Valley Technology Inc. Case Study

CASE OVERVIEW

Valley Technology Inc. is a part of the computer storage industry that initially offered a tape drive portfolio of products, which provides backup and recovery capabilities, and it has recently introduced a network attached product which is dedicated to file sharing only. The company encountered dilemmas regarding the most appropriate alternative that would be best to resolve their plan of reducing the company's overall cost, specifically with the tape storage division. The top management has decided to conduct a reduction in force (RIF), which would constitute an involuntary turnover. Before deciding on the final list of the employees who would be laid off, the division's managers assured that they followed the selection criteria, and the list was subject to a legal review before implementing the lay-off. This strategy is beneficial for the company to continue with its operations efficiently and effectively which would enable it to attain profitability; however the company needed to practice open communication with regards to such matter in order for the retained employees to perform well and to move forward from such issue.

I. Statement of the Problem

How will Valley Technology Inc., specifically its tape storage division, deal with the cost reduction in its workforce with regards to maximizing profitability and preventing any involuntary turnover in the future?

II. Objectives

1. To determine several alternatives that would help alleviate the possibility of involuntary turnover in the future

2. To know the significance of technology in today's market

3. To know the impact on how unionization of the workforce will affect the company

4. To strengthen the essence of open communication in the workforce

5. To know the impact of downsizing with regards to certain legal aspects

6. To be able to find ways on how to exceed excellence in the workforce's performance and maintain the workforce's morale

III. Areas for Consideration

1. Nature of the Industry - Valley Technology Inc. is a company which specializes in computer storage devices, specifically offering a tape drive portfolio of products which provides backup and recovery capabilities to secure the data of the organizations needing it as the company begun in the earlier years. It entered the market in 1992 during the dot-com boom and it went public in 1998, in which its stock price's value increased. In the latter part of its existence, the company has been providing a variety of product mixes in the market, such as a network attached product which is dedicated to file sharing only. The company needed to adapt with the advancement of technology in the market. In response to this, the organization created different products in order for the company to maintain its profitability and gain competitive advantage.

2. Organizational Culture - Historically, VTI's organizational culture has been employee-friendly. The company values the relationship with its employees and it gives much importance to its employees' welfare. One justification for such is that it provides private pension plans to its employees. Giving such retirement benefit establishes a strong base for building retirement security for its workforce. As the company's workforce grew, VTI leaders have been able to re-skill and shift to cover "hot" and future projects, therefore reducing the possibility of any reductions in its workforce.

Identifying and understanding the culture of an organization is a difficult task, which requires analytical skills, understanding the organization, and possessing the knowledge of organizational theory, combined with a great deal of effort. However, it is an even more difficult task to overcome cultural resistance while trying to control and reduce costs.

Source: (http://ejournal.unud.ac.id/abstrak/putu%20sudana.pdf)

The company must look at its foundation, specifically at its culture that governs how members behave. In identifying a cost reduction strategy, the senior human resource director of the tape storage division, Jan Ricter, must develop a strong and efficient culture, while minimizing the destruction of values because of reducing too much human resources. In circumstances wherein the organization's management would want to relay any significant notices, especially the ones dealing with workforce reduction, it should do so in a way that it would give much attention to the organizational culture practiced by the company. Relaying the significant information the right way would minimize any misunderstandings with the workforce.

3. Unionization of the Workforce - Unionization is a process where employees' concerns are raised so that the company's management will be able to resolve any issues. The members of the union conspire with each other to voice out their rights and to protect themselves from unjustifiable or unreasonable decisions of their bosses. Due to the unionization of the workforce, the employees who are part of such have the freedom to initiate any actions which would help them voice out their concerns. An instance for such is through threatening their bosses that they would initiate a strike if their needs are not properly responded to. Despite such threat, the employees who are part of the union would not think twice to initiate such action since they know that they are protected by their membership in such union.

A company's unionization would enable the top managers to know the majority of its employees' needs. Knowing their employees' needs would give the top management ideas on what should be done in order to cater such needs, therefore implementing actions to respond to those needs. This will enable the company to maintain a harmonious relationship in the organization which would result to employee satisfaction in its workforce. The satisfied employees will be able to do valuable works and give good outputs that would enable the company to have a high profit margin.

4. Communication Techniques - The goals of the company should be relayed to the employees in order for the workforce to know and understand the specifications of the job, such as what to do, how to do such, why it should be done, when it will be done, and where it will happen. Employees who are aware of the organization's goals would know what to contribute since they recognize the plan of the