Another term used is outplacing. This is another alternative to outright downsizing that could yield a better effect to the business which consists in lending the employees to related entities while affording the employees the chance to be taken back should business activities go back to normal. This is also another way for business entities to find employment opportunities for their workers with other corporations instead of immediately terminating the employees.
This strategy was the one that was applied by Rhino Foods when it saved the employment of their workers. As a small company with only not more than 100 employees, Rhino Foods was having operational inefficiencies and a drop in the demand for its products during 1994. Due to its small size, this might have caused to the company a creation of an intimate feel among the employees, thus this could in effect caused them to find a way to cut losses without firing people by lending about a dozen workers to the company’s biggest customer named Ben and Jerry’s Ice Cream.
As to how Rhino Foods managed to convince their employees, Rhino retained the workers’ benefits and seniority, and allow them to learn new skills while gaining a better understanding
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Under this latter arrangement, management empowers employees by giving the latter a stake in the company that would allow the latter the right to use to financial and other relevant information. This system could happen in different way such as by the creation of financials, introduction incentive programs Cocheo, S. ,1997; AICPA Broadens Minority Incentive Programs, 1993; Waldman and Ozog ,1996) that will be used as incentives to their performance.
The employees may also be taught to understand and learn many things like forecasting financial results, communicating progress with each employees other members of the organization and hoping for the eventual distribution the rewards for good performance. Springfield Remanufacturing (SRC) which is located in Springfield, Missouri has shown has applied this concept well. The employees of company were given stock ownership, hence making them owners aside from being employees. There is evidence of stock price increases in value using as basis the productivity (Rudner, 1992; Phipps, P.
,1996; Pilette, 2005) of the company on a per year basis. This arrangement has caused remarkable results for the company as the employees applied a lot of their energy into their work. The experience of SRC was also not different from other companies such as the susceptibility to external forces. Thus in case of large order cancellation from customers, employment termination are also renowned but the company, instead of ending the services of employees, management responded by retaining the present jobs in the hands of the employees.
While said employees were informed of the cancellation, they are also provided the financial information about what and how efficiency are required to happen (Stack, 1994). SRC was ready enough to have in each area of the company functions, a computer that was made available to any authorized employee, in gaining access to any financial information regarding the company for decision making. Given the required number of the employees everyday problems were made as challenges for them to overcome.
With management attitude and effort to teach the employees to think, decide and act not only as employees who may be just thinking of the salaries, the said employees are also deciding as real owners in a way that is much different that the financial world does. One can only notice how SRC has produced maintained workers in their workers while increasing the value of their company in terms of better capitalization and improved jobs (Stack, J. ,1994).