(Note: This case is a work of fiction.) Addition/Subtraction
Company (A/SC) is a textbook publisher for math education,
including 1st grade through graduate school levels. The company has
been supplying textbooks to public education schools (grade –
university level) for 55 years. The company has always prided
itself on the loyalty it shows to its employees in that almost all
of its authors are full-time employees, and very little of the work
done in the organization is farmed out to independent contractors.
However, over the last 10 years, the earnings of the company have
taken a huge hit, partly because of the No Child Left Behind Act,
which caused some of A/SC’s textbooks to fall out of print before
they made a profit, and partly because of the increase in costs due
to the company’s health insurance premiums when a large number of
their employee base (and their families) contracted serious
illnesses requiring lengthy and expensive treatments which has
impacted the bottom line of the company. The HR Vice President has
reviewed the business practices of their two main competitors, and
realized that they are making their profits because they rely
mainly on independent contractor authors, paying them only
royalties on sales versus the salary/benefits packages which A/CS
employees make. Further, because the other companies have a wide
open subject matter expert pool by using independent contractors,
they are much more nimble at reacting to changes in need of the
market, and they can offer more math areas in their textbooks,
giving them a larger market share. In fact, the last projection
which was done by the marketing team showed that A/CS was going to
be out of business in two years if they don’t change something
quickly. The HR Vice President is going to recommend to her CEO
that the author group of employees (numbering 510) be downsized out
of the company and replaced with independent contractors. Further,
because of certain employment laws, none of those who are downsized
will be invited back as independent contractors. The publishing
team will be expected to work with independent contractors and
manage all book writing projects using less human power as well.
That team will be downsized by 15% over the next year. Choices of
“who” will be downsized will be based on a review of the last two
years of performance evaluations, seniority, and roles. This week,
discuss the barriers that will exist to successful implementation
of this change. Along with discussing how the change itself will be
perceived by the employees, talk about risks to the company,
internal and external factors which will create barriers, and
challenges to overcome them.