HRMN 400 Case Study Assignment Spring
INSTRUCTIONS:
Read the entire case study carefully (including exhibits A D) and then respond to the seven Discussion Questions on page 6. Answer all questions and all parts of each question.
Develop each answer to the fullest extent possible, including citations from course resources, where applicable, to support your arguments.
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You must submit to the assignment link by the due date (final day of class).
A missing assignment will be assigned a grade of 0.
Jenna Richards is the senior human resource director for the tape storage division of Vully Technology Inc. (VTI). Jenna has been with the company since its inception. Last week, Jenna was part of an executive committee meeting in which overall cost reductions surfaced as an issue. One likely option that was explored was to significantly reduce human capital costs. If adopted, this would be the second reduction in human capital to occur in Jennas unit in the past three years. Jenna knows that it is important to balance business efficiency considerations with compassion for employees who may lose their jobs after many years with VTI. Additionally, Jenna is concerned about the long-term success of the organization and the morale and performance of the employees who remain in the event of a reduction in force (RIF). She knows that the road ahead will be rough and that it will be her responsibility to ensure that the organization navigates that road with care in order to maintain profitability.
Vulley Technology Inc. History
VTI, headquartered in San Jose, CA, was established in 1992 during the dot-com boom. It competes in the computer storage industry, specifically offering a tape drive portfolio of products which provides backup and recovery capabilities to organizations. Most recently, VTI introduced a network attached product: a server dedicated to file sharing only. VTI went public in 1998. It is publicly traded on the NASDAQ under the ticker symbol VTI. Over the past 10 years, the stock price has increased in value from $10.25 to $45.33. This year, the stock price started at $35.06; hit a low of $28.13 in February; and hit its all-time high of $45.33 in June.
When it went public, VTI had a workforce of 100 employees. Today, VTI has a global workforce of approximately 6,500 regular employees and 1,500 contingent workers. The companys culture has historically been very employee-friendly. For example, even though private pension plans have all but become extinct, VTI provides a pension plan. This defined benefit retirement plan was established to provide a strong base for building retirement security for VTI employees. Benefits under this plan had been funded 100 percent by VTI with no contribution made by the employee. This practice stopped for incoming employees in 2005 and was replaced by an increased percentage match for the existing 401(k) plan, a voluntary program and valuable savings source for employees future financial needs.
Bob Cuellar, VTIs CEO, consistently tells employees, shareholders, and the press that VTI is successful only because we have the most talented, well-trained, and rewarded employees in the industry. Due to its treatment of employees, VTI has been able to avoid the unionization of its workforce. However, because of the uncertain climate in the high-tech industry and a recent RIF, talk of unionization has arisen in the past two years.
VTIs workforce had grown significantly since 1998 but has only remained steady over the past year. Fortunately, the organizational culture is such that VTI leaders have been able to re-skill and shift resources to cover hot and future projects, rather than reducing headcount through a formal RIF. Eighteen months ago, however, the first RIF in VTI history occurred. In that RIF, the tape storage division lost 79 employees, primarily through early retirement incentives. The tape storage division currently has approximately 700 employees. The employees are scattered throughout the United States, including three recently acquired sites in Northern California; Durham, North Carolina; and Houston, Texas. A partial organization chart is provided in Exhibit A.
Current Financial/Market Pressure
While the storage industry is a growing market, VTI did not shift their product mix appropriately to adjust to the decline of classic
products. VTI lost revenue and market share over the past three quarters due to fierce competition, inappropriate product mix/focus and
misaligned sales force incentives. Sales in the European region are down 25 percent.
Disappointing third-quarter results have just been reported, and the executive team held a three-day offsite meeting to discuss the current
status and future strategy. To regain market share, management believes that the product mix must shift, which could include a shift in
human capital expertise. However, skill sets from tape drives to attached storage are not easily transferable; management is appropriately
nervous that to turn VTIs market position around in a reasonable timeframe, they may have to implement a RIF.
