Free Report On A Case Of Unemployment

Executive Summary

Unemployment in an organization has to be dealt with before it enters the vicious stage. There are a number of cases related to unemployment in organizational perspective. From these, the case to be discussed here is the layoff experienced by the employees of a company named Boeing in 1998. The reason behind this unemployment, its scope, measurements and the ways by means of which it was reduced has been discussed in this paper.

Introduction

Organizations should take care that downsizing when done, must only shed the extra fats and not the organizational strength muscles. It is not a strategy rather tactic to remove some employees from the organizational hierarchy in order to compensate the prevailing situation of business in organization. It is a situation in which company needs more attention and cannot take care of a larger number of employees. Hence by reducing the size of employees, the organization is given a chance to re-stand on its feet and derive a chance to survive in critical circumstances. It gives the opportunity to a company to have a new start. But it has dangers linked with it as well, of the process is not taken out carefully. Previous researches however do not encourage this act of unemployment in the organization for the sake of getting revival in business. The reason behind this is that the methods used for unemployment in organizations do not permit expansion. A ten year study of companies in US and Canada demonstrated that companies that unemployed their employees were relatively inferior to companies that were not involved in shedding off their employees. Haphazard laying off employees without considering their skills and tenure in the working situation will create difficulties for the company in ensuring their growth.
In this paper the unemployment issue faced by an aircraft company Boeing is explained. The companies operating in this context can pay more attention to the systematic ways adopted for planning a better unemployment in organization due to present conditions. There are certain ways identified in this paper by means of which a better unemployment plan can be organized which can promise better future growth prospects. Companies need to think and re-think before the actual implementation of unemployment in their work setting. There is a lot of research available that seeks to explain the effects of lying off employees at individual as well as organizational levels. It has become an organizational tradition to un-employ workers at the time adversity or loss. The need is to recognize the ways that can yield better future growth as compared to others.

Problem Identification

Theoretical perspectives of unemployment in organizations
Population Ecology Theory
The theory relates the process of unemployment in organizations with the influence of external factors, such that the population (total number of employees) in an organization is determined by the intervention of external environmental factors (Hannan & Freeman, 1977). There are a number of constraints that the outside environment imposes on the internal environment of the organization and the organization is forced to act within the decided framework. An organization cannot operate solely and is dependent on the externalities for its decisions. The external constrictions may force the organization to reduce its size of employees or change its production manner. The theory explains the fact that an organization ensures its sustainability in the external environment by adapting to the limitations of the external structure and reducing the number of its employees by means of un-employing them.

Institutional Theory

Another theory that explains the phenomenon of unemployment in the organization is institutional theory which describes the process in the context of institution (DiMaggio, Powell, 1983). It is treated as a response to the constraints and un-predictability of external environment. As the external environment cannot be predicted therefore, it needs to make the changes in accordance with the companies operating in similar context in industry. The company tries to replicate the processes of other similar businesses. The replication of the competing firms’ processes does not ensure growth or progress but however it is legitimate way of getting a cushion against any uncertainty of the external environment. It saves the organization from any negative consequences by means of taking a pre-stage action (DiMaggio & Powell, 1983).
It is understandable that the managers at any organizations are not going to follow these theories explicitly. They will take the action considering it to be important for survival. They will opt for this tactic only when they are trying to ensure that this process has a lot of positive consequences to offer in future in the form of organizational growth, which may not be possible right now in the prevailing organizational size and circumstances.

Measure of Unemployment

The government is responsible for the measurement of unemployment rate. US bureau of Labor and Statistics perform this function to measure unemployment in individual of age 16 or more. A monthly survey is carried out called Current Population Survey (CPS) that covers the data of unemployment of monthly basis. Secondly, unemployment insurance is given to only those who have applied for this insurance. The Census Bureau aids in conducting this survey. They ask about 60 thousand households about their job conditions and data is collected by means of computerized questionnaires. People are either contacted personally or via phone-calls to collect data about their age, gender, race, education status etc. to be categorized as unemployed must not have a job and secondly that person must be contacting other parties such as relatives, friends, distributing resumes to organizations and must show willingness to work shortly. If a person is not trying to get a job and will not be counted as an unemployed person become demotivated.
The real rate of unemployment is usually double the number of rate of unemployment calculated otherwise. The real rate includes the unemployed individuals as well as under-employed and discouraged. These are marginally attached workers and hence the real rate of unemployment remains relatively higher. The individuals who are not happy with their current job designations are also counted for unemployed but not in the calculation of official rate of unemployment, therefore, BLS (Bureau of Labor Statistics) provides a better measure of unemployment that includes both unemployed and underemployed. It is called U6. U6 also includes marginally attached individuals and those un-willingly working for any part-time job which they do not like. So, in order to get the better idea about the health of the labor market, other indicators should also be taken into consideration. For example, a better measure of unemployment can be taken from U6 rather than official unemployment rate. These undefined and hidden facts add to the slack of getting the original information about unemployment in an economy. By considering all these slacks, the institutions formulate better policies related to overcoming the evil of unemployment.

Reduction of Unemployment at Boeing

A committee was formed of which the important personalities of the company joined hands with other alliance firms. The government also provided funding for this program. The underlying objective of this plan was to accommodate those fifty thousand displaced due to bad circumstances of the company. Boeing Company was showing consideration for proper training of those employees and search appropriate employment opportunities for them as well (Mueler et al., 1999). The need of training the employees was necessary to make them competent in the present scenario, so that they can sustain their future positions despite of fierce competition due to their skills and competencies (Arndt and Duchemin, 1993). Colleges were set up for this purpose where existing employees of Boeing were present to locate individuals to proper jobs on the basis of their talent and skills. They also helped in providing counseling for course registration and funding. The presence of Boeing employees at those companies facilitated the unemployed workers to get counseling in a friendly environment due to already established peer relationships.
For the purpose of receiving extra funding from the government, the company asked US department of labor to provide a grant of $10 million from which $5 million were provided on urgent basis. After the gain of trust about the company’s policies for the welfare of displaced, a further loan of $.2 million was awarded. A total of USD 14.7 million was gathered for this program from the government and it was sufficient hence no more amounts were demanded from the government (The Boeing News, 1996). The success of the program can be seen when 450 ex-employees took part in entrepreneurial programs, in which they got the essential training (The Boeing News, 1996). At the end of the training program, around 61 ex-employees were able to setup their own businesses and they did. This figure increased to 80 entrepreneurial set-ups out of which only two tries turned out to be failure (Wetmore, 1997). With the fruitful results of this campaign, a committee was set up to continuously monitor and evaluate any need of un-employing the employees from the organization in present or in future. They plan the actions accordingly, thus adopting a pro-active approach rather than reactive to the situation. This proactive approach saves the organization from bigger mishap as happened in the past.

Conclusion and Recommendations

After the complexion of developmental changes in 1988, the company was sure that no more tasks will be there to keep the developmental team employed at the organization. In addition to that it was a time of collapse of Soviet Union and US defense had also exhibited sharp budget cuts. There were reduced contracts for the business hence it was obvious to lay-off extra staff at that time. But the corrective actions taken by the firm were highly appreciable. The early grouping involving the government authorities to tackle the situation was a good step. It further builds the company’s reputation as the employee focused organization because they showed quick actions in consideration of people who lost their jobs. Even though the company was forced by the economic conditions and financial crunch to perform this action but they took steps to alleviate the problem, it shows the strength of their leadership.
Setting up partnerships and strategic alliances with other companies was also an exhibitor of company’s strength and seriousness about the matter. The existence of such committee is necessary to provide the necessary guidelines regarding matters of the company and describing what measures has to be taken in what circumstances. These committees also help in strengthening the leadership and vision of the company. Open communication between the company and the employees is necessary in these situations for building trust. So that the employee know the reasons of un-employment and the organization should ensure to take as many corrective measures as possible prior to unemployment as done by Boeing company. The need of effective and efficient leadership is most important in these cases to bring people closer and provide awareness about the matter. If the problem is left unresolved or the problem is not discussed with the related parties, it creates distrust among the organizational and organizational heads. If the company had not been able to cultivate trust in its employees about concern towards their well-being and their living problems, the company would not have been able to even get their ex-employees back for the re-employment plan. There lies responsibility on the side of the employees as well in order to understand the company’s situation in accordance with external environment and show willingness to work in co-ordination of executives’ policies (Brockner, Davy, Carter, 1985).

References

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