Decision Making Skills
Asia Pulp and Papers is an established group in China (Asiapulppaper.com, 2014). They have recently opened their paper manufacturing unit in Bali, Indonesia. The unit is based up in the location in view of abundance of trees and lesser cost of labour. The company utilizes resources from Bali’s local suppliers and employs local residents of the island as the work force to work on paper making machines.
The company invested good amount of its existing revenue in automating the process wherever possible. They have set-up the needed machinery in their manufacturing plant which turns pulp into paper. The company also has advanced mechanisms to achieve variation in the width of the product. They have very thin tissue papers made with environment-friendly techniques and the very thick ones that are used for academic and presentation purposes (Asiapulppaper.com, 2014). Using of the machinery needs technical skill though.
The company has employed 20 local workers from Bali to work in their plant. 10 of them are responsible to bring the raw materials from suppliers and accumulate in go-downs. These 10 workers are middle aged men in the age group of 30 and 40 years, and are heavy built. They work under clear instructions on how much amount to deliver, which supplier to go to, verify the quantity before taking the delivery, load the goods on truck, unload in the go-down area and lock the storage area carefully. They are then required to hand over the keys to the security guard before leaving for the day. Depending upon the supply of goods, these 10 workers are appointed to work thrice a week. They work 8 hours a day on Mondays, Wednesdays and Fridays. All of them get same wages of 600 Indonesian Rupiah each every month.
The other 10 workers are literate, though not technically skilled on the subject. They can understand little English and can manage with few words in English to communicate. All of them fall under the age group of 20 and 25 years. They are given training after their induction on how to work on machines. The training lasted for 3 weeks and each of them can work on different machines existing in the plant. They are not aware of technical know-how, but can operate the needed functions without much problem. These 10 workers work for 8 hours a day as well. They work for 5 days a week and are paid 1500 Indonesian Rupiah each.
Since Bali is a small island and all of the workers belong to the same neighbourhood, there seldom are arguments on disparities of earnings between the two groups. The non-technical workers consider this unjustified to have been paid lesser than the technical group. Their justification is on the level of hard work they are subjected to, and demand to be paid higher at par with the technical group. These arguments often turn to fights between the two groups and rivalry affects the workplace environment at the plant. The management is aware of the situation but has turned a blind eye to the scenario until now. The routine operations of the company are not impacted by the internal rivalry and the management has decided not to interfere until the business continues as usual.
However, the situation has taken a severe point of turn this time. The non-technical group has called for a strike and have put an apparent end to the work until their demands are satisfied. They demand for better wages and are keen to swap their routine jobs with simpler work. They consider the technical work much too simpler and comfortable and call it the matter of pressing buttons on several machines. They seem adamant this time to call off the strike without a favourable decision. The management is forced to intervene.
Options before the Management
- Ignore and hire new set of labours
The management is aware of the labour problem which is common at almost every plant of theirs worldwide. They can opt to ignore what the non-technical labour group is demanding and hire the new set of workers for the job on the regular wages.
- Consider the demands and work on expanding skilled work-force
The management can consider it an opportunity and plan on training the non-technical group as well. This will strengthen their skilled work-force for future. It will also pave the way on expanding the plant’s functioning in the long-term with loyal workers working in the Organization. However, this means that the Organization needs to spare significant share of its revenue towards this change.
Analyzing the options
SWOT Analysis of Option 1 – Hiring new set of labours
In brief, the biggest advantage with this option is reflected in terms of revenue saving. Employing new set of employees demands some time to be explained the routine jobs. They must be introduced to the suppliers and must be shown the regular way of working initially. Since, there has never been a slippage in the supply before, the earlier set of labours seem to work in organized order. The best that can be expected from the new work-force is to be at par with them.
There are threats associated with this scenario. The risk of similar problem arising cannot be ruled out. The disparity between incomes of two sections is clear. This is sure to raise arguments now and then when the two groups meet each other. However, there are some bigger risks too. In case of the disloyal employees joining the Organization, the normal functioning of company may be affected to severe extent. There may be shortage in ordered supply, as the employees may cheat on the quantity before bringing it to go-down. Or there may be slippage in fulfilling raw material orders which can further delay the entire process of paper manufacturing.
SWOT Analysis of Option-2 – Considering demands and training work-force
Analyzing this option is easy. The greatest disadvantage for the company is in terms of huge investments they will have to levy for training non-technical group of employees. There is a straight calculation for the extra expenditure:
Expenses levied on 1 employee under current scenario = 600 Indonesian Rupiah
Expenses levied on 10 employees under current scenario = (600*10) = 6000 Indonesian Rupiah
Expenses levied on 1 employee when opting for Option 2 = 1500 Indonesian Rupiah
Expenses levied on 10 employees when opting for Option 2 = (1500 *10) = 15000 Indonesian Rupiah
Difference in expenditures = 15000 – 6000 = 9000 Indonesian Rupiah
9000 Indonesian Rupiah is a considerably huge amount under the current circumstances. The management now needs to make a decision considering the factors important to its business continuity.
Objectives of the decision makers
Since the company is originally based at Hong Kong, 9000 Indonesian Rupiah converts to 4.49 Yuan! This sum is negligible to be given much thought for long. Any Organization would be happy to shed 5 units of its local currency if that promises long-term prospects and business continuity.
There is another aspect of the complete scenario. A company based in Hong Kong has set up its manufacturing plant in Indonesia. This indicates that the company is heading towards expansion. The main assets for it are the strong and skilled resources that can promise better work in near future. This will also lead to the more peaceful situation inside the work premises. As the employees gain confidence and get educated on technology, the company can utilize them in an efficient way without having to look for new resources from scratch.
Hence, the decision makers opt for ‘Option 2’ as the choice.
Evaluating the decision
Option-1 saved money for the management. But it considered the temporary solution to the persisting problem that was sure to arise again. The Organization could continue hiring new resources for their non-technical load delivery job on the same wages and their business would continue. But, with this they blocked their way to being reputed as a trustworthy Organization. With every new set of labours appointed, the company would move more towards being called unethical. It would gradually gain the reputation of an Organization where employees do not stay for long. Even worse, the company may soon face challenges on hiring new resources if it gets de-famed. Along with this, there always is a short span of delay in routine jobs whenever the old group leaves.
On the other hand, by opting Option-2, the Organization sought out the long-term solution to the problem. All they invested as extra amount was 5 Yuan! This decision satisfied the employees, tagged the Organization as people-friendly company and paved path for future expansions with ready pool of skilled resources. In a way, the Organization turned crisis to opportunity by considering the positive and negative aspects of the two options. It will soon be recognized as the work-place that considers the employee demands. This will have potential benefit often. When the management does not approve of workers’ demands further, they will still be willing to work in the environment with the mindset that company has justified reasons behind their decision.
Recommended Potential Improvements
Quite clearly, the main problem under the situation was the income disparity, which the Organization was able to solve amicably. However, as it continues towards expansion and has more branches operating from different parts of world, it will be difficult to deal with the demands of workers which are frequent. The company must think of some solution to tackle it efficiently, without having to worry about a solution.
One way to deal with this is having some legal agreement in place (Proctor, 2005). The work force must abide by the terms and conditions formulated on the legal agreement. This will have lesser probability of income related arguments, and the workers would have to work for the stipulated time on same wages as signed on contract. But as every Organization must consider, the employees need some sort of motivation to continue with the same Organization for long (Adair, 2010). For the company too, it is beneficial to stick to the same set of employees as they gain experience and contacts over time. To achieve this, there must be points on the agreement which can attract the employees to work for long-term (Adair, 2010). They must be rewarded with deserving incentives and performance based salary hike, and must be allowed to set example for others.
Whether business or personal, there are various instances that need decision making for continuing further. The decision that is made in the specific instance decides the further course of action. Very often, the decisions are made on short-term perspective. They appear favourable temporarily but lack the potential of ruling out the problem forever. On the other hand, there are decisions which are carefully made after long thought. These are long-term aiming though appearing unfavourable momentarily. What proves best depends a lot on the current circumstances of a business or an individual. SWOT analysis helps with decision making. It reflects upon the problem situation clearly, and works as an aid to weigh the factors that are important. With a careful analysis, it is rather easy to turn the crisis to opportunity. All problems thus have solutions through a strong decision which must be made after careful analysis, under no hasty judgement.
Adair, J. (2010). Decision making and problem solving strategies. London: Kogan Page.
Proctor, T. (2005). Creative problem solving for managers. London: Routledge.
Asiapulppaper.com, (2014). Asia Pulp & Paper. [online] Available at: http://asiapulppaper.com [Accessed 4 Dec. 2014].