Human Resource Management

Medical and Environmental Electric Devices Corporation (MEEDs Corp.)

Written Case Analysis

Submitted to: Prof. F. A. Fareedy Teaching Associate: Ms. Haadiah Qaiser

Group Members Fahad Asif Saiba Mian Zaid Nomani Zara Naqi

MBA-II Section-A Lahore School of Economics

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Introduction and Case Overview:

The case talks about a company; Medical and Environmental Electronic Device Corporation (MEED) and its supplier of circuits the IC group. The company acquired its name in 1964 and by 1979, MEED had achieved overall 31% market share in the area. MEED designed, manufactured, sold and serviced complex medical and environmental control systems. It had facilities throughout the world and the HQs were in Michigan. The sales and profitability of the company, since then, have been on the rise (if seen on an overall basis). The organizational culture however is informal and ambiguous, with no defined parameters or rules. Talking about the IC group; it is an ever-evolving manufacturer of circuits which is transitioning as the technology is changing. ICG was not MEEDs major supplier as it bought 80% of its supplies from other companies but ICG was like a laboratory to MEED as it fell in its umbrella. The case centers itself around the dynamic environment and how ICG and MEED try to find the premise of their existence skilled manpower. With ever-growing needs of employees, the case talks about how it is becoming extremely difficult to find employees. For the purpose of doing so, HRDP, a separate department is created by Tom Douglas, which is also facing issues. Hence, several problems pile up and bring about various concerns for the management at MEED.

Problems Identified:
A number of problems persist within and outside of the organization. Let us take a look at them: External problems The industry has a shortfall of skilled, expert labor hence the labor market was tight. There is an ever-increasing demand (especially in the case of technical and managerial skills) but there is not enough supply. In the industry that ICG operates, its becoming an industry norm to allure workforce from one place to another. Whosoever offers more money becomes the employer. Years are spent on technically training an employee, and when that happens the employee is ready to leave the company for other. The poaching is increasing and workforce is decreasing creating a dilemma for ICG.

There is a cultural fix the West and the East Coasts both are opposites in term of culture and they dont settle in each others domains. There is a lot of effort needed by companies to stay abreast of technology and there is an ever-increasing dynamic change in the circuits business with which ICG has to deal with. Hence life cycles of devices in the semi-conductor industry ended quickly.

Relocation costs were very high moving employees was next to unfeasible with the amount being $5000 per semi-conductor engineer brought from West Coast to Michigan. This business is also very expensive in the sense that the cost of producing chips is a lot. Hence, the high costs are a setback.

Internal problems: The turnover rate is increasing, causing instability in the workforce and internal management of the company. o Exempt employees : 10% o Nonexempt employees : 20% There is understaffing there are 106 positions that are open and still need to be filled. o This is over-burdening the current employees. Each person has to give in their 150% because theres a shortage of workforce. For instance, Tom Douglas (group manager ICG as well as plant manager Jackson was also reported of program management, planning and personnel). There is no formal planning. Let alone long-term goals, there is no succession planning happening in the company. Planning wasnt even done at ICG. Organization culture at MEED and ICG is just informal and ambiguous. There are no rules and no parameters defined which is why theres always a haphazard operational scenario. There are no guidelines, no conformities and way too much flexibility. ICG is not being able to meet the demand of MEED. Where it is supposed to pitch in 20% of MEEDs demand, it only fulfills about 5-8%. There is a major scheduling issue a very chronic problem. Parts were being delivered to assembly units after several delays and the nature of the business didnt afford that (as technology changed at a very fast pace).

MBAs are needed in the firm as management is required. But there is no formal program for recruiting MBAs. Engineers were moving up into management squeezing out recruitment of MBAs.

The underlying problem is that engineers are bad managers and in this particular company, engineers are given management position where they have no such background and vice versa. Tom Douglas, not even having semi-conductor background, was running as plant manager Jackson. This is also leading to overlapping roles.

No formal career development tracks were in place. And the training was minimal. JDs, JSs are not specified. There are no solid criteria; there are no models and in the case it says people dont know what a good manager looks like... There is specialized recruitment thats being done workforce is being found but theres no follow up. None of the potential workers that are searched for are called. HR problems also exist. o Employees were moving around too much mobility was causing problems in planning. o There was no proper appraisal system in place. o There were no mentors to help new hires to start out. o Compensation system was not in place incoming engineers were paid more than the previous engineers which was clear discrimination.

Analysis
As has been mentioned in the introduction, the company is facing many problems which range from managerial problems to human resource problems. The short-term problem that the ICG faces and should be solved immediately is that of finding an experienced plant manager for the smooth running of the Jackson plant in Michigan. The manufacturing was initially done at a plant in Lansing, Michigan but due to high turnover and increasing expenses the plant was closed down. Its operations were transferred to the Jackson plant in Michigan which was headed by Tom Douglas. When Douglas was made the manager of Manufacturing, before him 5 plant managers had come and gone in the short time span of four years. ICG was facing a lot of problems in its manufacturing which were spilling into other subunits as well. Previously, all the plant managers of manufacturing were from semi-conductor background and had knowledge of how to run a plant. But due to high amounts of pressure the job required the previous managers had quit. Mr. Douglas when made the Plant Manager was also the Group Head of ICG, so now he had a dual role and responsibility. His expertise was not in semiconductor as he was an electrical engineer and also had a degree in management. But the issue was that he had never managed a plant before and although he seemed calm about it but it was having an effect on the operations of the plant. The performance yield of the Jackson plant was below of that of the industry. This means good chip as a percentage of chip starts. While the industry yield was 71%, the yield of Jackson plant was at 65%. Moreover, the cost of manufacturing operations for the current fiscal year had exceeded by $11 million than forecasted. This shows that the operations of the plant were not efficient and even though Douglas knew the top management was not going to interfere but he realized that it was his responsibility. Furthermore, the ICG was to fill the 20% requirement of chips of MEEDS and the rest of 80% were to be provided by outside suppliers. But ICG was also not able to fulfill this requirement and it was only contributing 5-8% as to 20% originally agreed contribution. And even the chips it was manufacturing, it was at a higher cost then being supplied by the outside suppliers. Apart from the above mentioned problems, the most critical of all the problems was that of Scheduling. Mr. Douglas was not able to develop and implement an effective schedule which resulted in
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production delays which in turn meant delays for volume assembly. The semi-conductor industry has very short lifer cycles due to continuous innovation and delay in production led to the design becoming obsolete more quickly which ultimately resulted in lost sales of approximately $100,000 a week. Due to the above mentioned reasons and explanations, Mr. Douglas should immediately start searching for an experienced plant manager for the running of Jackson Plant. As has been mentioned in the case that the search can take time of up to 6-8 months due to lack of expertise therefore the HRDP Director, Barbara should be ordered to search for potential plant managers. ICG was also facing a number of other problems. Although the problems were not directly stemming from lack of utilization of Human Resource functions, they were a part of the problems. Ms. Barbara was made the Director or HRDP to do employee forecasting for managerial and professional personnel. One of the problems ICG was facing was lack of managerial depth. Managers have extremely important functions to perform in a company: Planning, Leading, Staffing, Organizing and Controlling. All of the functions from the basis of a managerial job which needs to be performed. This means that ICG did not have enough knowledge base of managers and they did not have a policy to hire MBAs. But they will soon need to change their policy and bring in MBAs for managerial jobs. Currently, they have been promoting engineers, the technical employees, to managerial positions. Some of them have been successful while others used to think more as technical employees rather than managerial employees. It was a pattern at ICG that engineers became managers and as every manager knows that Engineers make bad managers. They dont have the decision making and planning mind set. For instance it has been mentioned in the case that Engineers dont care about managerial tasks like reporting, they are more interested in challenging projects and for this may even ignore recruitment duties. Even though the company was in dire need of experienced engineers and technicians, but still not enough technical training was being provided to them which was considered to be a major need at ICG. Engineers felt that no special attention was being paid to their career development and they were of the view that engineer development was discriminated when compared with management development. Even though there was no management development system in place and the company was not even hiring MBAs for management positions.
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So it is evident that ICG need to recruit more people, especially, people with managerial background so that they could manage their operations efficiently. A total of 106 open positions are at ICG and they have to be filled. Also according to ICG hiring requirement projections in Exhibit 1 and 2 of the case reveal that if they do not start hiring people now than they might start facing more operational problem. But the question is from where to recruit people? These could be recruited internally or externally. Most of the companies prefer internal recruiting before jumping to external recruiting. If ICG fills in open positions internally, it would have several advantages and disadvantages. On the positive side, the internally hired candidates strength and weaknesses would have been known to the management. So the supervisor would know which person is best suited for which job. They would have high commitment and high moral if they are being promoted. And they would require less orientation and training than the outsiders. ICG should hire from internal sources if the right person is available for the right job at the right time. To do this efficiently, they need to develop two things: (i) Succession planning and (ii) Skills inventory. It should be in Barbaras responsibility to develop these two things. However, on the down side, internal hiring might not be fruitful if an employee applied for the open position and got rejected. Such a situation needs to be handled very carefully. So HR personnel and the line manager need to coordinate and handle the situation in such a way that employee morale is not compromised. If ICG fills in open position externally, then it has quite a few options. Firstly, college recruiting is an option. The good thing about this option is that it creates a good pool of applicants for the open positions. But it is very costly and time consuming. Moreover, in case of ICG, the problem is that not enough college graduates are coming out every year to meet personnel requirements of ICG. The College Relations department of ICG is already trying to establish good relationships with many universities to attract potential employees. The College Relations department could work with the deans of the universities and design the course content which would be more practical, so that, the students could get exposure to the real business environment before they even graduate. ICG should invite university students for an On-Site visit of their company and make them familiarize with MEEDs culture. They can also offer them internships. Another external source of recruiting for ICG is attracting employees of competitors. Although, it has been mentioned in the case that if a semiconductor engineer is hired from another company then
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he/she would mostly likely be relocating from California to Michigan which would be very cumbersome for the employee and moreover he/she might not get adjusted in the environment of Midwest. However, if they are given higher salaries and more incentives along with the assurance of career development then they would stay. Also they should be informed that MEEDs is growing at more than 30% growth rate and it has the highest market share (31%). So the future prospects are bright for this company and also for the employees of this company. Not only is the company facing recruiting problems, it is also facing the dilemma of culture conflict. The culture of MEEDS and ICG is such that they dont fire or lay off people even during the times of recession. They believe that even if a whole equipment system has been messed up by someone it can still be fixed up instead of scrapping it. Their culture is opposite to that of a semi-conductor industry culture. The semi-conductor industry is said to be extremely strict and harsh with the employees, firing them if seen as incompetent. Semi-conductor industry needs discipline and planning which is not part of the MEEDS culture. MEEDS culture is ambiguous, freedom and it lets the employees do what they want. Therefore, MEEDS also need to change its culture to attract more semi-conductor experienced engineers and technicians because they would be the best ones to run a semi-conductor manufacturing plant.

SWOT Strengths:
Excessively growing Sales Technologically advanced Freedom & Flexibility for Employees Rapid Growth No Union Good employee treatment and help No layoffs despite recession Weaknesses: ICGs supply - 8-9% when 20% is expected Over lapping positions Dual reporting Informality in the structure leading to ambiguity Excessively technologically advanced Lack of Specialization No program to hire MBAs Excessive duties on one manager Unclear JA, JD & JS Manufacturing High turnover and expenses Lack of Succession planning Role of HRDP ambiguous

Opportunities:
Work in collaboration with local universities like Wang Employee retention programs Incentivize Formal Structure Reducing the duration of training Proper follow up with candidates Offer internships to the passing out engineers Channelize growth constructively Training Centre Standardize policies across the board Fill key positions at the earliest

Threats: Scheduling Delay and losses Shortage of supply of engineers Attraction and relocation of candidates is different High turnover Intense work load may lead to existing managers leaving

Recommendations
One of the gravest issues facing MEEDS right now is that of lack of labor available in the market and the type of expertise they are looking for is not only extremely scare but most of the engineers do not even possess those skills and do not have an understanding of the technology that MEEDS is using. Therefore, a wise thing to do for MEEDS is to work in collaboration with the local universities which have candidates mostly from the local area. One of the most lucrative universities is WANG, which is seen as the upcoming MIT. If the management at MEEDS works in collaboration with the management and deans at WANG and provide them with the exact profile of the candidate they are looking for; they can retrieve very promising candidates from there who have the needed skills and are also familiar with the area and other extraneous factors that led to engineers from the west coast leaving within three months. One thing MEEDS to focus on is how to retain their existing employees, because, as it is, there is a bleak supply of engineers that can possibly meet their demand and if the existing ones were to leave, it would cause mayhem in the organization. There is a high probability for them to leave because the employees are overburdened with work due to under staffing and they need to be incentivized to stay with the firm because as it is mentioned, people leaving means they go behind their schedules and their entire production cycle is messed up and would yield them losses. Proper monetary as well as non-monetary benefits to make the existing employees interested in their job would be a good way of making them stay with the organization, consequently, decreasing turnover. MEEDS being an organization with an extremely informal working style and structure, need to develop themselves and build on a more formal and streamlined structure. There are no standardized operating procedures and neither do they have a formalized handbook or procedures manual that the employees need to follow, thus they need to make this structure more formal and based on standard protocols that need to be followed so the work is properly channelized and there is low wastage of time. Training is the most crucial factor, as of now for MEEDS, because of the fact that the supply for the kind of labor they are looking for is near to zero and thus they need to train the employees to get them familiarized. But the problem at hand, taking into account the training is the length of
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the training; it takes three years for them to conduct an entire training of an engineer and for him to be totally adept to the procedures and technology at MEEDS. This severely needs to be shrunk given the market dynamics and the supply of labor and their increasing size by the day. If they would waste so much time on training itself, it would harm the productivity of the firm. They need to take remedial measures to shorten the training which can be done by providing universities with curriculum of what they need from the candidates so they are trained in advance and only their polishing needs to be done. It has been highlighted that the recruitment staff is providing the line managers or engineers with a pool of candidates that they think are suitable for their jobs but the managers are not following up with these candidates. They say that the pool is built but the candidates are never contacted. Given the condition MEEDS is in right now, it is highly doubtful that they would want to lose candidates because there is already a shortfall of about 20,000 candidates in the market and thus they would not want to lose candidates like this on their own. Another concern that stems out of the previous problem is that of a proper allocation of work on part of the engineers. They have been assigned with duties that they should not be doing and there is a lot on their plate so if there are overburdened, it is probable that the employees might not be able to do any of the work correctly. So a proper job analysis, job description and job specification of every position needs to be made so everyone knows their tasks and responsibilities and work constructively and efficiently. Succession planning is the backbone for the smooth running of any organization; no matter what size they have and what business they are operating in. The issue facing MEEDS right now is that two of their key positions are open right i.e. of the plant manager and the operations manager and only one person, Douglas is looking after all of these responsibilities. Now this needs to get streamlined at the earliest, because key positions are the ones that make or break an organization because they need to control and plan the organizations working. A proper succession planning procedure needs to constructed so the organization plans for unforeseeable leaving of any key position holder and their probable candidates can handle and take charge of the position quickly without causing undue pressure on one person and ensuring smooth running of the organization.

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There also no formal procedure to hire MBAs at MEEDS and they really do not understand what a management personnel is responsible of doing so it is advisable for them to create such a program, where specialized business management and administration personnel are hired who can look after the management side of the business and keep the engineers free to do the job they are suited for. There is a clear case of person job fit issue here where technical people are taking care of the management, which should not be the case, rather they should hire MBAs, who are business analysts and are capable of managing the operations effectively and efficiently.

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