HRM Case Study



Servo Engineering is a company that is going through a phase where low level employees are de-motivated and not performing to the level that is expected when self management is employed within a factory outlet. This case analyzes the compensation method, power of trade union and use of a qualified human resource manager to sort out the problems that are occurring in the workplace.

Self Managed or Semi-Autonomous Teams in Manufacturing

Companies are increasing efforts to employ teams as their fundamental organizing units which can be reflected that 80 percent of companies that have 100 or more employees tend to rely on teams and groups tocomplete eh everyday tasks of the firm (Peterson, Mitchell, Thompson and Burr, 2000). A team is defined as a group under which people are assigned with roles, functions and interdependency (Stimpson, 2002). It has been observed that teams are given allowance to self-manage their team processes and therefore are given authority and responsibility to manage their own team functions that is self-managed teams are promoted within companies. Along with that, it has also been noticed that a typical self managed team is not designated any leader but is allowed to designate its own leader itself (Daft, 2008).
The use of self-managed teams within manufacturing companies is that they are created to enhance organizational effectiveness and to improve levels of commitment and performance within the workforce (Goodman, Devadas and Hughson, 1998). It has also been seen that since people involved within a self-managed team are allowed to hire other team members, it usually results in hiring of employees that can perform their duties attentively and have the required qualifications (DeCenzo and Robbins, 2005). The criticism that self management faces is that despite raising productivity levels in some cases; in others it does not have that same affect. It even leads to low productivity and low morale amongst employees in extreme scenarios.
The self-management system at Servo Engineering is designed in such a manner that self-managed teams are provided with essentials required to fulfill a task as well as given the necessary training to perform that task. Along with that, those tasks that the self-manage teams cannot perform, they are handled by another self-managed tam or outsourced by the company. The main essence of self management system within the company is that there is division of labor involved with hierarchical positions defined.
The self-management system has increased productivity within this particular manufacturing plant but there is de-motivation and dissatisfaction amongst the low level employees. This is due to the fact that these low level employees not only have to perform the same tedious tasks again and again under close supervision but also have to report to autocratic leaders within a self-managed team. An autocratic leader is the one who makes decisions himself and involves little or no participation from his subordinates (Stimpson, 2002). This particular style cannot work in a manufacturing plant since low level employees usually have better knowledge and know-how of how to perform tasks and therefore their voices should be heard the most (Kotler, 2009). Additionally, self-managed teams are also not working due to high rates of absenteeism and high turnover which is not only due to the autocratic style of leaders but also because of the feeling that the payment system is an injustice to the work being performed by the employees. Another factor that is missing within the self management system of Servo Engineering is that workers are not given the authority to choose their own team members (DeCenzo and Robbins, 2005). If this strategy was to be implemented within the self-managed teams of the company, the success rate might have been better.
The changes that are suggested to be introduced within the workplace therefore are that the leaders should adopt a democratic leadership style which will enable two-way communication between the low level employees and the leader (Daft, 2008). Along with that, job rotation and job enlargement should be introduced within the workplace. This will enable the employees to not only increase their skill set but will also reduce the levels of de-motivation and dissatisfaction amongst the workers (Stimpson, 2002). Furthermore, a better pay system should be introduced within the workplace, one that ascertains the employees that they are being compensated for their work well and there is no injustice involved. Lastly, in a work environment like this where workers need to perform the same set of tasks and report to work at the same time every day of the week, the company should work towards promoting activity centers within the workplace which will give a chance to the workers to take time timeout and ease down from their monotonous work life (Daft, 2008).

Possible Compensation Methods Available

Organization’s compensation structure usually includes wages/salaries and benefits such as paid vacations, insurances and employee fitness centers (Daft, 2008). Developing an effective payment system is crucial for any company and its human resource management department since it helps to attract and retain talented and skilled employees. A number of payment systems are available for companies like Servo Engineering to employ within their work place for team based situations. These can be job based or skill based in nature. Job based system specifically means linking the payment method with the specific tasks that employees’ are required to perform whereas skill based systems are those that are designed in such a manner that workers with higher skill levels are paid more than those with lower skill sets (Stimpson, 2002; Daft, 2008). Skill based system is mostly preferred in organizations today since it encourages employees to enhance their skill set and competencies which eventually makes them more valuable for the organization. For the job based system companies most preferably make use of piece rate systems and hourly or time wage rates whereas for the skill based payment system, performance based related bonuses and pay systems are used along with commissions and profit sharing schemes (Stimpson, 2002).
In the case of Servo Engineering, the compensation mode that they have adopted is that of skilled pay rate system along with a chance to get bonuses if the performance exceeds the level that is desired by the company. This system is however, not working within the company. The new pay system that the company must introduce within its workforce should be of hourly wage rate whereby employees will be paid according to the number of hours they have worked (DeCenzo and Robbins, 2005). This particular compensation method will result in low absenteeism as well as low turnover amongst the low level employees since the more hours they will work, the better pays they will receive. To ensure that productivity levels do not fall, employees should also be given a chance to receive bonuses based on performance levels which are determined through proper job evaluation methods (Stimpson, 2002). This new approach will also result towards high motivation levels amongst the employees and will help the company to attract better skilled workers in future. Furthermore, the problem that the company is facing regarding low productivity levels as compared to other plants of the company indifferent locations might be solved too.

Role of Trade Union

The trade unions that are effective within Servo Engineering are working on the basis of collective bargaining which has the features of great power in hands of trade unions, possibilities of strikes and other actions which can affect the company’s output and sales along with reluctance in accepting any new changes within the company (Stimpson, 2002). If the trade union accept the changes that are implemented by the organization, they will help to facilitate those changes by communicating to the employees about the greater good involved in the new changes for them in future, by encouraging employees to participate in the new changes since it will result in higher productivity and better organization performance leading to better salary packages for the employees as well communicating with the senior management regarding which approach they should adopt that will work best in the company’s setting. If the trade unions, however, do not agree with the new changes that are being introduced in the fir, it can lead to possible disadvantages for the company’s present as well as the future. The trade union will not only affect the output and sales of this particular factory outlet of the organization but also within other outlets since they are engaged in collective bargaining. Loss of sales and output is not the only issue involved here. With growing media presence, bad publicity will be generated which will lead to consumers boycotting the company’s products and services and the company losing its possible good brand image in front of other stakeholders as well (Daft, 2008).
The best approach for Servo Engineering therefore is that it involves the trade union in the decision making process when changes are implemented within the company. This will not only give importance to the trade unions and the workers collectively but will also enable the company to listen to the input of the employees which might prove to be more workable in the current situation. Another strategy that the company can use is to implement the enw changes within a section of the factory and then seek the trade union’s approval for them (DeCenzo and Robbins, 2005). In this manner, a test will be conducted which will give the company a chance to calculate the success of the new changes made and the approval of the trade union will also be gained. The company’s management should nevertheless, listen politely to any amendments asked by the trade union and come to a decision which meets the expectations of the company and the workers both.

Qualifications Required in the New Human Resource Manager

The previous human resource manager has not been able to make the sort of impact that a capable human resource manager should have made. One of the possible reasons might be because George Wykes did not consider his job as managing people and was hesitated to be associated with anything of that sort. Literature has proven over the years that human resource management does play a vital role in not only properly implementing rules and regulations to manage the workforce but also to do so in an effective manner. The core qualification that the new human resource manager must have is proper communication skills so that he can easily communicate with the low level employees, understand their concerns and be a people’s person (Daft, 2008). Along with that, the manager should also have the capability to make use of motivational theories within the work place in the desired manner. It has been observed that proper understanding and execution of motivational theories like Maslow’s Hierarchy of Needs, Two-factor theory and others can lead to better productivity and higher motivational levels within the workplace (DeCenzo and Robbins, 2005). Furthermore, the company’s new Human Resource Manager should also understand the need of using job evaluation tools to determine proper pay systems that should be introduced within the work place rather than following the compensation system used in other factory outlets of the company. A qualified HR manager will also have the ability to apply performances of the low level workers. This will result in workers understanding those areas where they are lacking and will also help the company to maintain records regarding the growth of workers within their factory outlets.
The conditions within this particular factory outlet are so adverse that there is a chance that the company might shift the outlet to another location, specifically due to high turnover and absenteeism rates. Therefore, for an individual to be employed in the human resource department, he should have proper human skills, that not only enable him to understand the reasons behind such high turnover rates but also facilitate him to devise strategies to overcome them. Lastly, the manger should also have the leadership skills required to bargain with the collective trade union system operating within the company to make sure that problems do not arise in future.


The case of Servo Engineering reflects how companies make use of self managed teams and to what extent are self managed teams successful. It has been observed in this case that the self management did increase productivity but had little or no affect on the motivational and satisfaction levels of employees. Other factors therefore have to be taken into account as well to improve conditions within manufacturing plants which includes the compensation method employees within the factory outlet, the working conditions and the leadership style. This case study also showed the importance of communication with trade unions and the low level employees since trade unions with collective bargaining control have huge powers attached to them and the low level employees know better of how to perform and arte a job than the senior management. Furthermore use of motivational theories and non financial tools like job rotation and job enlargement will reduce the dissatisfaction associated with division of labor employed in the company.


– Daft, R., (2008). Management, South-Western College, U.S.A., pp. 355-356, 376-378, 515-516
– DeCenzo, D. and Robbins, S., (2005). Fundamentals of Human Resource Management, 8th Ed., John Wiley and Sons, pp. 272-276
– Goodman, P., Devadas, R. and Hughson, T., (1988). Groups And Productivity: Analyzing The Effectiveness Of Self-Managing Teams, In Campbell, J. and Campbell, R., (Eds.), Productivity In Organizations, Jossey-Bass, pp. 295-327
– Kotler, P., (2009). Marketing Management: a South Asian Perspective, Prentice Hall, U.S.A., pp. 124-125
– Stimpson, P., (2002). Business Studies: Motivation in Theory & Theory in Practice, Cambridge University Press, UK, pp. 164-166