How Would You Handle Employee Protests in a Family Business Transition?

Anagram Finances: A Decade of Growth and Challenges

Anagram Finances started as a small organization 10 years ago with only 50 workers. The employer, Mr. Braganza, is a high school graduate without any formal degrees to his credit. He employed people whom he knew and who had reasonable capabilities to perform accounting work. No formal recruitment procedures were followed, nor were any formal qualifications asked for.

Now, his son, who has completed his MBA, wants to expand and improve the organizational activities. He hired an HR professional to handle all HR functions. He decides to replace the old 50 workers with properly qualified individuals.

Employee Protest and Management's Dilemma

The 50 workers rise in protest and request the senior employer to protect their jobs and income source. The son reconsiders his decision and opts to assign less critical tasks that require minimal skills and decision-making to them. However, they refuse to accept this proposal and are reluctant to work under younger employees.

Proposed HR Strategy for Change Management

If I were to take over as the new HR Manager, I would approach the situation by first understanding the concerns and perspectives of both the existing workers and the management. It is crucial to communicate openly with the employees, explaining the reasons behind the proposed changes and addressing their fears about job security and status.

Developing a transition plan that includes upskilling opportunities for current employees or offering alternative roles based on their strengths could be a way to mitigate resistance and ensure a smoother change management process. Building trust, maintaining transparency, and showing empathy towards the affected employees would be essential in managing this challenging situation effectively.

Mr. Braganza has been running Anagram Finances for the past 10 years with a team of 50 workers. This implies that all 50 workers have been with the company for the same 10-year period. As the saying goes, "experience makes man perfect and strong in technical skills," it can be inferred that these workers have matured during their tenure at the company, becoming well-versed in work ethics and the working environment. If Mr. Braganza's son, who now wishes to expand the company, plans to hire new employees, it may take some time for the newcomers to acclimate. This adjustment period could potentially impact the company's revenue. However, it is not specified in this case study that the existing employees are underperforming. Therefore, one possible solution could be to provide additional training to the current staff, enabling them to adapt dynamically and think creatively about new challenges.

In the scenario where training is provided but Mr. Braganza's son still deems certain employees lacking in technical skills, he could identify these individuals and assign them to work alongside younger, more junior staff members.

Best regards,
Regards

What I feel is that instead of removing old experienced workers, it would be better to train them and provide professional training. Slowly but surely, new blood should be injected from outside, meaning step by step new professionals should be involved, instead of immediately. Otherwise, the production as well as the environment of the organization will suffer, damaging the reputation of the organization.

Thanks,
Daljeet Singh
[Phone Number Removed For Privacy Reasons]

This case study is incomplete as many facts are not mentioned, including but not limited to how the company is performing, what has made the son change employees, what might have happened, and what is the need to remove old people in the wake of expansion and improvement drive, etc.

Education Versus Experience

The XII class-passed father versus MBA-passed son have no match when doing business, and actually, education does not matter. If you see the profiles of 80% of business owners, they are not highly educated, including Mr. Dhirubhai Ambani.

Actually, in India, we overemphasize education level, and less importance is given to rich experience. Hence, in most cases, we do not hesitate to give huge pay and perks to novice MBAs/BTECHs and refrain from giving even a suitable/amicable raise or pay hike to all the practically working people.

Japanese Work Culture Insights

Working with the Japanese, I learned that education is essential and makes you eligible to enter at a certain level in the organization. But thereafter, all employees are judged and taken care of by equal opportunity and PMS without discrimination, based on their contribution.

By any means, the son is not capable (in terms of experience) to adjudge the people he is removing and is only using his position/power to make such decisions. This may lead to disaster in the organization if the routine business/affairs are hampered by the employees or management action.

Employee Engagement in Expansion

Improvement drives and expansion projects are always employee engaging and inclusive tasks and cannot be done by suddenly excluding people and inducting new ones to fill their place. This is a novice approach that will only do harm.

Debatable - still need more facts and research to arrive at the right conclusions.

Regards,
Vijay

Mr. Braganza, who started Anagaran Finance 10 years ago, is supposed to have relevant experience in the field, although he is less qualified, and has hired 50 workers through whom he has been able to generate business and make profits.

Expansion Plans and Employee Concerns

Suddenly, his son, an MBA graduate, wants to expand the business, which is a welcome feature as it generates more employment. However, removing the old employees for the expansion program is certainly not acceptable. The management may consider addressing nonperforming employees and those nearing 60 years of age for layoff, by providing a good and decent settlement package.

Settlement Challenges and Considerations

Settlement is a challenging task since the old employees may have been hired for a lower salary, and their appraisals (increments) would have been minimal. Therefore, considering the present market value of the old employees, in addition to gratuity, PL reimbursement, and accumulated bonuses, the management may contemplate offering an extra amount as ex-gratia in recognition of their years of service. This approach aims to ensure that the old employees transition out of their roles peacefully, without resorting to legal action.

The Role of HR in Managing Generational Differences

In this scenario, the role of HR is crucial as Mr. Braganza belongs to Gen X while his son belongs to Gen Y, indicating differing thinking and temperament. Nevertheless, HR professionals need to maintain a high level of professionalism, considering both employee and organizational interests, to reach a consensus and resolve the issues at hand.

Thanks

Mr. Shiv Khera brings in a nice story to drive home his point in his book "You Can Win," and this issue looks as if it is a story taken from that book! First of all, the law does not allow anyone to be removed from their job if they are working and performing well to date just because of their qualifications, especially after 10 years. It's ethically wrong too.

It's worth it for the MBA man to start a separate company as it could prove to be cost-effective and hassle-free.

If he insists on managing the old company itself, then the only alternative is (as already suggested):

- Make a SWOT analysis and train your employees on their weaknesses.

- Monitor their progress, and even after sustained training and hand-holding, if someone is not performing, provide all necessary opportunities before considering removal.

- Infuse new talent slowly without disrupting the existing setup to improve the performance of the company.

- Introduce a Voluntary Retirement Scheme that adequately compensates the employees.

This is based on the facts given above. Hope this helps!

Best Regards,
Divakar

Role of an HR Professional in Business Operations

When an HR professional is appointed and carries out their duties, they must do so in a manner that enhances the business and complies with management directives. Consider the perspective of experienced individuals within the organization, such as the father who possesses deep knowledge of the business operations.

Employee Termination and Legal Compliance

In the event of an employee termination, it is essential to follow legal requirements by settling the employee's accounts in accordance with relevant legislation. If the HR professional decides independently to replace existing employees with new hires, it is crucial to involve the management in this decision-making process. Transitioning to a new workforce may not guarantee immediate improvements in business performance, as existing employees hold valuable insights and expertise on how to enhance operations. Ultimately, the responsibility lies with the management to make informed decisions that benefit the organization.

Since you have mentioned that 50 employees have put in 10 years of service, the question of removing them does not arise at all. An MBA man surely knows the laws and acts in India.

1. To all employees, especially those who are above age 50, offer them VRS, which should be purely voluntary, with absolutely no pressurizing. For the remaining, my suggestion:

2. It is true that experienced individuals give better results than educated new employees. However, in the recent two decades, the business world has changed dramatically (globalization, liberalization, etc.). In today's world of the internet, computers, mobiles, etc., the involvement of talented people makes a big difference for an organization, not only to compete well but also for its own survival. Market trends, sales analysis, minimum purchase price, taxation, and effective communication are some of the very important areas where the need to appoint intellectuals is compulsory.

3. Coming back to the present case, in any type of company where there are multiple departments/divisions, both kinds of people, talented and non-talented, are working in each department: Sales, Purchase, Accounts, Logistics, Admin…

4. Since the MBA son wants to go for expansion, we can presume that additional recruitment is to be done.

5. In each department, HR should make a chart of two sets of employees: (1) talented, (2) general. Newcomers, who are supposed to be intelligent, will occupy the seats in the first group, while the other support staff would be adjusted from the second group, i.e., from 50 old employees, who may have to take guidance from newcomers and learn to work in a new style.

I think that 10 years of experience is a long span. The 50 workers also have valuable experience in their fields. It's better to use them in other areas where they can work, instead of letting them go. In any organization, the main asset is manpower. If I were an HR manager, I would convince the management and discuss with the aforementioned 50 employees to utilize them in different areas where they can showcase their maximum capabilities.

Assignment Concerns and Learning Opportunities

As already stated in the title of the thread and the question at the end of this caselet, this is an assignment for the students. The member has not made any effort to post her own views or solution, which could have been taken into consideration while discussing the case. This would have enabled the student member to correct or refine her solution while benefiting from discussions with a large cross-section of experienced HR professionals, thereby resulting in a copious amount of learning for all.

Simply outsourcing or offloading assignments to others, and then copy-pasting the best answers and submitting them to the institution, does not result in any worthwhile learning for the student.

Warm regards.

As an HR manager, I will not let down old but experienced employees because, as an HR professional, one thing I believe is that any company should have a fine ratio of experienced workers, educated but fresh blood, and educated and experienced employees. If my employer wants to expand his business, then there will be more vacancies, and upcoming vacancies can be filled according to the needed ratio.

Regards,
Umm-E-Abdullah