Multi-Locational Centers & Org - Dynamics - Consolidation Process
Business Case:
Large organisations setup large manufacturing & Operations centers across different locations or across countries or continents. This may be because of the organizational need over a period of time.
A new location may be opened for various business reasons including the customer requirements, to face the competion, to get the new business from a prospective customers, to show that, the company is growing by size and scale, for business continuity reasons and such others.
However, the rightness of that decision is not always right over a long period of time. Some of these locations also gives lot of political, economic and cultural issues, fallouts to organizations.
Positives:
Company's managers are growing with new promotions
We need the foot print in that geography for new growth
As a company, we have cash surplus to invest in the future
New market, people, products, better processes for future
New business may come potentially. Growth story begun
Employment opportunities at the new location/geography
The Organization is growing. We are on the expansion mode
There are lot of good stories to convey to our shareholders
We are providing a tight fight to our competitors nowadays
The other side, but crucial ones:
Customers are leaving the center. We do not know the reasons why it is happening?
Our new CEO had taken over. He will decide the course of actions for the location
Productivity at the location is not satisfactory. Not in line with our expectations.
The next 3-5 years are crucial. We will decide either to retain or to consolidate.
There are lots of legal issues in terms of employee legislations, Compliance
We see a big cultural shift and the unit is not integrating with us - HR issues
The cost of operations are too high. This is not a sustainable long term story
Case Capsule:
Consolidation of multiple geography operations is done with the motive of efficiency generation and to address customer requirements on a timely basis. However, the decision is not easy. The change management takes time, effort and investments.
The case study identifies practical challenges in the locational consolidations and how to effectively execute them? It also suggests effective measures for the change management, methods to avoid decision crisis and implementation strategies.
The Decision crisis:
The local legislations and political climate change influences the decision to a great extent. Example - Change in Political leadership
Many a times, the organizational culture vs. location's culture may clash. The location may not represent company's value system
This may a single manager's decision who was a decision taker at that point in time. The whole thing gets reversed as he leaves.
The business rule changes. It is of no advantage to keep the location either from the new business or from growth standpoint.
Lean working hours, employee retention laws, overtime laws, retrenchment compensation decides the next course of actions
If we look at the decion for expansion, either thru organic growth or acquistion, it looks good at that point but not later.
Locational Consolidation - Change process:
Need for appropriate communications and HR need to be involved here.
Appoint an attorney, who will facilitate compliance to local laws/others
Understand local legislations, other rule books and adhere to them
There are lot to be done as part of the change - People to process
Since employees are impacted, managers need to be more sensitive
Implementation methodology:
Cross funtional team to be formed to understand the entire gamut & to enable various processes leading to consolidation
Detailed project planning with the activities breakdowns logged, critical milestones defined, key stakeholders identified etc,
Define Roles & responsibilities for each one them. Define internal reporting structure so that, Done/Not Done are reported
Get budget allocated for the exit strategy. These includes, employee salaries, statutory dues, retrenchment compensation etc,
Continuation of seamless operations at the consolidated location is important - Define the Asks & identify the responsible people
The exit is made smooth to all of the parties involved. Provide people opportunities internally or through the HR placement firms.