A CASE STUDY & ANALYSIS

PRESENTED BY : Amit Papneja 10PGHR06 Ria Ghosh 10PGHR42 Sandeep Rath 10PGHR44 Sudhakar Mishra 10PGHR48 Urvashi Agrawal 10PGHR55 Vidhi Verma 10PGHR59

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Progressive employer Hired top students from across Japan Considered best-managed company Best wages and benefits

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Close-knit group spirit Employees expected security of job until retirement Excellent relations with labor union after initial turmoil Company aims
Maintaining rational employment levels Socially responsible position on pollution, working conditions and benefits

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1973 recession due to oil shock Work force not offloaded initially : No one need be laid off Excess of 3000 employees Necessity to shut down mills due to lack of demand

Complicated by : ` Pressure to increase retirement age ` Transfer of personnel became more difficult

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Several alternatives for increasing retirement age Planning across five decision areas:
Anticipated personnel outflows Rationalization Hiring Stopgap placement measures Other short-term / long-term adjustments to work force

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Only moderate cash savings through rationalization Smooth hiring better than off-and-on hiring Stopgap placements :
Accelerated training Loaning workers Restructuring of job roles Transfers to start new venture Early placement in post-retirement jobs

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Emphasis on cutting employee costs, not personnel Saving wages moderates being voted out, danger of breakdown of management-union relation Fringe benefits removal impression that NSC was cheap Retirement bonus cuts union relations affected Seniority wage increase reduction difficult since depended on whether retirement age was moved back

How to decide the retirement policy?

Self-interest vs Organizational targets

How should the decision be presented to the work force?

Being open vs Not telling employees

Develop a plan that is : ` Acceptable to work force ` Maintain operating efficiency and morale ` Meet companys financial constraints

Accounts Payable has steadily increased since 1974, decreasing only in 1978 Total current liabilities has been increasing at a very high rate, reaching a maximum in 1978 The operating cash is actually falling at a slow rate. Hence, the strategy chosen must limit outflow of cash

The employee costs are rising slowly But the materials, depreciation and operating expenses are increasing very fast Which means the total cash outflow is rising This means the strategy follows should again restrict the cash outflow.

PLAN : Increasing the Retirement Age to 57, and continuing it till the year 1987. The excess work force will decrease to Zero by 1987 provided there are 1300 retirements in 1987. The retirement bonus costs worth 25.2billions would be saved for the 1st 2 years in this plan.