A Human Resource Perspective of Bonds Garments in Australia

Table of Contents

Introduction

Profile of Chesty Bond

HRM significance in Bonds.

Problems of Corporate and HR policies

Solutions to resolving corporate and HR dilemmas

Timetable

Conclusion

REFERENCES

Introduction

The essay discusses the perspectives and significance of recruitment, selection and employee turnover functions in Bonds, a garment manufacturer located in Australia. Much of the literature will focus on concepts of human resource (HRM) managment discussions pertaining to workplace restructuring, downsizing, and employment practices. It can be posited that the key problem faced by Bonds is workplace restructuring and downsizing via outsourcing of production personnel. It will also address human resource (HR) perceived problems underpinned at corporate policy and actual functional level. A timeframe will be allocated to achieve policy and human resource goals within the company’s environment. The key proposition intended for this paper is “workplace restructuring and downsizing will radically alter human resources practices and employment methods, producing a leaner and meaner HRM function”.

Profile of Chesty Bond

Bonds is an Australian clothing company that was created in 1915 by George Alan Bond in Sydney. It originally manufactured athlete cotton singlets and men’s underwear. A fictional character named Chesty was created for a campaign to sell men’s underwear, hence known as Chesty Bond. Later, the company extended its products into women’s bra and undies as well as comfort clothings for babies called ‘Roomies’ (Bonds, 2010).

HRM significance in Bonds.

The paper will deal with human resource recruitment, selection and employee turnover. According to Armstrong (2006), he defines human resource management as the strategic and coherent approach to the management of an organization's most valued assets - the employees. HRM often involve the core activities of recruitment, selection and training. Other equally important duties include administering the welfare of the employees, their performance and benefits. According to Kochan and Barrocci (1985), the recruitment, selection and staffing, compensation and benefits, training and development, and employee relations functions need to make different responses at different stages in an organization’s business cycle. As these are significant functions, such responses within these functions are made to cater to the dynamism of today’s fragmented talent market, which borders on monetary mechanisms. The dynamism discussed in the paper involves corporate policy changes at the workplace through restructuring and downsizing, which will affect the functional composition of the Australian HR department.

Guest (1989) affirms the significance of HR policies claimed to facilitate this workplace restructing problem are linked with organizational and job design, the management of change, and internal socialisation. This HR functional policy of recruitment must form as a key critieria at the organizational and functional level. The significance of this is to internalize corporate values to Bonds’s employees aimed at satisfying customers. Such selection policies must be made carefully, for example the arguments for designing competency-based approaches to recruitment and selection are focused on the knowledge, skills and aptitudes which people require to do a job rather than their qualifications, simultaneously granting a more objective assessment of job candidates (Farnham and Stevens, 2000). This will ensure the benefits of having truely qualified candidates that are able to work at the ground level for Bonds. However, a competency-based approach well commended may not always bring the value required by Bonds intend on seeking only profitability goals. Australia’s recruitment and selection functions need to seriously review the importance of corporate policy of downsizing and cost savings. The best personnel recruited is not always the best form of recruitment, but one that serves the purpose of coporate objectives rather than the HR functional goals. More often that not, the recruitment policy of spelling out the best candidate is one that can do a job, but not intend on saving costs for the company. The significance of HR has a limit as far as the company is still around. Armstrong and Brown (2001) argue that the significance of pay as a means of attracting, retaining and providing tangible rewards to people is not to be underestimated. But as a traditional means of generating long-term commitment and motivation, pay has to be regarded as only part of the whole. This suggests that employee turnover is not always to do with monetary incentives, and the fact that if there is downsizing to begin with, monetary issues may not be so important to contend with as long as there is a job to keep. It becomes relatively less important to search for the ‘best’ candidate, but rather one that fits into the corporate culture of costs savings.

Any early appraisals of workplace restructuring are usually done after concluding that it is non-viable to operate the production unit in Australia. Bonds, being a manufacturer, must cut costs to provide bulk-breaking for its distributors, and corporate performance is appraised through the number of garment pieces completed and the overall sales revenue. Thus, developing more goods with efficiency and locating a cheaper production market for Bonds would be a natural respond. However, this would marginalize the Australian production workforce and radically alter the state of employment. The argument is that Bonds production employees will continue to specialize on a specific task, but are forced to raise their productivity with little prospect of pay increases.

Any other HR approaches to recruitment, selection and training are purely a forced reaction that is secondary in nature. If such employee production performance results are not achieved, this would result in a lack of employee motivation and optimization of talent not being fully utilized leading to more employee turnover with little regards to one’s personal choice of turnover. With employment turnover, there would certainly be a functional change soliciting new employment methods of recruitment, selection, compensation and training ? At this juncture, it is not critical to evaluate if such methods will lead to more jobs, but that there are indeed new employment approaches that will arise due to the occurrence of more workplace restructuring.

Problems of Corporate and HR policies

Drawing of previous discussions, it would be perceived that a key integrated problem for Bonds and its employees would be the issue of production costs. In an article posted by Carswell and Vollmer (2009), it reported that the clothing giant confirmed yesterday it would close its seven Australian factories in a bid to save $150 million a year, and about 1200 employees will be purged in the closures, including 523 at the Bonds factories in Wentworthville, Cessnock and Wollongong. Kane (2000) advocates that the streamlining of domestic cost reduction has been largely through workforce reduction practices such as downsizing, or through the introduction of greater flexibility into labor use. The employment altering effect is that this will create a shift in the demography of skill sets that will be resisted by Bonds’s employees. It will also create a problematic situation of skills displacement and resistance to upgrading. Even if HR implements these new skills training, these changes do not mean that the production employees will continue to remain with Bonds, but that such changes are imperative for their own sake.

Paradoxically, where production units are shifted to other cheaper production bases, there is also the radical change in workforce diversity. Deery and Walsh (1999) suggest that increasingly workers are part of teams with widespread member diversity. However, when Bonds downsize, diversity will be reduced. In countries that specialize in production, diversity of workforce does not always exist and recruitment methods do not always account for widespread diversity. The Australian production workforce cannot simply shift to other countries to keep their jobs. It is exactly this paradigm of change that new methods of recruitment seeking diversity could also be rendered redundant.

Corporate downsizing strategy is usually traced to outsourcing requirements. The policy of outsourcing production to low-cost factories to reduce high costs will have an impact on the human resources change policies, resulting in the sacking of many government policies insinuated at HRM. Hawke and Wooden (1997) affirm that industrial corporate reforms since 1983 have acted to de-regulate industrial relations and wage determination. During that time, Australia's labor system was regulated through judicial tribunals and union representation. Currently, the new Australian Workplace Relations Acts has decentralized the legal or statutory responsibilities that help define the rights of workers and acceptable employment practices (Deery and Walsh, 1999). This brings about a shift in negotiation power from employee and union-centered to employer-centered. This actually results in HR policy redundancy. Any new workplace restructuring policies are usually aimed at reducing costs, satisfying shareholders and extracting value-added activities on the entire value chain to stay competitive. But such policies are usually in conflict with HR and other functions. If Bonds does not decide to restructure through outsourcing, Bonds production will just simply face intense pressure to increase capacity.

According to ACCIRT (1999), work has to be intensified in the face of global competitiveness, and the standard working week has been undermined with an increasing number of people working longer hours for little extra reward and greater stress. The problems faced with Bonds’s transformation of a workplace and its ultra cost-saving policies to boost capacity would require more than just change actions. Kaye (1999) explains that the strategic HR policies have been used opportunistically rather strategically, as long as it serves the needs of corporate survival in an increasingly complex and chaotic economic environment. Bonds’s production employees are purely surplus to requirements.

Storey (1994) explains that the first issue is to deal with the human element conditions required for the realization of new forms of work organization and the role of HRM in the management of change. He justifies another issue which centres on the outcomes of change on HRM, such as the adjusting the expectation of skill levels, employee morale, payment and reward systems, training and so forth. With regards to the outcomes of change, Kaye (1999) assumes that employment training initiatives, the development of performance indicators and performance management systems were particularly problematic to implement as part of the transformation agenda. However, based on Bonds’s annihilistic workplace transformation nature, such current HR activities would mean little in value and are added frills for Bonds. De Cieri, H. (1994) supports this view that traditionally, personnel managers were required to perform a set of functions and activities, including recruitment and selection, training. salary administration, and industrial relations. Each of these functions may have been conducted with little integration across functions and a relatively limited involvement in the total organisation’s strategies and goals. In other wards, HRM is a frill-based component.

Barring these change initiatives if rejected by employees, would it thus result in sensitive issues pertaining to employee strikes, legal suits, government and company union’s interference? It could be argued that affected employees may gain more skills in these areas and HR policies should be designed to tackle these sorts of problems instead. For instance, such is the impact that the Federal Government tried to persuade the company to find an alternative to the widespread sacking (Carswell and Vollmer, 2009). Many of these conflicts mentioned are prior to the exit whereupon the shift of production would mean the annihilation of many local HR systems in place resulting in the birth of new ones.

Solutions to resolving corporate and HR dilemmas

Workplace restructuring trends in HR practices have created physical changes in HR policies. A shift in Bonds corporate policy to downsizing and outsourcing have led many organizations to formulate new strategic HR directions. Rooke and Keeley (1994) explains that the need for transformational change in order to survive has pushed corporate and HRM at the forefront. They emphasized that any new corporate policies embraced by Bonds must gain competitive advantage and contribute to the organization's bottom line in areas such as recruitment, selection, training, development and performance appraisal. But where such advantages and contributions are so marginally spread to other organizational functions, any new HR policies would seek to streamline their own bottom line. The HR solutions changes that manifest will be evaluated at corporate and HR levels through workplace restructuring are as follows:

- Flexible work structure; The greater use of employment flexibility of within Bonds, such as job sharing, contractual or casual employment aimed at keeping their jobs. Other options can involve reduction of perks and benefits. Australian Bureau of Statistics (1999) has reported that in the ten years to 1998, the number of Australians employed on a casual basis had grown to 1.95 million. Such advantages entail keeping factory employees that are loyal and experienced at a lower cost platform, which ultimately satisfy the organizational policies. There is little need for increased expenses of training at this point. On the other hand, there is a need to recognize Australian employees are willing to keep their jobs even if they have to increase productivity or job share. Management must be open to flexi-work methods of rearranging employment through trusted communication. Having a flexible work structure will improve the cost structure of the company. This is a long-term key solution that will achieve the cost reduction goal of Bonds and will also satisfy the demands of Australians.

- Tweaking the pay-benefit system; According to Palamara and Pascoe (1999), the Australian government has been promoting the adoption of family-friendly practices, which the most widespread method is the paid sabbatical approach. This can be very effective for Bonds, and may appear in the form of minute payments every month to ensure the employees are able to fend for themselves and their families for a period of time until they seek another job option. There is also a possibility of rehiring the employees if required.

- A retentive unit; During the process of downsizing, Bonds should retain all other functions of the organization so as to ensure no complete closure. The production unit itself could still be retained on a small-scale basis to serve nearby markets, where the Australians whom are retained would have to undergo a change in the reduced shift system as well as doubling up on their portfolio, for instance, a selected supervisor will play the role of a manager, and the manager will take charge of other regional portfolios. This problem-solving approach will be undertaken by an external consultant experienced in the dealing of downsizing and restructuring.

- HR problem-solving systems; Increasing Australian workers are increasingly viewed as a commodity. Bonds’s employees are facing more layoffs, have less job security, have to work harder for less, and are more stressed. There is little scope for negotiation to the reduction of the workforce. A solution is one where Bonds’s HR department attaches an importance to managing the physical and legal security of its remaining board staff. Although layoffs are inevitable, it must be served humanely. An instance can be seen in a case of a worker who had his is a case determined whether he was a worker or an independent contractor covered by workers’ compensation. The answer was that the worker was an independent contractor and not an employee and thus not subjected to compensation (Abdulaziz, 2010). Such issues are surely to be contended with in the case of downsizing whether the productions workers are independent contractors or truely workers.

Such solutions are required in the changing structure of the production environment where cost savings reign. With rife competition to achieve more production sales, HR functions are coerced to become leaner and meaner filled with more production and less irrelevant frills. The adage of ‘less is more’ does not stand. The new HR measures adopted are necessary, but are nevertheless still subjected to more changes. They should be perceived as short-term solutions designed to comply with the workplace restructuring policies and are not exclusively permanent.

Timetable

The timetable to implement the changes of HR activities at all levels can be shown taken from January to May during a 5 month change period.

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Conclusion

Bonds, like many other long lasting organizations are faced with the dilemma of changes in the corporate and HRM function. There is a need to adapt to the fast changing environment where corporate policies of workplace restructuring, downsizing and outsourcing are becoming the norm. Policies are engaged between corporate and functional units where the focus is upon competitive advantage via cost reduction and relocation to a cheaper place of production. The nature of Bonds’s HRM is effectively to recruit, select, train and compensate employees, albeit retaining employees that are loyal and relevant. However, its HRM policies and systems are not perfect, and are often being dictated by the top management. In any event of layoffs through workplace restructuring, issues such as a shift in the demography of skill sets will be tested and resisted by the employees. To resolve certain issues of HRM instability, creative and effective solutions should be undertaken that realizes the need for adopting a more flexible workplace structure through flexi-work structure; improving it problem-solving systems between Bonds and its employees; tweaking the pay system in the form of sabbatical monthly payments till employees secure another job; retaining a small-scale factory unit and relevant employees that are willing to double their work intake and accept reduced payments. Thus, any corporate policy changes will have a radical effect on HRM at all levels, altering its policies and affecting changes in the nature of recruitment, selection, training and all other HR activities.

REFERENCES

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