You are on page 1of 11

Human Resource Management

CASE : Medical & Environmental Electronic Devices


Corporation (MEED)

Submitted by:
Name Fizza Afzal Noor ul-Ain Shuja Mudassar Iftikhar Syed Mehdi Shah ID 11E0016 11E0033 11E0001 11E0091

Submitted to: Prof.F.A. FAREEDY

Lahore School of Economics

WRITTEN ANALYSIS OF CASE


1. FACTS & QUANTITATIVE DATA:
MEED Corporation was founded in 1959. MEED designed, manufactured, sold and serviced complex medical and environmental control systems. Sold to directly to major end users, provided some control for OEMs. Also provided equipment to smaller end users through international force of marketing representatives. By 1979 achieved market share of 31% Sales growth at more than 30% per annum with maximum sale of $1 billion in 1979 with profits of $107 Million. Average no of employees for 1979 were 24900 Over the past 20 years MMED had developed its own highly distinctive set of values and modus operandi. MEED culture was ambiguity, freedom, flexibility, risk taking and supportive attitudes towards employees. IC group was responsible for sourcing of integrated circuits from outside suppliers and also design any unique ICs required Since 1977 IC group was successfully meeting MEEDs needs. MEED s IC requirement will grow from 0.9% of the industry output in 1980 to 2.5% in 1985. Nonetheless ICG was never envisioned as a major supplier for MEED. ICG was started by 5 people in 1972 that grew to 66 people in 1975 and then grew to 448 in 1977. This resulted in three departments which were advance design, circuit design group, manufacturing plant and material that provided the link between ICG manufacturing and the volume assembly operation of MEED. MEEDs closest direct competitors had only 20% and 11% share. In 1960 IC technology was revolutionized by integrating thousands of tiny transistors onto plates of ting chips of semi-conductor material. CPU was minimized onto a chip called micro-processor which made possible MEEDs use of mini-computer in many medical and environmental control products. Initially the manufacturing of IC resulted in poor yields of fewer than 10% whereas the competitors were producing t 71% and 65%. So manufactured expenses crossed their budget limits. ICG produced components of twice the cost as much as components bought from the outside. Furthermore ICG was only manufacturing 5% to 8% of MEED semiconductor needs instead of 20% planned. ICG material quality was a differentiated factor which gave good consistent quality. However MEED remained tolerant to ICGs growing pains and committed to the principles behind ICGs establishment.

2. QUALITATIVE STATEMENTS:
MEED general management advised its employees to be self-starter, self-director, and selfbeliever. They want them to get accustom to radical changes and prepare for surprising and unpredictable changes. MEED culture is to be proud of treating people like people, give autonomy to competent people, if people fail then work with them. By contrast culture of semi-conductor industry was unforgiving, coldly result oriented and sometimes unscrupulous as well. No lay off workers despite recessions. As a result MEED employees are not unionized. Shortage of good electrical engineers in labor market. There are 40,000 electrical engineers needed whereas only 20,000 are graduating. In MEED you learn to handle pressure, give your level best this is because of decentralized structure where one cannot pass his problems to the higher management as a result he has to solve his issues himself. Planning was new to ICG where as it was regular practice for MEED. Bosses and subordinated found difficult to conduct regular performance appraisals These appraisals were supposed to be conducted at least once a year as part of an employee salary review.

3. PROFILES:
TOM DOUGLAS: Date of Joining:1962 Designation: Group Manager, ICG; Manager, ICG plant Qualification: B.S.E.E., Wayne State University Experience: System engineer and manager for Quality Control Personality: Firefighter Track Record Played dual role Informal contacts Preoccupied with problems Created new HRDP position

DOM RAFFAELLI: Date of Joining:1966 Designation: Manager, ICG Advanced Design Qualification: Associate in E.E., Oakland Community College and Engineering Certification Experience: System Technician and design engineer Personality: Desire of talented people Believed in strong Emphasized on adaptability in

Reoriented Business

relationships Ranks

MEEDs culture Innovative

LES HOGAN: Date of Joining:1968 Designation: Manager, ICG Material Qualification: B.S., University of Minnesota Experience: Finance manager and MEED Manufacturing marketing manager Personality: Top-Down Approach Disciplined Department Constantly met goals

BARBARA HAMLIN: Date of Joining:1976 Designation: Director HRDP Qualification: B.S., Ohio University & M.A. University of Chicago Experience: Public School Administrator Personality: implementation problems Optimistic Uncertain Confused Need to improve HR practices Coordinated efforts KENNY LASH: Date of Joining:1979 Designation: Manager of Operations, ICG plant Qualification: B.S., Physics, Texas Tech; M.s., Physics, Rice University Experience: Texas Instruments Product Design manager & manufacturing manager Personality: Under Pressure Difficulties in start up Wore western clothes Resignation after 13 months

Profiles Summary:
Biographical Information & Profile (Exhibit-6)
Name Position Group Manager & Manager ICG Manager ICG Advanced Design Manager ICG Materiel Manager Operations ICG Director HRDP Age Education Joined MEED MEED Experience (Current: 1980) 18 yrs Previous Experience System engineer and manager for Quality Control System Technician and design engineer Finance manager and MEED Manufacturing marketing manager Texas Instruments Product Design manager & manufacturing manager Public School Administrator Personality Characteristics - Fire-fighter - Played Dual Rule - Created New HRDP - Innovative - Strong Relationship - Adaptibility in MEED Culture - Top-down Approach - Disciplined - Constantly met goals - Wore Western Clothes - Pressurized - Optimistic - Confused - Coordinated Efforts

Tom Douglas

41

B.S.E.E., Wayne State University Associate in E.E., Oakland Community College and Engineering Certification B.S., University of Minnesota B.S., Physics, Texas Tech; M.s., Physics, Rice University B.S., Ohio University & M.A. University of Chicago

1962

Dom Raffaelli

34

1966

14 yrs

Les Hogan

41

1968

12 yrs

Kenny Lash

46

1979

1 yrs

Barbara Hamlin

32

1976

4 yrs

4. EXHIBIT ANALYSIS:
Exhibit-1 shows that there is shortage of employees in each sub-section of ICG. Difference of required versus actual is maximum for manufacturing.
ICG Population Profile (Exhibit-1)
Current Advanced Design Managers Exempt Non-Exempt Sub-Total Manufacturing Managers Exempt Non-Exempt Sub-Total Materiel Managers Exempt Non-Exempt Sub-Total GRAND TOTAL 6 59 32 97 11 123 188 322 6 60 138 204 623 PROJECTIONS FY1980 FY1981 7 68 41 116 13 171 380 564 10 84 172 266 946 7 90 53 150 30 199 625 854 10 159 256 425 1429 DIFFERENCE FY1980 FY1981 (1) (9) (9) (19) (2) (48) (192) (242) (4) (24) (34) (62) (323) (1) (31) (21) (53) (19) (76) (437) (532) (4) (99) (118) (221) (806)

ICG Population Profile


1000 800 600 400 200 0 # of Employees 854 564 322 204 97 Current 266 116 FY1980 425 150 FY1981 Advanced Design Manufactu ring Materiel

Exhibit-2 shows the projection over the period of next five years that how much number of employees was required in each of the sub-section of ICG. Both Manufacturing and materiel have high requirement as compared to Advanced Design.
ICG Hiring Requirements (Exhibit-2)
FY1980 Advanced Design Exempt Non-Exempt Sub-Total Manufacturing Exempt Non-Exempt Sub-Total Materiel Exempt Non-Exempt Sub-Total GRAND TOTAL 35 18 53 40 147 187 47 102 149 389 FY1981 56 31 87 73 151 224 66 149 215 526 PROJECTIONS FY1982 FY1983 88 56 144 117 245 362 105 238 343 849 142 90 232 187 393 580 167 382 549 1361 FY1984 226 144 370 322 629 951 267 610 877 2198 FY1985 363 229 592 554 1006 1560 587 976 1563 3715

ICG Hiring Requirement


2000 # of Employees 1500 951 1000 500 0 187 224 362 215 87 580 343 144 549 232 877 592 370 1560 1563 Advanced Design Manufacturing Materiel

149 53 FY1980FY1981FY1982FY1983FY1984FY1985

Exhibit-3 shows the comparison between sales, net-income, total assets and number of employees. It is obvious that as number of sales are increasing number of employees are also increasing. It is good as per company perspective that sales/employee are increasing over the year so company has to bear less human resource cost but it is not good as per employee perspective because it is showing over-burdened employees with more and more work to do and sometimes multiple jobs to perform.
Ten Year Financial Highlights (Exhibit-3)
Sales Net Income Total Assets Avg. # of Employees Sales/Employee 1970 79,000,000 8,000,000 70,000,000 3100 25,483.87 1971 86,000,000 7,000,000 89,000,000 3700 23,243.24 1972 117,000,000 9,000,000 116,000,000 4000 29,250.00 1973 161,000,000 14,000,000 170,000,000 6100 26,393.44 1974 256,000,000 25,000,000 265,000,000 9200 27,826.09 1975 321,000,000 28,000,000 336,000,000 11000 29,181.82 1976 440,000,000 42,000,000 523,000,000 13300 33,082.71 1977 637,000,000 64,000,000 647,000,000 18200 35,000.00 1978 1979 856,000,000 1,083,000,000 86,000,000 107,000,000 893,000,000 1,109,000,000 22400 24300 38,214.29 44,567.90

Sales Per Employee


50,000.00 Sales/Employee 40,000.00
38,214 44,568 35,000

30,000.00
29,250

33,083 25,484 26,393 23,243 27,826 29,182

20,000.00 10,000.00 -

Sales/Employee

1970 1971 1972 1973 1974 1975 1976 1977 1978 1979

Exhibit-4 shows that same person Tom Douglas is working as group manager as well as plant manager. Also after the resignation of Kenny Lash Operations manager, Douglas has also to look after his responsibilities. It shows incompetency of HR to meet the human resource requirements and gap within

sections. Also right persons are not at the right places and due to that employees have to do multiple jobs with is creating extra workload burden on them.

Exhibit-5 shows that HR sections of employment, compensation and training that are under one person are not working well. Also same opening of management development is created at two places within same department, which shows over estimation of open position which are actually not required. Also employee relation for ICG sub-section is not aligned with one another so lack coordination.

5. PROBLEMS AT HAND:
ICG was facing slower than expected progress in gearing up internal design & manufacturing operations due to Lack of know-how in project management Tight labor market for exempt employees Little management depth Prediction of high annual turnover Experienced difficulties in start up of Jackson Michigan, manufacturing plant Forecasting raised issues such as: What kind of programs should be developed to recruit and how HR practices should be implemented properly? How could ICG attract and keep technical and managerial talent needed? Should planning be at aggregate or individual level? There were no rules. Limited experience at one particular position due to fast mobility of employees. Movable period for exempt employees was after one year and for non-exempt employees it was six months. No formal development planning. Planning was done initially but with little faith. It was relatively new to ICG as it was to MEED as a whole .According to one manager, Planning process is just beginning to hold. Shrinkage of external suppliers by acquisition, redirection or non-investment. There was limited capacity for adequate supply & number of potential large customers for that limited supply is growing. Difference in culture created assimilation problem for experienced semiconductor people. In traditional semiconductor company, people have often been treated harshly, laid off or fired on short notice. There was less structure, regimentation & discipline at MEED. Culture was more unforgiving and cold results oriented. This resulted in high personnel turnover. ICG working through informal contacts rather than through regularized meetings. Performance Problem: Needs of manufacturing semiconductors were below planned.ICG was only manufacturing 5% to 8% of MEEDs semiconductor needs instead of the 20% planned. Actual manufacturing was less than planned. Delayed Production: Scheduling was an issue. Delays in delivering parts to volume assembly resulted in uncoverable loss for MEED. The loss to the company would have been approximately $100,000 if production delayed. Short Life cycles: Life cycles in semiconductor business ended abruptly with the advancement of new technology. Multiple jobs of each person: Single person was holding two or three jobs at same times. People often acting in both supervisory & technical capacities. Douglas dual role as a plant manager and a group manager. Douglas was not a right person as a plant manager Old HR department was not working according to the requirement.

Understaffing: need for more employees. According to planning manager, there are 20,000 electrical engineers graduating, but 40,000 are needed. High cost of attracting capable engineers with specialized technical skills. Cost estimation was $5000 to bring a West Coast semiconductor engineer to Michigan. More expenses than forecast planning. People are not comfortable in Meeds culture, despite salary and other fringe benefits. They disliked Michigan weather, non urban environment and felt uncomfortable with the Midwestern lifestyle. A few left the company within three months. Problem of assimilating new hires because they could not cope with the MEEDs environment. Resistance to change Engineering graduates often lacked competencies required by MEED. Institutions designed curriculum in accordance with the theoretical perspective. No formal program of management development at ICG. No formal recruiting process and job searches were limited. Fail to meet up hiring needs. Problems of handling management tasks. Engineers failed to follow up on recruits, reporting and so on. They even dont know what a good manager looks like. No MBAs as managers and there was no management models. Open slots for years. Limited training and no dual career path. It was not in their philosophy to train people and help them regarding how to start. Less trained and educated workforce as there were no mentors. No regular performance appraisals. The boss-subordinate relationship changed so frequently that it was hard for a boss to have enough information at any one time to properly evaluate his subordinates. Problems with salary compression. Incoming experienced managers might be paid more than those who had been with group for some time. Resignation of Kenny Lash

6. IMMEDIATE ISSUE:
The immediate issue is hiring of plant and operations manager with initiation of proper HR planning process such as need to improve recruits, career development (dual career path), promotion and appraisal system. Secondly to adjust in culture, invent a new culture midway between both traditions to cope with adaptability issues.

7. CORE ISSUE:
The case mainly revolves around Human resource issues. Core issue in this case is inappropriate HR Practices and policies. The HR practices that were prevailing in the organization were not what MEED required. Secondly development planning was a major issue. There was no greater emphasis on planning as people put little faith in planning. Planning is something that is relatively new

to MEED. Lack of adequate planning lead to multiple problems in the organization .As there was no planning, there was lot of mobility in employees positions and that disturbed the whole system. Tom Douglas was already placed on two positions and still one was vacant for operations manager. Right people were not at right places and its all due to poor or inadequate planning. Lastly there was little management depth. Human Resource is all about managing people but due to inability to handle management tasks, the company faced delayed production, performance problems, understaffing and high cost of hiring.

8. CONCLUSION:
MEED and ICG were having great potential, growing rapidly but along with that giving birth to many problems. The intensity of these problems was so high that long term bright future would be simply a dream with such management practices. The semi conductor industry was highly innovative, short life cycle and was growing rapidly. Thus to meet the market demands, firm needs to be quick responsive with quality work. MEED and ICG could easily grab this opportunity due to their strong technological background but lack of management was the biggest hurdle in their way. Engineers are normally considered as bad managers but ICG was relying on them on key managerial posts. On the other hand the engineers, who were performing the actual technical job, were having no well defined career path. Although informal and unstructured culture is a common problem of large firms but MEED & ICG were at growing stage and they were having this problem at this stage. There were some external problems which they were facing and on top of that was labor shortage. It was quiet expensive to hire engineers from other state like California. Despite enticing and intangible rewards and good raise, ICG were not sure whether they will stay or not because of misfit in the company and city culture. But ICG come up with remarkable solution to hire fresh candidates from local universities. Millions of dollars were lost just because of delays in production and reason behind was lack of planning. But the material department has shown good performance and meets their goal just because of good management practices. Douglas who was responsible for many key posts, himself believe and practice in an informal way of working. People were working under continuous pressure and performance appraisals were conducted once a year. .

9. RECOMMENDATIONS: Tom Douglas was pre-occupied by problems, leading to inefficient handling. Right person should be at right place. Engineers are normally considered as bad manager so they should not be on managerial posts. They need to develop a single culture which is structured, formal and well-defined. Proper planning to meet the market demands.

HR needs to focus on below tasks o Continuous hiring process and talent hunt to fill the open slots and future projection. o Develop proper training programs for both existing and fresh employees. o Establish a career path for engineers and managerial staff. o Offer internship program for university students particularly for the other cities and state universities. o Start quarterly performance appraisal with proper method. o Cover the labor and technical staff shortage from foreign countries

10. BEST SOLUTION:


HR below responsibilities needs to be fulfilled; o Continuous hiring process and talent hunt to fill the open slots and future projection. o Develop proper training packages for both existing and fresh employees. o Establish a career path for engineers and managerial staff. o Offer internship program for university students particularly for the other cities and state universities. o Start quarterly performance appraisal with proper method. o Cover the labor and technical staff shortage from foreign countries

Proposed Hierarchy:

ICG Grp Mng (Tom)

HR

FINANCE

OD

PLANNING

QA

PG MG

Dom Raffaelli

Les Hogan (Materiel)

AD DSG

MNFCT

Operation Mngr (MBA)