HRMT Human Resource Management

Case study

Situation 1:

We give below a situation which many companies often face in todays competitive scenario.

In a company X, union had given a proposal to the management for a 20 % hike in the wages. The collective bargaining process was still going on.

The Industrial relations manager was clever, so he called for an immediate meeting with the union. He tried to put the sate of affairs in front of the union and asked them to find a solution. This is what he presented to the union:

The input prices (cost of raw material, electricity, water etc) have gone up by 10 %

Due to competition, the company has to reduce the product price by 10%

At the same time the share holders are also expecting 5 % more returns from the existing 15 %

The IR manager puts forward the above circumstances in front of the union and asked them to give a solution.

Tasks for the participants:

Question 1: How to develop a strategy to respond this situation? (20 Marks)

Question 2: What are the areas that you can explore to find an answer?

Situation 2:

In a multinational company (MNC) the collective bargaining process was going on. The union puts up its demands to the management. But the management also had some issues to place before the unions. They said that they would consider the demands of the union only if the union is ready to make some compromise.

The MNC was catering to the markets of USA and Europe. At the same time, they had 50% dependence on domestic market. But due to Global Financial Crisis, the rest 50% export orders were affected. From 50%, it has gone down to 10%, a reduction of 40%.

This is a grave situation indeed. The company may not survive only with the domestic market.

So, the management made a request to the Union that they are ready to listen to the demands of the Union, only when they fulfill either of the following conditions:

Reduce manpower by 20 % or

Reduce wages to meet the slack in demand.

Question: What should be response of the Union to such demands? Can you suggest some alternative and fruitful solution to this demand?