MBA 745 – Reflections on Module 3 Concepts.

MBA 745 – Reflections on Module 3 Concepts.

In mature organizations, there is quite often a need to reduce labor surpluses. What would you suggest as other means by which to accomplish this objective rather than with layoffs?

Reducing the labor surpluses via layoffs should only be done in extreme cases. If the industry took an unexpected downturn, emerging technology replaced the companies product lines, and various other unforeseen events, then layoffs would be appropriate. Unfortunately many companies are not lean and mean, resulting in labor surpluses. This is due to mismanagement of resources, which will eventually catch up with them. When competitive forces catch up to them, they have no choice but to layoff these extra employee quickly. The better objective is to effectively manage the human resources and ensure surpluses are minimized or eliminated throughout the company. It is better to be in this position, so attrition will eliminate the surpluses. Early retirement and retirements is also a great way, but is heavily dependent on the age of your workforce. Additionally, people leaving also take valuable knowledge and experience with them that can not easily be retrieved by the company.

If by chance your mature organization established a “no layoff” policy, what advantages would this provide the company? Are there disadvantages? Which would you advocate and why?

A "no layoff" policy would be an advantage in terms of employee motivation, morale, and commitment to the company. Additionally, talented people will want to come work for the company, giving the company a valuable advantage in resources. The disadvantage is the potential for complacency. This policy needs to managed and expectations and accountabilities need to be set. No Layoffs does not mean that the company will not fire someone for incompetence, chronic tardiness, and absenteeism. It is easy for management to allow this policy to control them and allow poor performance to be discounted due to employee loyalty. I would be for this policy, but I would not be for having this policy being public or communicated to the workforce. I would have be an objective or an unwritten rule that is informally known throughout the company. It could be publicly stated that company has never laid employees off and strives to ensure business is kept at a level that prevents this action from ever happening. It is dangerous to broadly state we will never lay people off - because if it does happen, then the morale would tank drastically.

We know that fast growing companies need more working capital than those growing more slowly or not at all, as in mature companies. What strategy would you use to ensure sources of cash as incoming cash flow is delayed, and fixed costs continue, and paydays come every week?

I am going to assume that the word NOT was left out and you want to ensure incoming cash flow is improved and more timely. Keeping fixed costs from changing is an on-going battle and only can be controlled if you have a strong position with your supply chain. Also need help from the workforce to continually control waste and thus cost. Strong cash flow strategies can start with positioning yourself with your customer base. Working on 10 to 15 day net terms is much better than 30 or 60 days. Additionally, controlling your inventories allows the maximization of cash. Single most important part of improving cash flow is to minimize raw material inventories through just-in-time inventories and the same with finished product inventories by improving your responsiveness to customer orders. Need to gear the operations to just-in-time delivery. This allows the company to have accounts receivable equal collections or even have accounts receivable payable after collections come in.

Payroll is always demanding. Typical manufacturing/operational groups have hourly paid weekly and salary paid bi-weekly or even monthly. It would probably be best to streamline the process and engage the workers to have both hourly and salary paid on a bi-weekly basis.

As discussed in the readings, a company must project quarterly cash flows monthly for at least a year. This takes in account capital projects and other planned cash outflows that may have been missed, since they are atypical events.