Background
Medical and Environmental Electronic devices corporation was founded in 1959. Initially the core business was related to applications in medical device technology. The company started new business of Environmental control applications and achieved its current name in 1964. By 1979, MEED achieved 31% market share in its market area. MEED’s competitors had only 20% and11% shares. MEED has headquarters 21 countries around the world including Westland and Michigan. Integrated Circuit Group was set up MEED to meet its need for the customized circuits as semi-conductor industry is shrinking due to the backward integration of major competitors, redirections and acquisitions.
Hallmarks of MEED culture were ambiguity, freedom, flexibility, risk taking and a supportive attitude towards employees. There was no formal planning in MEED or even firs loosely coordinated companywide plan was undertaken in 1980. Sales were growing at 30% per year for t he last five years, topped $1 billion in 1979. Profits for 1979 were $107 million. Tom Duglass is the manager of MEED since 1977. ICG is experiencing a shortage of human resource and is only providing 5-8% of MEED’s annual demand. New plant set by ICG is also experiencing problem in startup. The HRD Department headed by Barbara Hamlin is unable to fulfill their duty of providing the human resource which is required for the sound working of ICG. Employee’s profile
Tom Douglas
Group manager
Dom Raffaelli
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Manager, ICG Advanced design
Les Hogan
Manager, ICG material
Kenny Lash
Manager of operations, ICG plant
Barbara Hamlin
Director, Human Resource Development and planning
Qualitative facts
The Jackson Michigan, manufacturing plant, which began operation in July 1979, was still experiencing difficulties in start-up and it was now the beginning of 1980. Barbara Hamlin in HRDP position was in charge for the forecast of the IC Group’s human resource needs, with special attention to professional and managerial personnel and to design and implement programs to meet those needs. MEED designed, manufactured, sold and serviced complex medical and environmental control systems. The labor market was exceedingly tight for exempt employees, especially the highly trained engineers critical too ICG’s work. MEED’s culture was unstructured, informal; make it happen, rapid growth, positive approach towards people. There was no emphasis on formal planning Douglas sought to reorient ICG recruiting toward meeting needs with existing employees and recent college graduates.
Given the MEED culture, it was also unreasonable to except that any one program manager would remain long enough to see one component through its entire life. Materials acquisition function was divided into two groups an operation group that focused on such functions as production purchasing and a strategic group that deal with the commodity managements, IC Group manufacturing and custom projects. In the past a buyer in the operations group could become a supervisor in operations, now a buyer had the additional option of staying with the acquisition but moving to a job in a strategic group The greater attention to manpower planning might have led MEED to locate ICG closer to the major sources of trained engineers, or perhaps even to recast its plan to enter the semiconductor industry. Employee mobility need at MEED also made planning difficult. According to personnel policy, an exempt employee was considered movable after he or she had been in a job for one year. Bosses and subordinates found it difficult to conduct regular performance appraisals; they were supposed to be conducted at least once a year as part of an employee’s salary review.
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Quantitative facts
Medical and Environmental Electronic Devices Corporation was founded in 1959 Sales, growing at more than 30% per year for the last five years, topped $1 billion in 1979; profiles for 1979 were $107 million. The goal was to ensure that by FY1985, 50% of professional hires would be new college graduates. At the beginning of 1980, Ambrose’s group had openings for two out of five supervisory positions, and 13 out of 37 subordinate engineering slots. In 1980, ICG had 623 employees (plus 8 staff personnel), and 106 open positions to be filed. Annual turnover, while not high by industry standards, was running close to 10% among exempt and 20% among non exempts.
The average number of employees for 1979 totaled 24,900 and another were expected to be hired as MEED continued its rapid growth during fiscal 1980. Starting as an idea and a group of 5 people in 1972, ICG had 66 people in 1975, but began its real growth in 1977, reaching 448 employees at the beginning of fiscal year 1980. ICG was only manufacturing 5% to 8% of MEEDS semiconductor needs instead of the 20% planned. It took about 3 years of work at ICG for a college graduate be fully trained, but by working with these colleges to develop programs and by providing equipment and dollar donations, ICG hoped to shorten on-the-job training to 1-1/2 years. A week lost could mean approximately $100,000 lost in profit before taxes for MEED.
Core Problem
The main issue that MEED was facing was that there was an urgent need that there was no formal planning due to which there was a need for the company to make a proper amendments in HRM of the company and to make policies and procedures and implement them effectively as there was a shortage of Human Resource management at all levels at MEED. They were not having specialized engineers and managers in the required numbers is affecting the corporation. There was a significant problem in attracting engineers capable of the state of the art work that ICG technology demanded.
The option of simply hiring in good people now met resistance from those who pointed out that there were no free slots for these people until the growth actually took place. An estimation was made that IC group’s exempt attrition would rise to an average of 15% per year and non exempt to 35% unless the group improved its recruitment, career development, performance, appraisals and promotion practices. ICG would need 241 hires in order to bring the employee total up to the target for the end of FY 1980.
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If we look at the exhibits 4 and 5 it could be observed that Barbara is at a very lower level in the hierarchy, and is given vey less authority. If a separate HR department is created with giving all HR responsibilities to the HR department than possibly all most the problems could be solved.
Other problems
Recommendations
Repositioning of Barbara Hamlin in organizational structure
We think that she should report directly to Dave Bertram, the president of MEED’s to minimize the distortion between them and Barbara can stamp the authority and she will not have to take approvals from group heads. She is the one who have identified the problems in the system so she should be able to exercise authority so she can solve the problems. Having the backing of the president of MEED’s, people will know that she is a credible source of high authority and she should be followed. Once there is clarity in chain of command, then Barbara should concentrate in making of new human resource department which will include recruitment and selection, compensation and appraisal, training and development which is not addressed in the company till now.
Hiring the right people
Problem of ICG can be solved as there is low performance by the managers and engineers are working as managers and company don’t have to hire right workforce and as a result they are performing at the top level. Supply of efficient workforce is also limited; that is also one of the reasons engineers are working as managers. Moreover, it is told in the case study that other companies have made collaborations with universities and they hire their technical staff and engineers automatically after they graduate. It is best for both student and company because student will get job immediately after he graduates and company can get fresh graduates that are fit for the organization. In exhibit 8, it is written “at institutes, we work with real projects”; that means student can get a taste of professional life and projects even when they are students. Good compensation to retain employees
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The employment industry of China is very competitive. In order to get best results in the company, company should be able to retain the right employees who are worth it. HR department should make organized and intelligent decision in retaining particular employees. As it is written in the case that giving $1000 a month and working for 20 years has become a standard of industry. Other than that, when an individual leaves the job, he or she gets a 30% pay rise on an average; that means when labor in the market start doing job hopping it will take employees pays up automatically.
Standardize the operating procedure
The first and foremost step that Barbara needs to take is that she should make procedure same for everyone. For e.g. in this case it was written that managers thought HRD is just for training the employees. So, Barbara should start working and should make everything formal including job analysis, job description, training & development and compensation plans. Employees should have awareness of HR department of the company and employees should know clearly that what are they required to do. Once HR department comes in and take steps to make things formal; then company’s environment will also become professional as it is desired by HR department.
Training and development
Company is not very serious about the training of the employees as position of management development is vacant from some time. Training is only given to manufacturing department in the company but it should be also offered to the designing department of the company. Training of design department will lead to more innovative designs and less flaws in the system.
Exit interviews
When an employees is leaving the company; he just have to go but one thing that company can do extra is the exit interviews; as company can get a new point of view of the employee about the flaws of the company and how they can be improved. Cause of leaving company should be asked from the employees that also point out significant errors in the company’s operations.
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Analysis of exhibits
If we compare FY80, 81 and the current year in association to number of employees (exempt and non exempt) to the departments (advanced design, manufacturing and material) it could be clearly seen that currently there is a decrease in the number of employees in comparison to the year 80 and 81.Currently there are 6 managers in advanced design, 11 in manufacturing and 6 in material, where as in the FY 1980 there were 30 managers and 1981 there were 47. Moreover, in the advanced design there are currently 97 employees with 116 in 1980 and 150 in 1981. In manufacturing currently 322, 1980 there were 564 and in 1981 there were 854.
In the materials currently they have 204 employees in comparison to 1980 where there were 266 and in 1981 there were 425. Overall a decrease in number of employees could be observed. Exhibit 2 talks about the hiring requirements projections. The exhibit depicts the year period. It could be clearly seen that for all the three departments in association to the years there was an increasing trend. Exhibit 3 talks about the financials of 10 years from (1970 to 1979).
It could be clearly seen that there was an increase in sales net income and stockholders’ equity of MEED since the 7 year period. Though the sales were not steady but and increasing trend is observed.
