Cooper Fabrics Incorporated

Situation Analysis

Cooper Fabrics was incorporated in the year 1950. Cooper Fabrics Incorporated
has three plants (one at Parville and other two at Rhode Island) which are into
production of automotive speciality household fabrics. Mr. Ralph Hampton
(General Manager) reconverted the Parville plant into automotive and speciality
household fabrics manufacturing units. The working condition of company was
pretty good. During the initial years of its inception (1950 – 1953) company was
running into losses due to low income, higher cost, low sales and renovation &
reorganisation. During 1953, the company was also closed down for certain
definite time period. Employment of workforce was also low in the initial years
but increased to considerable amounts (300) afterwards. Also, the rehiring of
employee was taken place those had been laid off in 1949 by liquidators.

During 1954 the company earned profits by reducing its cost,improving

quality and quantity of products. Also, number of workers increased to 340
considerably in 1954. It has policy to employ two or more worker from the same
family. Some of the workers commute several miles to come for work.
Communication between management and employees was generally routine.
The company maintained good relations with labour unions. The wages of the
worker were revised considering consumer price index. Workers didn’t take the
cut in wages positively and also misunderstood 6% decrease in wages as $ 0.06.
The older employees did not see any reason to bring in new machines when the
old ones were working fine. The company was not able to convince workers that
it was running into losses. The old employees didn’t see any reason in bringing
the Rhode Island machinery to Parville plant. There was tension between workers
and management and hence for the first time in Cooper Fabrics Incorporated,
third party was hired to do an amicable settlement between them.

The company wants to clear to employees that though company earned a

considerable amount of profit, improving position and outlook in 1954 was not
enough to increase the wages of workers.

Problem

• Employees are not willing to accept that the company is not into profits. They
believe that the company would not have been able to sustain itself if it would
have not been making profits.

• Secondly, Coopers Inc, being a privately held company could not divulge its
financials to public. Thus, management cannot show employees books of
accounts to prove that the company is really into losses.

• Thirdly, the company is finding it difficult to overcome the resistance to

change from the employees’ side. Workers are very reluctant to believe that
the current machines and equipment used by them are outdated and need to
be replaced by more technically sophisticated machines.

Objective
The management of Cooper Fabrics Inc were thinking of how to communicate the
employees that although the company has some profit for the first time in the
last four years, but still the company is not profitable enough so as to
accommodate an increase in wages. They wanted to convince the employees
that the company’s performance need to improve substantially and company has
also to develop capability to sustain such improved position before declaring
wage hike.

Thus, the primary objective behind the case is to learn ways to deal with the
employees in such a manner so as to gain their confidence which will enable the
company to have their support during difficult times. Efficient handling of
communications with the employees is very important for the success of the
company.

Further, the case also reflects that it is very difficult to convince the employees
of a prevailing situation (even if it is true) when the same means depriving
employees of some potential benefit. In the given case, the management is
finding it very difficult to convince employees that the company is not able to
make profits as this would mean no wage hike for the employees.

Evaluation of Alternatives

• Revealing the Financial Statements to Employees: - The

management of the company should reveal its financial statements to it
employees. Financial statements include Profit and Loss A/c, Balance
Sheet and accompanied additional information.

Advantages

1. Workers will themselves be able to see the true picture of the financial
position of the company.

2. Workers are able to understand the strategies and policies of the

company more clearly.

Disadvantage

1. Financial position of the company will get revealed and it won’t be in

the interest of company.

2. After getting to know about the financial conditions, workers could

demand higher wages, bonuses, etc.

• Reducing the communication gap: - The management should try to

reduce the communication gap between themselves and employees.

Advantages

1. Better coordination and cooperation among management and workers.

2. Management can pass notices, rules and regulations to workers very

easily.
 3. Worker can complain about their problem and grievances to the
management very easily.

• Building a residential society for Employees: - The management

should try to build residential society in the company’s premises itself.

Advantages

1. Worker doesn’t have to commute additional miles every day for work.

2. Worker would feel sense of pride as they will think that company is
concerned for their convenience.

3. In case when company has to execute immediate orders for

production, they can ask its workers to come immediately and work.

Disadvantages

1. Company has to make additional investment for which company is not

ready since it ran into losses for consecutive many years.

Implementation of Best Chosen Alternative

The financial statements of the company should be revealed to the employees.

This is so because the workers will themselves be able to understand that the
company was running into losses for consecutive many years. Increasing wages
would make company again vulnerable to losses. Instead of increasing wages,
the management of the company should tell that it would invest money in more
profitable ventures so that the overall performance of the company increases.
The company should try to tell the workers, the profits earned by the company
would help in long term benefits for which the short term benefits of salary
increase should be foregone so that their living standard increases.

In case workers reject the option, then the company should immediately follow
up with contingency chosen alternative.

Contingency Alternative

The contingency alternative should be reducing the communication gap between

employees and workers. It would lead to better understanding. The two way
communication between both the parties improves and it would lead to better
coordination and cooperation at workplace.