A CASE STUDY & ANALYSISPRESENTED BY :

Amit Papneja 10PGHR06Ria Ghosh 10PGHR42Sandeep Rath 10PGHR44Sudhakar Mishra 10PGHR48Urvashi Agrawal 10PGHR55Vidhi Verma 10PGHR59

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

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

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

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

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

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 forceMaintain operating efficiency and moraleMeet company’s 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.