Briefly mention at least 4 differences between the communications in the two alternatives that support your answer to A.
Please answer both questions 1 and 2 at the end of the case, this is a management skills case. Answers do not need to be longer than 4-5 sentences.
THE PAY CUT CASE
A manufacturing plant is experiencing financial difficulty and the only way it can survive is to administer an across-the-board 15% pay cut for 10 weeks. Below you can see two alternative approaches for explaining this decision to the employees. Please read them very carefully multiple times and then answer the questions.
Alternative 1.
The president of the company meets with the employees and presents the following explanation.
Mr. James (President): Something we hate to do here at this company is lay off any of our employees. But, as you probably know, we’ve lost our key contracts with companies A and B, which will make things pretty lean around here for a little while. As a result, we need to cut somewhere, and we’ve come up with a plan that will get us through these tough times. I’ve been working on a plan with Ms. Jones in accounting, and we’re sure it will work. The plan is simple: Starting Monday; we will each get a 15% cut in pay. This applies to you, to me, to everyone who works here at the plant. If we do it this way, there’ll be no cut in benefits and no layoffs—just a 15% pay reduction. So, either your hourly wages or your salary will be reduced by 15%. Will it hurt? Of course! But, it will hurt us all alike. We’re all in it together. Let me just add that it really hurts me to do this, and the decision didn’t come easily. We considered all possible avenues, but nothing was feasible. I think of you all as family, and it hurts me to take away what you’ve worked so hard for. But, for the next 10 weeks, we’ll just have to tough it out.
Then, the president answers questions of the employees for one hour.
Alternative 2.
The vice president of the company meets with the employees and presents the following explanation.
Mr. Thompson (Vice President): It is inevitable in a business like ours that cost-cutting measures are often necessary to make ends meet. Unfortunately, the time has come for us to take such measures here at this company. I know it won’t be easy on anyone, but Mr. James (The President) has decided that a 15% across-the-board pay cut will be instituted effective Monday. This is largely the result of the fact that we’ve lost our contracts with companies A and B. However, soon we’ll be picking up jobs with companies C and D, so we’re sure the pay cuts will last only 10 weeks. I realize this isn’t easy, but such reductions are an unfortunate fact of life in the manufacturing business. On behalf of Mr. James and myself, we thank you for bearing with us over these rough times. I’ll answer one or two questions, but then I have to catch a plane for another meeting.
Q1) Which of the two alternatives is better? __ Alternative 1 __ Alternative 2
Q2) Briefly mention at least 4 differences between the communications in the two alternatives that support your answer to A.
