WeaveTech: High Performance Change

Report

1. Is the replacement of managerial staff a credible and/or necessary instrument

of change as WeaveTech implements its new strategic direction?
WeaveTech is changing its strategic orientation towards high-end performance
clothing market from its earlier military focused customer base. With its changing
focus; it definitely needs people with different skill sets. So, now the company has
two options either train its old work force or bring in new people. But before taking
decisions on laying off 20% of its staff and replacing them with new people it should
evaluate both the options.
First option, if they lay off 20% people, what loss they will have? They have to offer
them severance package or voluntary retirement package or some other kind of
compensation which will be a huge amount of money. Also, the lay off will set the
morale and intrinsic motivation of the whole company down and will ultimately affect
the working atmosphere and productivity of the remaining employees. The company
should also look at the past culture where it was committed to the well being of its
employees and included it in its mission statement and also had No Layoff Memo. If
they fire 20% of the people suddenly, it will contradict its own commitment and it will
loose trust of its employees. Also, in the past its hiring quality was quite high, so most
of the employees are very competitive and highly talented. So, any firing from this
pool will be a loss of efforts money and time put in the past in hiring these talents.
The firing of good talent will set a bad remark in the market and it may be possible
that in future talented people will not want to join WeaveTech because of the reason
of insecure future there.
In terms of gain, they will get people who already have experience in the high-end
performance clothing market and hiring those people will help company focus on its
new orientation quickly. But since it aimed to progress in the new segment in a phased
manner of 5% to 25% in five years, it has the option of hiring a few people with the
needed background and train the rest of its employees as per the requirement.
So, to achieve their target 5% sales in the new segment, it is necessary to hire new
people with right skills. Either these new hires will be an addition to the existing
people or they replace old people. But, if they fire 20% of the existing managers and
bring new managers, it will be a kind of clash between new and old employees.
Whoever be the new person, will not be able to gel with the old employees because
old employees will not accept new comers so easily after seeing their colleagues
suffering from the firing policy of the company. So, the intension behind getting new
managers and replacing old ones will not be fulfilled. The company will not be able to
motivate its employees to learn new skills from these new employees and work with
the new ones to achieve its target 5% sale in the new segment.
As per me, the replacement is necessary to achieve its goal in the very first year, but it
should go in a phased manner like first it should layoff 2-5% of the staff and give
them right compensation and reason while leaving. It should also take care that the
feeling of resentment should not emerge in its existing employees. Next, they should
focus on training of the existing employees in an intensive manner to orient them as
fast as possible such that to minimize the need of replacement of existing employees
because of lack of needed skill sets.

2. How should Jennings respond to the managerial reduction mandate? What

should he present to the executive committee on Monday morning?
Jenning should first review the possibilities of any alternative solutions to this 20%
layoff mandate and make a detailed analysis of its possible consequences. He should
also prepare the execution plan if in case the decision of reduction will remain intact.
In his search of alternative solutions, he should check the possibilities of training old
managers and hiring new people in place of people who are retiring. Although the DCorp managers were mostly in military before joining the company but other
managers may have experience in the new segment from their old jobs. So, he can
fulfill the strategic need of new talents in the company in the short run and train the
rest of the managers in the long run. He should also figure out the logic behind 20%
mark to establish its linkage to the 5-25% sales target in 5 years. This will give him a
clear picture of how many new people are needed in place of old managers to get on
to the set yearly targets. These details will buy him some time to evaluate the alternate
options.
In case the management is very aggressive on its mandate, he should present them
with the plan which is least damaging in respect of employee welfare and at the same
time fulfill the strategic needs. To prepare his execution plan he can explore PAS
system. The PAS system can always rank employees based on their past performance,
but just to go by the ranking is not justified because the accuracy of these data is
doubtful. So, to avoid the errors in the data, he can approach the managers on the top
and ask them to rate their reporting managers. He should do this activity at each level
and prepare the list of managers who are most performing and least performing. It
will not only help him in taking the final decision but also justify his decision against
those employees who are getting fired. The next thing he should focus on is the tenure
of service of managers at WeaveTech. He can prepare a list of managers who have
served the minimum years necessary to be eligible for pension and other government
benefit schemes. It is because, if he fire people who are not eligible for any benefit
schemes, it will be a disaster for their families. He should also short the managers
based on task they are performing i.e. specialized or general. If Jennings fires
managers who are doing specialized tasks, he will find it difficult to search for their
replacement. Also, the specialized managers who are fired will face severe problems
in finding a new job in the market. So, its a loss on both sides.
Jennings should also make a recovery plan to handle the hard and soft issues that will
develop in the company after implementing the layoff plan. To keep the effects of
layoff on the working atmosphere to the minimum, he should try to keep the decision
of layoff as secret as possible to avoid panic environment. The company should come
up with a new vision and mission to align the employees towards it new orientation.
Since, the company is going against the no layoff policy of previous CEO, there are
possibilities that the remaining managers will loose faith in the company and start
considering job switch. Such situation will create a shortage of workforce and will
rather hamper the future plans of exploring new segment. There has to be a rigorous
training program in place for the old managers, which will make them ready for the
new task as possible as early as possible.