & Nuts Co. is a classic example of failure to make this necessary required transition. It also shows the complicated and complex issues that are involved in such a transition especially in terms of Industrial Relation and how to cope with the problems that emerge as a result of such conflicts. Had the company made the right decision it could have been a winner. The wrong decisions it made pushed it to be a loser.

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QUESTION 01: EVALUATE CRITICALLY THE ABOVE FACTS AND TRY TO FIND OUT WHAT EXACTLY THE CAUSE FOR THIS UNFORTUNATE SITUATION. Bolts and nuts was the company which was manufacturing bolts and nuts which had a fair share of the market in the said product during the time when there was the closed economy which restricted imports from the international market. The organization was enjoying the said large market; consequently was making profit and was a successful organization. The change in the government made a huge impact on the economic system of the country as it transformed the economic system from closed economy to open economy where it opened up to the international market. This open economy caused many difficulties in the Bolts and Nuts Company and as a result they lost the market due to the import of the high quality products that were given at a lesser price. The organization had to adopt their entire approach accordingly to the change in the economic system. The organization had to evolve a new strategy to overcome this change. The company planned to reduce the production cost by increasing the production to meet the competition thus retain the market share. However with the old machinery it was difficult to increase the output.  PESTEL ANALYSIS PESTEL analysis would have helped the organization to find out the POLITICAL, ECONOMICAL, SCOICAL, TECHNOLOGY, ENVIRONMENTAL, and LEAGAL factors. Political factors  The change in the government  Transformation in the economic policy of the country  Entrance was opened to the international market and foreign products Economic factors  Transformation from the closed economy to the open economy Social factor  Workers were part of a Trade Union that opposed the government.  The Human Resource Manager failed to understand the situation.
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Technological factor  Obsolete machinery  Out dated technological systems. Environmental factors  The diffusion of waste water system was not environmentally suitable  Environmental authorities was pressing to change the system  Company planned to move from the city of Colombo Legal factors  Not following a proper legal procedure on termination  Employees were terminated while the inquiry was pending before the commissioner of labour  The termination closure of the business was illegal  The commissioner of labour instructed the company to pay compensation for the workers who were terminated.  5M FISH BONE MODEL Common uses of the Ishikawa diagram are product design and quality defect prevention, to identify potential factors causing an overall effect. Each cause or reason for imperfection is a source of variation. Causes are usually grouped into major categories to identify these sources of variation. The categories typically include: Man, Methods, Machines, Materials, Environment.  Man- workers were under undue pressure to increase the output  Machine – out dated / obsolete machinery  Measurement –failure to understand the market and poor communication  Material – inefficiency of the human resource manager  Methods –no proper training for workers and no proper legal system was followed  Environmental problem – unsuitable water diffusion system.
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QUESTION 02: WAS THERE A WAY TO AVOID THIS SITUATION? Yes, there were ways to avoid such a situation. They could have conducted pest analysis and 5m fishbone analysis when there was a change of government, and that could have helped them to find out the causes for the changes that arose due to the new situation. This situation could have been avoided if the human resource manager had listened to the employees. There was a demand repeatedly made by the management to increase the output, however it was obvious studying the situation the human resource manager had really not understood the cause for the inability of the workers to increase the output. Proper analysis would have shown him that to increase the production the company had to make a drastic decision of changing the outdated machinery. This was not done. Unfortunately everything else was done without doing the most important thing that was necessary. This led to the closure of the company Replacing the machinery was an important prerequisite. Accordingly changes to the technology should have been made to increase the efficiency of production. Having made the necessary technological changes the human resource manager could analyze the quality of the output and maintain a standard of the products manufactured.

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QUESTION 03: WAS THERE ANY REASON FOR INDUSTRIAL RELATION IN THE BOLTS &NUTS CO.

POOR

Yes the many reasons for poor industrial relations in the Bolts and Nuts Co. The employees were part of a Trade Union that opposed the government in power. As a result of the change of Government and the consequent impact it had on the economic policy which followed a loss of market share for Bolts & Nuts Co, evidently there were strained industrial relations between the employers and the employees. The management signed a collective agreement between the employees and the employers only after it decided to cut labour cost by reducing the work force. In fact when there was once again a change of government the labour force joined a different Trade Union. As a result when the management decided to terminate the workforce on the basis of the collective agreement signed the workers pointed out that it was signed when they were part of a different Trade Union. This only shows the continued strained industrial relationship that existed. A proper industrial conflict resolution model was not adopted. As final resolution the management decided to completely terminate the workforce. If a win-win industrial conflict resolution model was followed both the management and the workforce would have gained. The HR manager did not comprehend fully the legal terms, agreement and implication involved in a termination of a workforce perhaps he did not know the company act. This only reveals his incompetency. If the company had made the necessary changes it terms of machinery and technology it could have introduced, over time work pay scheme, appraisal system, incentive schemes to increase the motivation of the workers and thereby increase production. There was no proper dialogue between the employers and employees. The Human Resource manager on his part failed to initiate this dialogue.

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QUESTION 04: CAN YOU POINT YOUR FINGURE AT THE HR MANAGER FOR THIS SITATION? Yes and No. The human resource manager is also an employee of that organization who holds a position of managing the work force. He is the link between the employers and the employees. The workers repeatedly pointed out to the human resource manager the real cause for the loss of market share and the decrease in production. The HR manager failed to understand this simple but complex issue. The change of the economic system and its implications was not appropriately comprehended by the human Resource Manager. Neither was he willing to listen to the workers. A Human Resource manager should be a very competent person who could understand the changing market conditions and read the economic underpinnings. Here the Human Resource Manager failed to do so. The Human Resource Manager has a legal and a moral obligation towards his workforce. The case shows the HR Manger failing morally and legally. He neither had adequate knowledge of the law or the ethics involved in its application. If he did so he wouldn’t have agreed to terminate the entire workforce. The HR Manager should take full responsibility of what happened. On the other hand the Human Resource Manager was heavily under pressure from the employers to increase the production and maintain the market share. This may have led him to see only the management’s point of view this case is a classic example of how the HR Manager could act when he is blind completely and totally all issues involved.

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QUESTION 05: WAS THERE ANY WAY TO RESOLVE THE CRISIS SITUATION THAT AROSE IN THE COMPANY? There is an alternative path which the company could have adopted, The government has changed. There was a new economic policy in place. Markets have opened up. New quality products at low price were available. The issue at hand was the Bolts and Nuts Co. was losing its market share. The cause is the outdated machinery with which quality products could not be produced. There was one alternative change the machinery with new technologically equipped machinery that could produce quality product at low cost which could compete with imported goods. The Bolts and Nuts Company did not make this transition as a result di lost its market share profits and eventually its workforce. To keep phase with the demand of the market the above change was a must. Unfortunately the Bolts and Nuts Co. did everything possible without addressing the real issue had it introduced new technologically equipped machinery it could have perhaps not only retained its market share but also could have increased its market share. This case study is a classic example of failure to keep pace with new technological innovations and the subsequent consequences it has to face.

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Conclusion
This case study shows the approaches and the transitions that Bolts and Nuts Co. should adopt to go ahead with the new changes. PESTAL & 5M fish bone models, and other programs and the changes in the machinery which is outdated to make the production in an efficient and effective manner to stand along with the new economic policy change of the organization.

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