Question

Case questions

1. What HRM problems could be expected to arise from this amalgamation? As HR consultant to All Star University, what would you recommend (and do) to prevent or overcome such problems?

2. Formulate a plan of action to reduce the head count by 20 percent (pay attention particularly to how you would identify and select those academics to be terminated). Identify the major challenges you might face and explain how you would overcome them.

Case: The merged School of Business

All Star University, the product of a government-sponsored amalgamation between the prestigious 115-year-old Sandstone University and the 20-year-old Redbrick Institute of Technology, is facing great financial difficulties, having lost more than $10 million in the last financial year. Sandstone University had a traditional academic emphasis, which was reflected in its courses of study. Its graduates mainly entered academia, the public service, banking and consulting. In contrast, Redbrick Institute of Technology offered applied programs of study oriented to the needs of business, with its graduates going into a diverse range of private sector industries. As part of the amalgamation, the School of Economics at Sandstone University was combined with Redbrick’s School of Business. The School of Economics taught economic theory, economic geography, economic history, statistics, mathematical economics, labour economics and industrial relations. Student demand for its courses (especially in economics and industrial relations) has been in long-term decline. Students, government and local businesses have been pressuring the school to introduce more business-oriented subjects into the curriculum. Reflecting its different background and focus, Redbrick’s School of Business offered majors in finance, marketing and HRM. The School of Economics employs 35 academics and has 700 students who are predominantly young and study full-time (the average rate is 21), while Redbrick’s students are made up of both full-time (65 percent of the student population) and part-time mature-age students (average age of 33). Sandstone University’s staff are highly academically qualified (90 percent hold a PhD) and they perceive themselves as research-oriented academics. Academic qualifications and research publications are prized over practical experience and teaching ability. The majority are members of the left-wing Tertiary Academics Union. Employment terms and conditions are determined by a collective agreement negotiated by the union and the university. Eighty five percent of the staff have tenure. Pay is determined by seniority and all employees in the same classification receive the same rate of pay. Sandstone University’s academic staff remain angry at having to merge with a teaching university and that the focus that is now being placed on costs and performance. Fears that job security, academic standards, research output and prestige within the community will suffer are common. Redbrick’s staff of 28 are less well qualified academically — only 40 percent have a PhD and only 20 percent have tenure. Staff are employed on individual contracts (varying from one to three years in duration). Most Redbrick staff have had extensive work experience, take great pride in their reputation for teaching excellence and aim to prepare their 1000 students to go into the ‘real world’. Sandstone staff are generally regarded as being too theoretical and divorced from the needs of business. Redbrick courses have proved highly popular with students and the local business community and its students are in high demand. Less than 50 percent of Redbrick’s academic staff belongs to a union. Those that are union members belong to the right-wing Australian University Teachers Union (a bitter rival of the Tertiary Academics Union). Private consulting is encouraged and this, along with a performance-related pay system, means that it is possible for top-performing Redbrick academics to earn incomes significantly higher than those traditionally paid to Sandstone University academics. It is anticipated that the newly created School of Business at All Star University will need to reduce its head count by 20 percent if it is to meet the proposed budgetary guidelines.

Answer 1

Even though amalgamation is aimed at good causes including diversification of operations, elimination of competition, managerial effectiveness and efficiency, increasing shareholders value and financial gain, there can be many adverse effects to it as well, as discussed in the case of All Star University. The major problems we see in this case are Competition between groups which are not healthy, and the old company's loss of goodwill and identity gained over years. As the HR Consultant to All Star University, I should formulate a plan to overcome these problems, otherwise the institution would break down eventually. I would suggest formation of a council including educational experts, the management team and teaching staff representatives from both Sandstone University as well as Redbrick Institute of Technology to discuss the emerging trends in educational field, the issues they are facing currently, effectiveness of current strategies/methods, and scope of improvement for current strategies implemented in the universities, and then decide on what processes to follow in order to improve effectiveness and efficiency of current practices. Then a policy should be formulated jointly by the constituent university representatives, and should be religiously followed by the organization as a single unit. The policy should include ways to improve all the functions of All Star University, safeguarding the needs and interests of students and staff as well.

Poor management and economic crisis faced by All Star University signifies the need to reduce its workforce by 20%. I would suggest multiple ways to reduce the employee count. First of all, I would keep a close watch on the attitude and efficiency of each staff using different methods including 360 degree feedback, experience, and even by directly talking to them. I strongly believe that disengaged employees are wasteful to the organization since they could spread negativity across the organization and this can even affect the students. There is a disadvantage to this strategy, that is, sometimes, my findings could be wrong, when grudge of people on the person and other situational aspects can affect the decision which means that the wrong person is laid off. I might choose for offering voluntary retirement to certain employees so that I can ensure the presence of best workforce in the team. However, this strategy has its disadvantages too, the major one being legal issues, and then this can affect the goodwill of the institution. The major challenge I might face while implementing any lay-off plan will be the increased work-load which can be a burden to the retained employees. Some methods to overcome this will be providing incentives or other grants to the employees which can encourage them to work; Implementing employee engagement programmes so that the employees will be happy at work; and initiating training programmes that can help in self-development as well as organizational development.