Faced by reducing product prices and increasing labor costs due to competition, Nokia’s management decided to close down its Bochum plant in Germany. The closure led to the layoff of the plant’s 2300 employees which led to agitation and hostility. The company went into disrepute where unions called for a boycott of the company’s products followed by bad publicity in the press. The shutdown would cost Nokia a fortune. The article indicates that the closure cost Nokia 200 million euros. The firm’s German market share plunged with its managers reporting more significant losses.
Nokia’s case exemplifies an error of commission where the management made a bad choice of laying off employees. The article indicates that layoffs are not the optimal decision if employees perceive it as unfair. In organizational behavior, the firm’s base rests on management’s philosophy, values, goals, and mission which in turn drive the corporate culture in the social environment. The culture determines the type of leadership, group dynamics, and communication which employees perceive as the quality of work life which defines their level of motivation. The outcomes are individual satisfaction, personal growth and development, and performance. Nokia’s decision adopted a culture that failed to enhance motivation by laying off employees unceremoniously adequately.
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AT & T, on the contrary, has experimented with better ways of handling changing workforce needs. They opted to retain 100,000 workers whose jobs would be irrelevant in a decade by retraining them. As the article indicates, AT & T avoided negative publicity and subsequent decline in profitability. They applied knowledge about how groups and individuals acted within the organization. They interpreted the people-organization relationship regarding the employees, the organization and the whole social system. In organizational behavior, the retention and retraining represented the building of a better relationship through achievement of human, corporate and social objectives.
Workforce change philosophy directs senior managers in decision making. A company believes there is a value that employees contribute to its success. It acknowledges expectations arising from employees’ loyalty, flexibility, adaptation, and growth. Further, it evaluates what it owes employees as a fair exchange for what the employees have offered. AT & T believed that retaining the employees was beneficial. The retraining shows that they feel they owe the employees a certain level of gratitude. Their engagement with them led to the eventual realization of improved operations and increased profits. AT & T depicts a decentralized structure where they acted more quickly to address layoff in a manner that the employees did not feel alienated.
Michelin adopts a methodology that that focuses on minimizing the harm that may be caused by layoffs. The article indicates that in 2013, Michelin stated overcapacity for truck tire production in its Budapest factory in which case they had enough time to plan objectives for shutdown which would reduce the impact on affected employees. Its setting up of an accountability structure that indicates tasks and responsibilities is in the spirit of departmentalization and span of control. Every employee knows the functions for which they are responsible. It represents a decentralized structure where decision making is spread closest to the workgroup.
The analysis of the three companies indicates that a decentralized structure has a competitive edge over a centralized structure. Decentralized structures enhance motivation to their employees by providing avenues for personal growth and development, like AT & T and Michelin, which in turn improves performance and revenue. Centralized structures develop a culture that does not promote the social relationships within the organization, which eventually dents the social relationship out of the organization. Nokia acted in violation of good social relations within and subsequently outside the organization through lousy publicity and decreased consumer loyalty. Managers in centralized and decentralized companies need to evaluate their decision making whose negative impact is slightly felt or not felt by employees.
