STRATEGIC HR MANAGEMENT Student Workbook PAC Resources, Inc.: A Case Study in HR Practices By Myrna L. Gusdorf, MBA, SPHR This case study has been adapted from the original version of the case study found at www.shrm.org. The submission instruction is the portion that has been adapted. Project team Author: Myrna L. Gusdorf, MBA, SPHR SHRM project contributor: Bill Schaefer, SPHR, CEBS Copy editing: Katya Scanlan, copy editor External contributor: Design: Sharon H. Leonard Jihee Lombardi, senior design specialist 2011 Society for Human Resource Management. Myrna L. Gusdorf, MBA, SPHR For more information, please contact: SHRM Academic Initiatives 1800 Duke Street, Alexandria, VA 22314, USA Phone: (800) 283-7476 Fax: (703) 535-6432 11-0101-SW Case Overview Although PAC Resources is a fictional organization, it experiences many of the difficulties common in today's business climate. In response to declining sales, PAC Resources must transform itself from a strategy of expansion and high profit to one of cost containment and staff reductions. The case is presented in two parts. Part I lays the groundwork for the case, with discussion of the organization and details of the human resource department. Part II is presented in e-mails from various staff members. The e-mails identify specific problems that need to be addressed by the HR department and give the reader an understanding of PAC's overall culture. Objectives In this case, you will: 1. Recognize the link between organization strategy and human resource activities. 2. Conduct a SWOT analysis of the organization with emphasis on the HR department. 3. Indentify problem areas in each of these five functional areas of HR Management: n n n n n Human resource development. Safety and security. Staffing. Compensation and benefits. Employee relations. 2011 Society for Human Resource Management. Myrna L. gusdorf, MBA, SPHR 1 4. Design solutions to the strategic problems identified in the five functional HR areas. 5. Develop solutions to the policy and people management problems identified in the e-mails. 6. Present their solutions of the issues involved in their assigned functional area of HR. Working through the case This case requires you to decipher the problems at PAC Resources and then suggest solutions for the organization. As an HR professional, you must recognize the interrelationship of organizational issues and HR activities. In the case of PAC Resources, you will address the strategic challenges facing the organization while concurrently resolving issues within the HR department and managing the dilemmas of individual managers and staff. 2 2011 Society for Human Resource Management. Myrna L. gusdorf, MBA, SPHR PAC Resources, Inc.: A Case Study in HR Practices The organization PAC Resources is a small manufacturing company located in a mid-sized city in the upper Midwest. PAC manufactures high-quality specialty components for the computer industry. The company was founded in 2004 by current CEO, David Dukakis. Dukakis was a talented young engineer in Silicon Valley. When the industry hit the skids in the early 2000's, he found himself out the door with little more than an entrepreneurial spirit and a small severance package. Dukakis left California, moved back to his home state and used his severance package to finance PAC Resources, starting the company in small rented quarters in a nearly vacant strip mall. He brought in Cliff McNamara early on as chief financial officer. Dukakis was smart enough to know that he had no head for figures, but McNamara did. McNamara was an old college buddy, a super accounting wiz, and somebody Dukakis could trust to squeeze as much mileage as possible out of his severance money. It was a good match. McNamara managed the business, and Dukakis was the idea man and designer of the specialty components, patents of which were the backbone of PAC's success. Today, the low-rent strip mall is a part of company history, and PAC employs 835 full-time workers in its own contemporary facility built in 2012. So far, PAC has not been significantly affected by the latest downturn in the industry. Its market niche continues to be high-quality, specialized equipment. The company is proud that its products continue to be made in the United States and of its ISO quality certification granted by the International Organization for Standardization. Dukakis believes this is what has kept his company in business while others in the industry shipped jobs offshore or went by the wayside. PAC sells its own products and has a small customer base scattered throughout the United States and Asia, but this generates only a small percentage of PAC's revenue. Eighty-three percent of PAC's sales come from building original specialty components for one manufacturer. This has been a steady income source for PAC, but heavy reliance on one customer is a significant source of worry for PAC's management team, especially because sales of finished products are down for this customer and cutbacks are expected. If the rumor proves true, PAC will not escape unscathed. Consequently, the push is on for belt-tightening in the organization. PAC instituted a hiring freeze, and marketing and sales budgets were directed to increasing the company customer base. Canadian and European markets are being explored, and while there is some interest, there are no solid contracts. PAC employees are understandably jittery. 2011 Society for Human Resource Management. Myrna L. gusdorf, MBA, SPHR 3 Though PAC remains non-union, three years ago the organization went through a difficult period of employee unrest. There were complaints of poor management, inconsistently enforced policies and unfair practices regarding job changes and movement of employees within the organization. Because of the company's standing as a respected employer in the community, it was significant public relations black eye when an anonymous employee wrote a scathing letter to the editor of the local paper. This brought in union organizers who distributed leaflets and circulated authorization cards. To address employee concerns, PAC responded with management training and reorganization of lower-level supervisory positions. A companywide \"Talk-to-the-Boss\" program was implemented, allowing employees to bring issues to any level of management without fear of reprisal. It seemed to help. The authorization cards failed to generate enough interest for an election, and things settled down. Unrest, though, never goes away entirely. Employees became cynical about \"Talk-to-the-Boss,\" and \"the union buzzards\