HRMT 295 Strategic Human Resources Management

Acme Industrials is an Edmonton firm located in the North West end of the city. They have been in existence for over 35 years and have grown from a small family operation of six people to a company of 138 people still owned by the Miller family. The company manufactures pipe fittings for water systems and is considered one of the best of such firms in Western Canada.

 

Their market share in Western Canada has increased over the last five years from 4% to 8% and is expected to continue to grow at a rate of about 1% a year for the foreseeable future. Based on that rate of increase, the company has sufficient expansion space for the next 15 years in Edmonton.

A decision has just been made to purchase three operations a competitor [Excel Pipe] owned that were located in Spokane, Washington; Regina, Saskatchewan and Airdrie, Alberta. These new operations will enable Acme to bid on much larger contracts and to maximize shipping potential. While Acme was not planning this organizational growth, the company president believed that the opportunities were simply too good to pass up from a return on investment point of view.

 

Excel Piping has 299 employees as follows; Spokane — 156; Airdrie — 103 and Regina — 40. There is no head office function as that is provided by another component of Excel Piping's corporate entity which is not part of the purchase arrangement. HR and Finance Services are provided by the corporate HQ and are therefore not part of the purchase. Information Technology and Purchasing are somewhat decentralized and located at Spokane and Airdrie although not in Regina.

 

Those functions are performed by the Administration Manager in Spokane and Airdrie with supplementary support on the IT function coming from external service providers. All three of these Excel component operations have lost money in each of the two previous years. However the company president believes that Acme will be able to operate them at a profit by relying on Acme's strong business model and economies of scale. The purchase is signed off and will become effective in three months at the end of their fiscal year.

The new additions are all non-unionized but Jed realizes that given the new size of Acme, it will be a clear target for unionization. Jed hates unions and wants to avoid that outcome if at all possible. Training of staff in Acme has been an important element of their approach and it is viewed as an investment and not as a cost.

 

Unfortunately, it appears that the opposite approach has been taken with Excel which may be one of the reasons they are losing money given the changes occurring within the industry. None of the sites has anything that resembles a formal job evaluation process but rather staff have typically simply been paid the 'going rate'. Interestingly, this appears to have been done quite haphazardly since although the industry labour rates are relatively comparable in the North West section of the United States and Western Canada, the existing pay rates have more than a 25% variance with Regina and Spokane being at the 70th percentile of comparator firms and Airdrie being at the 40th percentile.

 

Acme is at the 55th percentile. Employment benefits such as health coverage, dental and life insurance is non-existent with Excel, but is provided by Acme; which incidentally, is a norm within the industry. Likewise, Excel offers no pension provision. Acme has an RRSP matching arrangement that provides up to $5,000.00 per year in matching funds once employees have been working there for 1 year. Organizational charts and employee demographics are provided below.

Jed Miller is the company president. Jed and his three siblings each own 25% of the company.

 

The only other member of the Miller family that works for Acme Industrials is Elli Mae who has been their Office Manager and HR person. Elli Mae took on HR responsibilities as the company has grown because "she liked people". It has become increasingly clear to both Jed and his siblings that Elli Mae is beyond her level of capabilities as their source of HR services. Elli Mae agrees with that assessment and would like to retire to spend more time with her cats. The company is experiencing problems in both attracting and retaining staff, has no HR plans in place and has difficulty keeping employees skills current given the rapidly changing field of pipe fittings.

At a recent holiday family dinner, Jed announced the purchase of Excel and Ellie Mae became very upset. It was the first she had heard of the decision and she felt as the HR person, she should have been involved in the decision given the significant people implications. Jed informed her that she was being told now and that should suffice. He went on to inform her that HR is not a strategic player and he disagreed with her feeling of needing to be 'looped in'. Ellie Mae quit on the spot and stormed out of Jed's house after throwing her turkey dinner at him.

Jed thought about the issue overnight and telephoned Ellie Mae the next day. While the two were able to patch up the dispute, Ellie Mae refused to reconsider her termination. After a great deal of apologizing, Jed was able to get her to agree to stay for three months until the above noted acquisition was effective. Ellie Mae was also able to convince Jed that he needed to look at the huge HR issues this purchase would have and must hire a fully skilled HR Manager and staff as well.

 

Her final point to Jed was that he did not seem to understand the true role of HR and failure to come to grips with that would doom the company to failure given its soon to be new size. Ellie Mae also informed Jed that either he put a comprehensive plan together to address these issues within the next three weeks or she would lobby their siblings to fire Jed and hire a "real manager"
 
Jed is now starting to realize what he has done. The purchase is a done deal. The implications are significant. Accordingly, Jed decides to hire the best consulting firm in all of Edmonton which happens to be your team.

a)Is a 'true' HR manager required or could this be a part of the finance function;

b)What size and makeup of staff should be employed in the HR function; what the benefits of such an organization would be, what services it could deliver, how that might add value to Acme, what it would cost the firm, and what it's key objectives should be in the first twelve months after being established;

c)Should HR be centralized or decentralized and to what extent if decentralized;

d)Where should HR be organizationally placed and should it really be considered strategic and if so, why;

e)What implications exist regarding the one of the other plants being in another province and one being in the United States; and

f)What HR implications exist and what the key HR objectives should be in the first twelve months after being established broken down by HR functional area.

Jed hates to read so he wants your report to be no longer than 15 pages [Times New Roman 12 point font on 1.5 spacing]. You will have a number of opportunities to ask Jed questions over the next few weeks. You will also be expected to deliver a formal 20 minute presentation to Jed summarizing the key aspects of your report.

Form into groups of 5-6 by the date prescribed by your instructor. The group is free to divide up the task as they see fit but remember that there are a number of key aspects including:

a)Researching HR requirements and practices;

b)Soliciting information through questioning from Jed (your instructor will identify when opportunities for consultations will occur).

c)Addressing the issues noted above [i.e. subparagraphs a through f]; and

d)Drafting your written report