Introduction and Identification of Facts
Signode Industrial Group is a global leader in the manufacture of a wide range of protective packaging solutions. The company’s product lines include Contrax, Tenax, and GripPack, among other products. It has gone through various changes over its life with one of the major changes being the acquisition by the Carlyle Group in 2014 and the subsequent rebranding of the company from Signode ITW to Signode Industrial Group (The Carlyle Group, 2014).
The year 2014 marked several changes in the human resources structure of Signode. The acquisition by the Carlyle Group brought with it the challenges of leadership in the organization, with these challenges being felt in the company to the end of the year 2016 (The Carlyle Group, 2014). The acquisition by The Carlyle Group required maintenance of the leadership of the acquired firm as it was without any changes. The acquired firm was to be operated as a semi-autonomous member of the Carlyle Group with the capacity to guide its operations. This was important considering that the Carlyle Group's business appeared independent from the industrial operations of Signode. The Carlyle Group sought to retain the procurement processes from Signode. However, the importation of substandard materials for the manufacture of strapping and packaging materials unearthed the human resource weaknesses of the business model adopted after the acquisition by The Carlyle Group.
Focusing briefly on the importation of substandard materials, the Carlyle Group headed the importation of the raw materials from China. The management of The Carlyle Group believed that they would be able to procure high-quality raw materials at a price lower than the former Signode ITW could manage, hence lowering the operating costs. Considering the belief that the Carlyle Group was competent in the procurement processes, the management of Signode trusted that there would be no challenges whatsoever in the procurement process and the operations of the company.
At the beginning of 2015, the Signode Industrial group received the first batch of procured materials only for the company to realize that the procured raw materials were substandard and could not be used to meet the purpose for which they were meant. At the time of the receipt of the first batch, the company also realized that similar products had been dispatched to all other parts of the world where the company has operations and that all the products shipped were all of the same quality and standard (The Carlyle Group, 2014). The company rushed to correct the situation only to realize that any complaints had to be raised first with an arbitrator in China before moving to a specified Chinese court if the arbitration process failed. It is this discovery that unearthed the human resource weaknesses to which the company had signed in the acquisition by The Carlyle Group.
Identification of Human Resource Issues
Fast forward to the issue at hand, the management of Signode Industrial Group realized that the competence of leadership at the acquiring firm was in question and this was demonstrated by the failed procurement process. The company indicated that the procuring officers ought to have disclosed the all material facts about the procurement process including the need to have matters heard only in Chinese legal systems.
Secondly, the procurement fiasco revealed that though there had been a determination that the leadership at The Carlyle Group had been found liable for the losses incurred in the procurement process, the firm could not fire or punish the liable officers simply because they were bound by the agreements signed at the time of the acquisition. The officers have threatened to institute legal processes in their protection, and this has become a major concern for the human resources depart at Signode Industrial Group. The concern is that the agreement instituted at the stage of acquisition by The Carlyle Group may result in more financial losses for the company. At the same time, the tenure of the procurement team at the Signode Industrial Group was unclear as the acquiring firm had taken up this function (Rowley& Jackson, 2011).
Thirdly, the human resource department discovered cultural differences between the leadership of the Carlyle Group and the leadership of Signode Industrial Group. While the Signode Industrial Group has focused largely on the development of skills and connections among the human resources, the culture of the Carlyle Group has always been resulting oriented with the company focusing more on the investment management processes without considering their implications the company and the leadership. From the human resource department, the Carlyle Group appears to be culturally used to large financial losses as well as financial windfalls depending on the performance of the market (Rowley& Jackson, 2011).
Being exposed and used to such big risks means that the leadership of the Carlyle Group handles issues such as that of procurement different from how the Signode Industrial Group would. To illustrate this issue, the leadership of The Carlyle Group took a holiday break to the Bahamas over the period of the procurement process and not even the notification of the crises would make the leadership postpone or even cancel their holiday plans. The leadership appeared more relaxed and unperturbed by the crisis while at that time the leadership of Signode Industrial group appeared always disturbed and unsettled. At the height of the procurement crisis, the leadership of the two companies collided on the grounds of cultural differences. The leadership of Signode Industrial Group accused The Carlyle Group of insubordination while The Carlyle Group accused their superiors at Signode of being unreasonably controlling. The human resource department is now concerned about how the crisis can be handled and brought to closure as a new year begins for the group (The Carlyle Group, 2014). The following few sections are focused on the recommended actions for handling the three human resource issues as herein presented.
Evaluation of Courses of Action
Responding to the Liable Employees
The first issue concerns whether the human resource department can fire and punish the persons liable for the procurement crisis. First things first, the contract entered at the acquisition was not structured to allow negligence and incompetence to prevail. Notably, by entering into the contract,, Signode Industrial Group sought to protect its employees from loss of employment due to the acquisition of the company. This does not mean that incompetent employees ought to be allowed to continue operating under the guise of the contract and security tenure. Similarly, it does not leave a loophole for The Carlyle Group to place blame on the procurement of human resources at Signode. In every situation, the shareholders would have their way in the decision. The human resource department must act in the interest of the shareholders. It must institute strategies to protect the shareholders, and at the same time, the company must consider methods of dealing with the incompetent personnel in The Carlyle Group.
Interpretation of Terms of Contract
The human resource department must focus on the interpretation of the agreement entered during the acquisition. It is important to have the organization and the employees understanding the essence of the agreement, any exemptions, and all conditions that may help in clearing the air on the issue. The case ought to deal specifically with the individuals involved in the crisis and not blaming the human resources at The Carlyle Group and at the same time blaming the human resources at Signode. Performance must be the grounds of dismissal and not a case of seniority (Rowley& Jackson, 2011).
Understanding Human Resource Legal Issues
The second issue regards whether the employees affected by the crisis would prevail against the company if they filed a case against the company. Signode employees would prevail in their case against the company by the liable employees from the parent company would not. However, the issue at hand is not purely a human resource issues. Rather, it is an issue touching on procurement processes, leadership issues, as well as the operational efficiency of the company. As such, the question should be as to whether the courts would have any say over the performance of the company and the decisions that the human resources would take internally. The analysis of the issue reveals that while some of the employees involved in the problem may prevail in the lawsuit, the company’s management still maintains control over the internal processes and this includes running the recruitment processes. The tenure of the employees ought to be anchored on the performance of the employees (Rowley& Jackson, 2011). Therefore, it is discretionary upon the company to manage its affairs based on the set internal processes. One important factor to note is the determination of how and why the procurement processes were left to the inexperienced enterprise and whether there was negligence on the part of the management at Signode Industrial Group. Notably, the company has been in operation for a long time, and the sourcing of materials has never been approach concern. The company may have been better placed to acquire the materials from trustworthy vendors as has been in the past. The push to have the raw materials may have been a good reason for the company to delegate procurement to the newly acquired enterprise. However, there is the need to investigate whether the company was in any way negligent in the process.
Addressing Leadership and Cultural Differences in Human Resources
The last issue relates to the cultural differences between the two companies. It is important to note that just because the issue of procurement has surfaced, the resolution of the issue will not lead to the resolution of the cultural differences between the two companies. Quite notably, having cultural differences may be a cause for alarm, and it may be put to blame for the mishaps at the company. Consequently, the company must consider how well it can be able to deal with the cultural differences. The company cannot possibly fire all liable employees at The Carlyle Group just because their work ethic and culture does not rhyme that of the Signode Industrial Group. Notably, the two companies have been operating in different industries, and the differences may be the cause of the cultural differences. The culture that leads to the success of The Carlyle Group may not be the same that will lead to the success of Signode Industrial Group. Consequently, there is the need to strike a balance human resource development and enable employees from the two companies to accept and appreciate the human resource diversity (Rowley& Jackson, 2011). Culture induction activities are important for the group to bring together employees from all subsidiaries of the company. Employee transferability across the subsidiaries may also be important. It will help the human resources to learn that which the company can benefit from with regard to the cultural differences and work ethic. Alternatively, the company may be required to focus on the development of policies that would ensure the efficient running of systems.
Recommended Course of Action
The issues identified herein have a large impact on the human resources at The Carlyle Group. Notably, the handling of the issues herein identified will greatly affect the morale of the employees (Rowley& Jackson, 2011). If properly and efficiently handled, the issues herein discussed would allow the company to succeed. On the other hand, failing to respond effectively to the issues discussed in this document would result in the demotivation of the employees and may result in more errors in future. It is therefore critically important to respond effectively to the crises (Rowley& Jackson, 2011).
One of the major notes made in the discussion is that the issue heavily places the responsibility on the leadership of the two companies. Notably, the differences in the leadership approaches explain why the executive blames the Carlyle Group for insubordination. At the same time, the leadership approaches are the reason behind the claim of excessive control. It is important to note that such issues ought to have been discovered by the leadership at the point of the acquisition. Consequently, they ought to have been addressed at the signing of the agreement between the Signode Industrial Group and the employees of the Carlyle Group.
Conclusion
Lastly, it is important to recognize the issue at hand as an issue touching on internal operations of the company. Quite notably, the human resource issues cannot be addressed without putting into focus the fact that the company must address the internal concerns leading to the problem herein discussed. In other words, it is important to note that internal processes of the Signode Industrial Group may need to be looked into just as much as the human resource issues posed by having employees with a different culture in the organization (Rowley& Jackson, 2011). This realization underscores the importance of applying a multi-stakeholder approach to the issue at hand. It is important to note that employees from both the former Signode ITW and the acquired firm must be present at the negotiation table as the company addresses the issues herein presented.
References
Rowley, C. & Jackson, Keith. (eds.) (2011). Human resource management: The Key Concepts. London: Routledge
The Carlyle Group. (2014). The Carlyle Group Completes Acquisition by Signode Industrial Group from ITW. Retrieved from http://ir.carlyle.com/releasedetail.cfm?ReleaseID=844721
