The decision of Chrysler Corporation to add a third crew in a two-shift schedule will lead to the employment of the Alternative Work Schedule (AWS) rather than change the number of shifts. The AWS system results in a flexible working schedule that involves three crews in two-shifts to ensure the production increases to 120 hours per week that is the “3-2-120” working schedule (Wassell, 2013). The two-shift has been operational and fruitful for the company, thus leading to questions relating to abandoning the favorite mode of production. This paper discusses the factors that facilitate the change and the risks involved in employing the new working schedules.
The decision to switch to AWS is based on both wage and capital costs. The two-shift previously used involved working for 8 hours for five days for an employee to attain the 40 hours per week. Additional working hours due to increased demand, for instance, the minivans and Jeep Cherokee, would lead to workers increasing their overtime on Saturdays. The company pays its workers one and a half times for overtime, and with most of the employees working for an average of 10 hours daily and on Saturdays, the wage costs increased. The company also relies on studies depicting that long working hours result in fatigue that leads to decrease in productivity, higher margins of errors and increased probability of accidents, which does not support the continued use of overtime for their high demand vehicles. The high wages during overtime do not equate to the productivity of the tired employee hence the move to introduce a third crew that would decrease the workload and increase productivity (Samuelson, & Marks, 2011). By working for seven or eight hours, the workers will be more productive whereas new employees will earn less compared to the costs of overtime. The move reduces wage costs and increases productivity.
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The other reason for introducing a third crew is capital costs. The popularity of the company’s minivans and Jeep Cherokee means that company must increase its production. Production growth is achievable by increasing the workers or opening another plant. The construction of a new facility is expensive and time-consuming. It would also result in a waste of resources as a single plant can increase its working hours to achieve the quantity and quality demanded. Rather than open a new facility, the company choose the later to maximize the plant’s assets (Samuelson, & Marks, 2011). The third crew will cost less, and due to the continuous production in a single plant, other resources such as electricity and machines will be used to their maximum productivity. The move enables maximization of capital to reap the highest returns.
Risks the Plan Poses
The plan enables the company to maximize its assets and increase workers’ productivity while decreasing both wage and capital costs. It is from a capitalist perspective that it is perfect, but due to the complexity of humans, the firm faces opposition from the workers and unions. There are reports that workers are complaining that the AWS system which they term as “Awful Work Schedule” (Wassell, 2013) is a strategy the company is employing to rob them their overtime and Saturdays. Although by the time of demonstrations the plan was not fully implemented, the workers argued that the corporation intended to ensure that they worked 35 hours during working days to make sure that they would work on Saturdays for free to attain the 40 hours per week. Human resources studies indicate that workers opposed to changes or are not in line with the company’s strategies are not motivated thus creating the risk of decreased productivity (The Economist. 2014). The other risk pertains danger of working night shifts and the fewer hours of repairs and maintenance of machines which threatens to reduce productivity while increasing safety concerns. The company should consider the benefits and risks to ensure they can maximize profits at the lowest costs.
Samuelson, W., & Marks, S. (2011). Managerial economics (7th ed.). Hoboken, NJ: John Wiley & Sons.
The Economist. (2014). Challenges for human resource management and global business strategy. The Economist . Retrieved September 26, 2017, from http://futurehrtrends.eiu.com/report-2014/challenges-human-resource-management/
Wassell, A. (2013, February 25). UPDATE: Chrysler Warren Stamping Workers Still Fighting Alternative Work Schedules . Labor Notes . Retrieved September 26, 2017, from http://www.labornotes.org/blogs/2013/02/update-chrysler-warren-stamping-workers-still-fighting-alternative-work-schedules