Read the case study below about SMU Shoes and answer the questions about HRM functions

SMU Shoes Ltd.

SMU Shoes Ltd. is a medium-sized manufacturer of leather and vinyl shoes located in Halifax, Nova Scotia. It was started in 1973 and currently employs about 500 persons in its Halifax plant and some 200 more in offices and warehouses throughout eastern Canada. In recent months, the company has been experiencing a number of challenges and problems. Added to these was the departure of John McAllister, the company’s human resource manager, two weeks ago. McAllister had been with the company for a little over three years and was reputed to have “run a tight ship”.

Robert Clark, president and a major shareholder of SMU Shoes, decided to re-evaluate the role of the company’s human resource manager before hiring a new person. Tim Lance, a graduate of Saint Mary’s University and now the chief executive and owner of Productivity Systems, a management consulting operation located in Sydney, was hired to “look into the present and future role of SMU Shoes Ltd.’s human resource department and suggest appropriate action plans to improve its contribution to the organization and help the company meet its future challenges”.

Views of the Senior Managers

Lance began his assignment by interviewing the senior managers of SMU Shoes. He made a short checklist of questions to prepare for his interview with the managers (see Figure 1). He was, however, determined not to restrict his interview to these questions. By keeping an informal and free-flowing format, he felt he could obtain a better understanding of the structure, processes, and culture of the organization. His intent, therefore, was to use these questions as a springboard for letting the interviewee speak out and pursue any point that he or she might consider relevant. Lance was able to meet three of the five “key” managers in the company. Figure 2 shows a chain of command in the company in 2013. At the time, Lance conducted his study, Andre Cardin, manager (Design & Research) was away on holidays. Lance was also not able to have an interview with the production manager as he was on trips to Montreal and Toronto investigating the potential of expanding the company’s operations to those cities. Lance felt that the half-hour interview with Robert Clark (interrupted by three or four phone calls on “urgent matters that unexpectedly arose”) was totally inadequate for his purpose. However, Clark was due to leave town the next day and Lance could not wait until Clark’s return to proceed with his study.

Going through his notes, Lance realized that the human resource function was viewed very differently by the three senior managers to whom he spoke. “I believe we need a mover and a shaker here”, Clark told him. “McAllister was all right, but he did not have the time or inclination to have a good system in place. He made most of the human resource decisions himself. I’m not saying that they weren’t correct decisions for those  occasions, but he wasn’t a popular man with either the workers or several managers here. And as you know, this is one job where you need a lot of rapport with people at all levels.”

Some of the excerpts from Lance’s interview with Clark are given below:

“I believe that the new person should be able to work with the people. In fact, not simply working with the people but leading them. He or she should be able to look beyond today’s needs…into the technological and other challenges that face this company and our managers in the new millennium…”

“The future of SMU Shoes? I have mixed feelings on this. On the one hand, shoes are something that everyone needs – every day, every week, and all through their lives. Also, most persons don’t mind buying an extra pair if the price is right. But, there’s the catch. It’s a pretty competitive market and what we so here and how well we do it depends quite a bit on how good our competitors are. To succeed, we need to have a clear market segment, control our costs, and meet our customer’s needs. Two of our brands, which were leaders in the eastern Canadian shoe market are facing intense competition from products manufactured in China, Indonesia and Korea.The currency crisis in Asia (especially in Korea and Indonesia) can both hurt and help us. On the one hand, the prices of the imported shoes are getting cheaper by the day, thus cutting into our markets. The other side of it is that Western investments in these countries may slow down – at least in the short run. This means that we have breathing time right now to cope with this onslaught…So, all in all…who knows”

“The most immediate problem? I should say we have two  pressing issues: first, we have to upgrade out production processes if we are to improve our efficiency and competitiveness. I personally believe that we have more employees than we need. If we could automate many of the production processes, we could improve the efficiency and reduce costs. But that is easier said than done. We have strong unions, and firing someone is going to be awfully hard in the future. At the same time, the reality is that no customer is going to  pay15 or 20 percent extra for our shoes if we cannot give a damn good reason for that. With the free trade worldwide, the market is flooded with Asian and South American products. We simply cannot compete with the Chinese and the Mexicans on the labour costs…Our survival may very well depend on technological upgrading and improving worker productivity.”

“A second and related issue is dealing with unions. We have four major unions and I would term two of them as militant. Actually our workers are pretty good – many of them have been with us for several years now – it’s the union leadership that’s causing much of the problem. The new human resource manager hired has to be tough with the unions, yet caring and understanding. In the last three or four years, union-management relations have gone from bad to worse. We have to turn a new leaf now or else all of us will sink.”

The response’s to Lance’s questions from the other two senior managers at SMU Shoes were varied. Excerpts from  his interview with Tim McDonald, general manager of Finance, are given below.

“I don’t think human resource management is the most critical activity in the management of a shoe company”. McDonald told him. “True, we have to pay the employees adequately and there must be a system for keeping records. But, beyond that, I don’t think that the human resource department has anything major to offer that has a significant impact on an organization’s working. What we should really focus on now is how to control our cots and come out with a sound marketing program. We especially need a good advertising program; we need to hire competent sales staff and upgrade the skills of the present sales force”.

“The human resource department here hasn’t done much, if you ask me. They haven’t had any input into job design or organizational planning. Part of the problem stems from the fact that there has been little continuity in that department. A typical manager in the human resource department stays for a maximum of three years before he moves out. Neither McAllister nor his predecessor stayed in the company for five years. Tony Rezkov, the manager in charge of administration and security, is new; so are several other junior officers and staff in the department…I do believe that there is a problem there…”

“Oh, don’t get me wrong. The human resource department staff are very friendly and cooperative. McAllister had a few rough edges, but overall, he was someone whom I grew to like. He was one of those tough guys – straight out of a John Wayne movie. He made fast decisions and was sort of a trouble shooter here”.

“The big challenge? Global competition of course. We’d better be prepared to meet the Koreans, the Chinese, and the Mexicans. Unless we maintain our competitiveness, we are just not going to survive. It’s as simple as that”.

“Of course, global free trade also brings with it a great opportunity. NAFTA gave us access to a market now that is several times the size of our local market. Freer trade in Asia and Eastern Europe will do the same…..But can we make use of this opportunity? That’s the big question.”

Pat Lim, general manager, Marketing, had a somewhat different vision of the role of the human resource department:

“It’s probably one of the most important functions in this company.” Lim told Lance. “In my university days, I was taught that human resources are the single most important asset of any organization. After working for nearly twenty-five years in the management area, I’ve grown to realize how true that statement is. In my mind, people make all the difference. You can have all the resources you want, but in the absence of good employees, all those resources are worthless. The human resource department is the backbone of employee relations”.

“What do I expect from the human resource department? Quite a lot, I should say. I believe that the department can play a leadership and developmental role. Until now, it has played a somewhat low-key, record-keeping, staff role. It’s time that the department got involved seriously in employee planning, job redesign, career planning, organizational design, and other developmental activities. Gone are the times when it could simply play a support role. Look at all the successful companies in this country and the U.S., especially those that are listed in books such as In Search of Excellence. It’s the people and people management that differentiate them from the common crop”.

“The new human resource manager should be an expert – an expert on systems and people. We need new ideas here, and with a growing work force we need more formal procedures and systems, whether it’s orientation or performance appraisal. Right now, many of the human resource functions are done on an ad hoc basis.”

“Above everything else, I believe that the new human resource manager needs to bring a new philosophy to deal with the unions. In the last several months, there has been an increasing degree of hostility between the unions and management. I’m not blaming anyone for this. But I do believe that we as part of the management team, have the responsibility to solve some of these problems. It’s up to us to take the initiative to improve the situation. Isn’t that the essence of good management?”

View from the Human Resource Department

As part of the study, Lance met with the three key staff members in the human resource department; Jane Reynolds, special assistant to the human resource manager; Tony Rezkov, manager of administration and security; and Joseph McDonald, the industrial relations officer (no relation to Tim McDonald). Rezkov, being new on the job, wasn’t able to tell Lance very much about his position or the human resource function. In Lance’s opinion, his two meetings (lasting approximately an hour each) with Jane Reynolds was more productive.

Lance studied the various comments made by Reynolds:

“The possibilities here are simply enormous. With a little determination and the right type of resources, we can make this one of the best human resource departments in this country. To be really effective, I believe that human resource management has to be well  integrated with the strategic and operational planning in the firm. That has not occurred here yet”.

“When I joined this company two years back. it didn’t have any system – at least, not anything that is worth mentioning. My job since I arrived here has been to introduce new procedures and decision support systems. For example, recently, we started a formal orientation program for all plant workers. We are also in the process of developing two performance appraisal instruments – one for  the plant employees and the other for administrative staff . We are also beginning to provide absenteeism and turnover data in the various departments to the respective managers. But I want to emphasize that these are just the beginnings. With the right support, we can do wonders here”.

“Why do I sound so pessimistic? Well, look at our department’s staff strength compared to human resource departments in similar-sized organization in this part of the country. We probably employ 50 or 60 percent of the number you would see elsewhere. We also do not have the computer hardware or software support and the necessary number of PCs to do an adequate job”.

“Sure, despite everything, we could still have done better if we had the will to do it. I will be totally frank with you – you will keep my observation confidential, won’t you? Not that I mind too much if someone comes to know about it. It’s as if we are a poor cousin here. Being in human resources is not just considered to be important or very useful. We’re looked at by many others as unnecessary appendage.”

Lance found that Joseph McDonald (“call me Joe, everyone does”), the industrial relations officer, was the toughest to handle. McDonald was very friendly and supportive, but did not give a direct or coherent answer to any of Lance’s questions. McDonald was one of those persons (reflected Lance) who talked to you for an hour nonstop without giving any useful information. Lance realized that he only got two points of information out of his forty-five minute meeting with McDonald. First, one of the unions in the company was very militant and might go on strike when its contract expired in the next few  months, and second, McDonald’s son was planning to go to medical school – Lance knew the former fact already and didn’t care to know about the latter.

In less than ten days, Lance was scheduled to meet Robert Clark to give a summary of his findings and recommendations. Already, Lance had received a call from his office in Sydney informing him that one of his consultants had been injured in an automobile accident and would not be back to work for the next several weeks. This meant that Lance had to return to his office soon to complete the project himself. Given the time constraints, Lance was wondering how he should proceed from here.

Figure 1 – Checklist Prepared by Lance for Interviewing the Senior Managers

• What do you expect from the human resource department in this company?
• What is your evaluation of the human resource department’s contribution in the past?
• What activities should the human resource department of this company carry out?
• Which of these are done now? How well are you satisfied with the performance of the department in those fields
• Overall, are you happy with the human resource staff? Why?
• What are the major challenges facing SMU Shoes in the next five years?
• What are the unique needs of your department?
• What new services or information should the human resource department provide you?