Management Case Study

November 4, 2011
To:   John Hanson
Subject:   Employee payroll decrease

Hello John,

In response to the memo received regarding Austen Pharmaceuticals’ financial difficulty, it has come to my attention my department has to decrease employee payroll by 15%.   I have the responsibility of managing 50 employees and all are average or above average.   Many have been long time employees and recently because of a lack of diversity in our workplace more employees were hired.   After evaluating each employee’s production and how to be fair and ethical, the following is what I am recommending.

In order to keep all employees during this slow economical period in our company and also keep in compliance with diversity needed in the workplace, had a meeting with a few of my senior employees and asked each one privately if they were willing to work only four days out of the week until our production picked up.   Then they may go full time again. I explained to them that if no one volunteered to cut their hours I would have to make the decision.   I received responses from some agreeing to cut their hours and keep their jobs.   The others who did not respond I will make the decision of who to cut more hours from.  

The new employees who were just hired I recommend cutting hours to part-time and work only four hours a day, five days a week, until our production picks up.   Those who are not willing to go part-time will have to be terminated.   These employees were hired to meet lack of diversity, I think this is a fair way to still be in compliance with any employee laws and shows that our company is ethical in these hard times.   We owe it to them our senior workers have put much time and effort into this company for us to let them go.   I would rather have them make the decision if they would like to cut their hours.   The fact the company is having financial difficulties does not mean that we can not still have some fairness to the cut backs.  

Please advice of your thoughts...