Case Study: The Calleeta Corporation

Jan Samson, CEO at CalleetaCo, sat stating at the now$-$empty boardroom. Her board of directors had reacted negatively to Jan$$s growth proposals for expanding CalleetaCo globally, leaving Jan with a big problem. Shareholders, who had bought its stock as the radio frequency identification $($RFIDI$)$ manufacturer led the boom in new users for its products, were restless as financial returns slowed. In addition, board members expressed concern that CalleetaCo plants in Mexico and Vietnam were becoming the targets of activists who advocated that organizations ensure that the huane working conditions common in the United States be established in American$-$owned offshore facilities. Finally, board members demanded that Jan move immediately to rein in employee costs of the U$.$S$.$ operation. Those costs were growing at a rate of $12\%$ annually compared with an industry average of $4\%.$ HR Vice President John Nosmas defended his practice of hiring the best, paying them well, and providing them with expensive benefit programs to keep them developing the innovative products the market demanded. However, board members were adamant and demanded a plan at the next meeting, only six weeks away.

CalleetaCo, with its current $1,900$ employees spread across three countries $($i$.$e$.,$ the United States$-1,000,$ Mexico$-200,$ and Vietnam$-700),$ had grown rapidly over its $8-$year existence. Although it started as a small entrepreneurial company, CalleetaCo was now challenging the top providers in its industry as it pursued its goal$-$ to become the global leader in RFID products. RFID use exploded after the introduction of memory for passive radio transponders, which lef to the production of RFID tags, microchip field radios, embedded in products and used for electronic inventory. These tags were replacing traditional bar codes and manual scanning.

Electronic product coding associated with RFID has been embraced by retailers and consumers alike. Retailers such as Gillette, Hewlett$-$Packard, and Walmart benefit through more rapid restocking, less likelihood of out of stock items, and the electronic identification of product expiration dates. In addition, consumers can more readily return purchases. Applications seem unending. Members of Congress have introduced legislation to track sales of tobacco products using RFID technology, for example. New U$.$S$.$ passports contain RFID tags. $$Swipe$-$less$$ checkouts, RFID medical alert bracelets, and security identification wrist bands are on the horizon. In addition, California is likely to use RFID to comply with the $2005$ Real ID Act mandated by Congress $($Billingsley$,2007).$ However, some groups are concerned that RFID proliferation could lead to the surreptitious tracking of individual$$s purchases and other privacy violations, especially since individuals may be unaware that their purchases include RFID devices. In addition, hackers may be able to steal identity information by remotely scanning an individual$$s passport, credit car, or driver's license.

Jan$$s company had grown rapidly by perfecting several of these products. To keep the innovations coming, Jan and John Nosmas devised a human capital talent acquisition and retention plan to attract the most highly skilled individuals in the industry. The company had $25$ HR recruiters focussed solely on identifying potential employees, $17$ selection specialists to test and interview them, and above$-$market compensation and benefits at its U$.$S$.$ location to retain them: health, dental, and life insurance at no cost to the employee; six weeks of paid vacation annually; elder care; child care; on$-$site per boarding; liberal performance bonuses, $401($k$)$ matching at $10\%,$ stock options; and onsite spa and exercise facilities. The programs had been incredibly successful in finding the right people to fuel the company$$s innovative products.

With the company$$s success had come an even larger HR department. For example, employees regularly stopped by the HR office to chat with their designated HR support representatives $($there was one HR support representative for every $10$ employees$).$ The employees were thrilled with the personal service and responsiveness to inquiries on everything from health questions to veterinary referrals. Managers had access to their own HR support specialists, who handles everything from performance appraisals and salary increases to filling vacancy requests and overseeing employee discipline. When the company had formed an SSC for information technology and financial services, the HR department had balked at participating because employees were so satisfied with service levels even though departmental costs were $20\%$ higher than those of counterparts at competitor firms.

What changes can John make in his HR operations to meet the board's demands?