Good Example Of Ajax Minerals Exercise And The Problems At Perrier Case Study Essay
Ajax Minerals had been operating at an excellent capacity from some time. Its successful operations were harmed by poor skills of management and weak relations with employees. An external business competitor from Pacific Rim Mining Company put great pressure on the company due to high and direct competition. The starting valuation focused that during the time of three years Pacific Rim would make a strong position in the industry and in the result of that Ajax Minerals would be ran out of business. Pacific Rim had the capacity and also resources for undertaking cheaper exercises of mining and exporting the minerals to U.S while having very less cost of operating as compared to Ajax. This threat from the competitor was rapidly identified by the top management and leaders of Ajax Minerals. They were in need of acting quickly in order to face the challenge successfully and for maintaining the position of company in industry. The lower level of management had no knowledge about the current situation impacting the company; this includes supervisors and other employees working on daily basis.
The life in any organization has a combined aspect due to which resistance to change is caused which has direct or may be indirect effect on the working conditions and salaries of employees. Change is always considered to have a negative outcome and leads to a situation of skepticism and with respect to Ajax Minerals exercise two different sources of resistance were found. These sources were discomfort and uncertainty. The two sources were present before the organization decided for implementing changes and they were all based on the poor relationship between employees and management.
There is a usual perception of giving respect towards the ongoing structure of top management in the organization but the previous initiative have made animosity and stress among management and employees. The full amount of this conflict was faced whenever a fresh plan was introduced; the employees feel it as a suspicious and bad strategy that would have unpleasant consequences on them like reduction in salaries and layoffs of job. Due to this, the executive policy makers of company were affected and they had to trend carefully before any changes were communicated with employees. The union of employees was actively waiting for any fresh decision related to new challenge of enhanced competition from Pacific Rim and other companies like maneuver whose goal is to gain concessions at the time of next talks of contract.
The competitive relationship between the employees and management gave a chance to the team of union leadership for motivating the employees in order to prepare themselves in a way that would give them benefit. They gained this through encouraging and motivating employees for acting slowly at the time of implementing any changed strategy. This would hinder the efforts of company and result in huge reduction in forecasted results. The more time the company took for implementing the changes meant that employees would earn bonuses and allowances on extra time.
The organization had put itself in a situation of compromise that was added in to the list of threats impacting the firm. There was a need of full support and help of all employees by management so that the change could be implemented in a better way and Ajax Minerals can get safe position in the industry of mining. It replied quickly by taking different initiatives which aim was winning back the confidence of employees. This included the sessions for collaboration and communication due to which supervisors and management can be brought together on a common point. They took a decision that they were in need of considering all the choices and results which will be made through new changes on the whole working conditions and on success of firm. This would involve designing a coercing case for change before implementation and the adjustments. In the past, organizations did planning before clear consultation and due to this periodic resistances were faced. At the time of interactive sessions, the top management and other managers developed a case for implementing change. Case studies of different companies were used by them which has faced similar types of challenges and had worst consequences because of their inability for responding effectively to the tough competition. They used an open book approach in which workers were provided with unprecedented reach towards data on financial performance of Ajax minerals. Weekly meetings were conducted between employees, managers and leaders. These meetings helped in making discussions in a way that can be beneficial for the company (Palmer et al, 2006).
Perrier is a famous company of French based which deals in the manufacturing of sparkling mineral water. The company has an ideal status and reputation and history of doing successful business. The organization was initiated in 1898 by Louis Eugene Perrier after buying the source of mineral water near Vergeze, France. The organization experienced fast growth buoyed by increasing demand in the end of 1980s which can be seen through its sale of 1.2 billion bottles in only U.S. The flourishing operations examined by its profits which were reflected through the pay increments, allowances, bonuses and holidays given to employees. The association between management and employees was cordial and coincided in a friendly working environment.
In 1991, scientists discovered benzene, an industrial solvent in different sparkling mineral water bottles of Perrier. This led to the organization withdrawing number of bottles which were in circulation. Due to this, the company faced losses of millions of dollars and at that time Nestle did acquisition with the company for 2.7 billion. This acquisition strategy did not help the firm in meeting the losses faced by Perrier. The employees of Perrier do job a 35-hour week with an average pay of $32,000. This rate was the best rate for employees in France. This could have not been compared with the workload that each employee took. It was predicted that average employee of Perrier manufactures only 600,000 bottles in a year which was much lesser than 1.1 million bottles production of Nestle.
The relationship between management and employees were not so good. This mainly appeared due to the fact that majority of the employees were from trade union of CGT. There came always rigid opposition to any struggle the firm made for recuperating its dwindling performance. Peter Brabeck-Letmathe C.E.O of Nestle attributed the activities of CGT as guided to ensure that Perrier remained nascent (Tobin, 1999).
Jean-Paul France, leader of the CGT at Perrier, has a unique view of the condition in which the concern is about laying off 15% employees. This step would be immoral, because due to this those hardworking employees will not have the place for going in the midst of competing employment and climate of business. The firm also planned for pushing a plan for retirement before time for few employees at the Vergeze plant. The union resisted this new project and went to court in against of this decision. This was then withdrawn when Nicholas Sarkozy a French Minister of Economy gave an intervention. The Swiss organization Nestle forced Perrier to sell the company to it and to stop opposing the plan of redundancy.
Perrier also had to face a challenge from Danone Company who introduced their Badouit Rouge. The purpose of this product is to do competition with bubbly brand. The management tried to motivate its employees for working harder and increasing the level of productivity in order to compete with its rival. For this, they placed bottle of competitor brand in the cafeteria of company. The employees took this a provocation and threw them in front of cabin of director.
The two case studies which are discussed earlier are similar to the techniques utilized by the management of an organization in order to deal with the dissatisfaction of an employee and in attempt to solve the problems which are being faced by the particular institution. In citation with Ajax minerals they established a consultative process, which involved the bilateral meetings with the supervisors. The company determined to fully explain the new and advance initiatives to all of the staff before they were actually implemented. Although Perrier adopted quite a different approach, the approach was stationed on a inflexible stand and a tough lined position in contacting with the trade union CGT and the other workers themselves. The company suffered from several losses and so the company introduced a redundancy policy in order to upgrade its financial performance. The new initiative developed by the organization focused more on the early retirements and substantial layoffs. When Nestle took charge of the company in 1992 they supervised the contraction of workforce by a third and employed 1600 laborers over a time period of about 14 years.
Contrast with the two company’s just Ajax minerals handled the opposition of workers to the change effectively. The prosperity of the institution is actually dependent upon the labor force and their engagement towards upgrading the performance and productivity. Ajax came to know this and he was having concern in listening to the requirements of the whole staff in an ‘open book’ approach. The technique actually worked in upgrading the confidence of the employee and improved the employer-management relations. The improved standards of working implied that all members performed really very well, which in turn has upgraded the performance of the company.
The change strategy used up by Ajax minerals was so effective and innovative in terms of producing suitable outcomes. Although the movement involved too much compromises on the side of management and empowered the workforce. This would ultimately have a bad effect as it would make the employees overconfident and consequent subordination to the policy of the company. In order to prevent these types of situations, the company should originate performance appraisal initiatives along with altering the supervisors. Performance appraisal will draw in the evaluation of the employee work in accordance with certain objectives and goals. Those employees who will be able to attain the desired outcomes will acquire an increment in their salaries. In contradiction with this, the other employees who will not produce the desired outcomes would be sacked and demoted. This would invoke competition and will reduce their unity in terms of opposing the change. The supervisors emphasized the workers to resist the new polices. A policy of hiring new supervisors should be introduced, so that they may not have any concern with the current staff. In this way, they can perform their duties more efficiently and effectively.
Perrier adopted bad policy in order to deal with employees regarding change. Due to that step, the relationship between workers and management became worst. There is need of two adjustments that must be adopted by policy makers; consultation and openness. By arranging meetings with CGT employees will assist in reducing the conflict to some extent. The management should also arrange some sessions for explaining the advantages that can be taken while implementing new policies. Openness with employees would be required by the firm for sharing sensitive and crucial information by focusing on financial performance. This would help in ensuring that the employees had understood the reasons for the changes and in this way they will work harder for improving the productivity of firm (Carter, 1994).
Carter, W. (1994). Managing organizational change. New York: McGraw-Hill.
Palmer, I., Akin, G., & Dunford, R. (2006). Managing organizational change: A multiple perspectives approach. Boston, Mass. McGraw-Hill.
Tobin, R. M. (1999). Overcoming resistance to change. London: Kogan Page.
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