Contemporary Management Issues
The recent choice by P&O Ferries to fire
800 people who had worked there for a considerable amount of time served as the
impetus for this study. The strategic choices taken by P&O
Ferries and a case study will
serve as our guides as we examine the causes of the change. There is a shift in
the expectations that consumers have of P&O Ferries, so the company wants to look into the
long-term financial and operational effects of this new approach. After that,
they will give you a few other options to consider. Any suggestions that
consider the organization's obligations in terms of ethics and the environment
will be considered. Critical thinking skills are highly valued in today's
corporate climate. Numerous issues that are currently being experienced may be
related to the beliefs and deeds of people who lived in the past.
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| Contemporary Management Issues |
Introduction
For all companies to be competitive, essential modifications must be made. According to the course module, it is possible to identify contemporary management issues through change and the impact that change has on all types of organizations. The bulk of contemporary businesses is affected by their internal or external environments, either directly or indirectly. There are two main ways that an organisation may respond to the problems it is having: either it will give in to the demands that have been made of it, or it can take control and improvement steps to become better.
P&O Ferries is considered in this study because the business
laid off 800 employees on March 17 and shut down the Dover-Calais route
ferries. Significant outrage and legal repercussions resulted from this
(Nooraie, 2018). This report's goal is to pinpoint the transformative forces
that are affecting the strategic choices made by P&O Ferries.
The British maritime firm P&O Ferries operates
ferries throughout the UK, Ireland, and continental Europe. The business was
formed in 2002 as a result of a merger and purchase, and DP World is the
current owner. In 2021, the organisation lost $39.8 million (Nooraie, 2018).
Therefore, it appears that the company is having financial difficulties, which
may be one of the causes of these massive layoffs. The causes of the
alterations are also having an effect. Regarding the forces of change, there
are two options: either resisting the new reality or seizing it by employing
creative strategies (Nooraie, 2018).
Exhibit an
Understanding of The Key Dynamic Forces Impacting on Business and Society
The forces driving change in a global corporate environment are many and adverse to a company. It may result from an organization's internal or external environment. The factors that caused changes and alterations inside the organisation are now the consequences of the reasons for the changes.
Factors of change are essential in the present
business environment because they enable an organisation to remain significant
and relevant while continuing to serve a wide range of customers. Change is
fueled by a variety of factors, including changing stakeholder requirements,
CSR (corporate social responsibility), innovations, ethics, CLO (corporate
leadership), demographic changes, globalisation, societal change, and
sustainable development (Booth and Cammack, 2016). The two criteria
chosen, according to the course module, are corporate leadership and
globalisation.
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Globalization: The emergence of technological
advancements has connected the contemporary world's nations. For example, using
the e-commerce website Ali Express, a person in the U.K. can place an order
from China. Now, P&O Ferries has to contend with rival firms outside the
UK. Those businesses adhere to the ILO pay rate, which is less than the UK
minimum wage. High salaries forced the firm to spend more on expenses, which
decreased operating revenue and eventually resulted in lower profitability than
comparable global corporations (Booth and Cammack, 2016).
PESTLE Analysis of P&O Ferries
For better understanding of the current environment of the P&O Ferries, following PESTLE analysis has been conducted;
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| PESTLE Analysis |
Economic: Following COVID-19, the economy
is healing. An economic slump has an effect on people's disposable income. The
organisation may now operate its ships as individuals are permitted to travel
once again as the globe is starting to reopen. However, the organisation must
make sure the travellers are immunized. Yet, because of border closures and
government lockdowns during COVID-19, the organisation suffered significant
losses. The company has had trouble running operations and needs a change to
resume its success (Akman, 2018).
Social: During COVID-19, there were changes
in the social environment; individuals were forced to stay at home instead of
going to residences or other locations. People became anxious and stressed out
as a result. People will travel again once the lockdowns are removed, though,
as they have been cooped up in their houses for a long period and need to take
vacations to unwind. As a result, they will go by ferry, which is advantageous
for the business (Akman, 2018).
Technological: In the present economic
context, technological innovation has been the quickest. Every industry has
been primarily disrupted by it. Lowering expenses and offering superior
customer service are the two ways an organisation may set itself apart. The
company is investing in the construction of super ferries, that will enhance
the vessel's capacity of the vessel to carry more passengers. The fixed cost
per client will go down. The business is also emphasising the development of an
integrative management information system, which will enable them to gather and
analyse client data. The company will be able to tailor the clients'
experiences as a result of doing this. They will be capable of suggesting
ferries and special offers to consumers depending on specific requirements,
which might result in rapid reservations and payments. The company has also
built an online payment system that would enable rapid fund transfers and
guarantee health safety because it is cashless (Kolios and Read 2018).
Legal: The company is required to abide by
the tax, corporate, and labour rules for the ferry business. Because data
analytics is a priority for the organisation. The 2018 Data Protection Act
should be followed to preserve the privacy of client data. To stop hacking,
appropriate encryption and cybersecurity measures should be in place. Legal
ramifications for breaking these rules can include fines, lawsuits, and even
jail time. For example, despite approaching the labour unions, the P&O
Ferries fired 800 employees. Outrage has resulted, and the business is now
dealing with legal repercussions. Employment and minimum wage legislation have
been a source of contention. Ship personnel were employed without a contract
and paid less than the UK minimum wage. While the organisation compensated the
new workers £5.50 per hour, the UK minimum wage is £8.91. Since foreign laws
differ, this might not be against the law, but if the organisation is
recruiting British nationals, it should still abide by the minimum wage
requirement (Kolios and Read, 2018).
Environmental: The triple bottom line
includes the environment as one of its elements, demonstrating that sustainable
development can be used to add value to organizations. Individuals are becoming
more aware of how traditional economic activities contribute to environmental
damage. For companies that use unsustainable practises, there are boycotts of
their products. In order to reduce carbon emissions, the government has also
implemented regulations and regulations, such as a carbon tax, and has
established penalties and other legal sanctions. For example, Miller Homes
Limited received £200,000 penalties for contaminating the Huddersfield River. P&O
Ferries is spending money on fuel-efficient super ferries that will lower its
emissions. An energy-management system that turns off ship systems when they
aren't required. Lower fuel usage per kilometre is guaranteed by using
batteries to power generators rather than gasoline and by using azimuth
thrusters (Kolios and Read, 2018).
The findings of PESTEL research demonstrate that both internal and external factors are driving change. As a result, in order to proceed with the process, the firm must evaluate both its business strategy and its moral duty. Therefore, if P&O Ferries thinks about its moral and social obligations before making a strategic choice, the corporation cannot just terminate 800 people without giving them any notice. "Social responsibility" refers to a company's obligation to make moral decisions that benefit the community as a whole.
In order to establish trustworthy relationships, organisations must consider how their activities will change the community over time. Companies should uphold their ethical standards in order to show social responsibility (Booth and Cammack, 2016). As a result, with regard to considering other options, P&O Ferries should evaluate any and all workable business alternatives, along with the potential to fire these drivers.
Companies should also consider the internal pressures they are facing while making a strategic choice. When making strategic decisions, keep in mind how they will affect the project in the long run. It is unlikely that a choice made lately will be changed in the coming years. The 800-employee scandal damaged the business's reputation. As a result, the United Kingdom stopped all financial and political support. Because of this tactical choice, the business abides by the UK Employment and Equity Act.
In addition to transgressing
accepted norms of conduct. They haven't yet received a formal order from the
ministry allowing them to open. They have the ability to immediately see the
results of their strategic choices. They have been losing millions of pounds
daily as a result for a very long time, and this has had a negative impact on
their production, popularity, and image. Long-term employees are highly
productive and help the business generate more revenue when they are paid more
(Booth and Cammack, 2016). An alternate strategic plan would be this. A company
like P&O FERRIES must be able to create and carry out strategic decisions
if it is to succeed.
Critically Evaluate
the Relationship Between Such Forces in Terms of Effective Strategic Decision
Making
The organization's first strategic move was to fire 800 staff members and replace them with less expensive agency personnel. by firing these workers and using low-cost labor. The company can drastically lower operational expenses. In the UK, the minimum wage is £8.91 per hour; however, under the new model, the organization's wage will range from £5.15 to £6 per hour (Shepherd and Rudd, 2017).
In the event that all else
stays the same, this will result in increased operating income and net profit.
The company may invest this extra cash in other sources, which can produce a
larger return. Additionally, this will help them compete with other global
organisations that, under the criteria of the International Transport Workers'
Federation, provide lesser compensation. Thus, by improving their operational
profit margin, they will reduce risk and increase efficiency (Shepherd and
Rudd, 2017).
There is a drawback to this, though. Talented workers may leave the company. For a good reason, agency labour is inexpensive. Many of them are less experienced and have lesser skill levels. Employing workers who are untrained or only semi-skilled may prevent the company from effectively operating its ships. Personnel management, as it is termed, is a strategy for luring top industry talent. It may also be accomplished by offering staff training and development opportunities that will improve their talents and skills (Shepherd and Rudd, 2017).
A company may get a competitive edge by guaranteeing a talent management approach. For example, Hilton Hotels had been able to build a productive staff that enabled them to outperform their rivals in terms of customer service and hotel experience. Although employing experienced workers might be expensive, the rewards are greater thanks to increased productivity, superior customer care, and well-coordinated implementation of strategic decisions. The organisation must weigh the efficiency loss against the lower wage expense because it is dismissing its skilled workers. One of the P&O Ferries passenger ships, for instance, was stranded in the Irish Sea for two hours (Venkatraman, 2018). The cause of this issue was a mechanical issue. The organization's staff may have identified this issue before to sailing out if they had been productive. This is a result of staff members not doing enough ship maintenance.
Customers who arrived late at
their location and had to wait without electricity for 30 minutes were
negatively influenced by this, which also hurt their brand's reputation. This
decreased client satisfaction and made it more difficult to gain repeat
business. This choice has legal repercussions for the organisation as well. As
the senior management made the judgement without contacting the union, it is
currently undergoing legal challenges. Although it ultimately relies on the
court verdict, the organisation may need to reverse the decision. But it's
obvious that this has driven up their legal expenses and damaged their
relations with the unions. The company has not been able to satisfy the
requirements of the stakeholders (Venkatraman, 2018).
The company's second choice was to pay its shareholders a £270 million dividend in 2020. This even shows that the firm's chances aren't good enough for it to keep these gains and put them into other endeavours that may bring in a higher or equivalent return on investment. The corporation might potentially see a loss of up to £100 million this year, which is not ideal (Schwenk and Cosier, 2019). The company might have preserved these enormous revenues and utilised them during this challenging period. But because of the top management's lack of vision, the organisation is going through a lot of instability. Additionally, it shows that the company has the resources necessary to keep its brilliant present staff. In the early phases of the epidemic, the corporation let go of 1100 workers. Due to this, activities have decreased from 2019, when the company had over 10 million passengers and 15% market share of the UK's freight cargo business (Schwenk and Cosier, 2019).
Brexit and the COVID have both resulted in the company losing significant
income streams. Due to the ban on travel and the effects of Brexit on UK firms'
relationships with the EU. The corporation must pay tax, customs charges, and
freight costs since the EU is no longer a free trade zone. Additionally,
specific approval is necessary. These border restrictions make international trade
much more difficult and drive up transportation costs relative to other EU
shipping businesses. Therefore, since the revenues are now necessary for the
organization's finances, the organisation should have kept the earnings. The
company is now having trouble running its activities due to a lack of funding
since the ferries were failing regular inspections and their condition would
worsen without repair. If this keeps happening, the company could have to stop
operating and declare bankruptcy (Schwenk and Cosier, 2019).
The company's workers, finances, and general well-being have all suffered as a result of the recent reorganisation at P&O Ferries. The Triple Bottom Line method can be used to give a more thorough justification for why a company decided to fire some of its best workers. This portion of the TPL theory looks at how an organisation affects the society in which it functions. The organisation directly affects the neighbourhood by eliminating the jobs of 800 workers. Paying dividends without considering how they can impact profitability in the future is a risky investment.
Select and Use
Decision Making Tools to Address Contemporary Drivers for Change
The organisation may implement a number of
different tactics that would improve the company's performance. Following is a
discussion of them:
First of all, the company had the option of
dismissing the workers for poor performance. By using variety of employee
performance measurement instruments, the company might conduct a thorough
examination of the employee productivity of its workforce. This might have made
it possible for them to recognise the workers whose achievements were poor and
who were not very effective. The company might fire the worst workers by
eliminating them. In doing so, the organisation would have been free of
low-skilled workers, leaving only competent, experienced, and qualified people.
As a result, the company would have been able to correctly implement the talent
management process and obtain a comparative edge over rivals by demonstrating
outstanding customer service with a productive staff. Additionally, by
dismissing the unskilled workers, the company would have saved money and had no
impact on day-to-day activities (Alruwaili, 2017). For example, by eliminating
18000 positions at Microsoft in 2009, the corporation was able to save $2.5
billion.
Instead of mass layoffs, the company may
have decreased employee compensation in accordance with performance. The
exceedingly unskilled individual ought to have been fired. The pay for the
semi-skilled or highly skilled personnel need to have been modified in
accordance with their level of expertise. The top would receive the highest
hourly rate, while the lowest would receive the lowest (Ljungquist, 2017).
Employees would have been more performance-focused and goal-oriented as a
result of this. Employee motivation would increase if a thorough performance
evaluation was ensured and kept free of organisational politics. This is
because rewards are linked to performance. Additionally, since not all
employees are highly competent, the organisation might have cut its payroll
expenditures by paying payments according to skill level (Ljungquist, 2017).
The right authorities and employee unions should have been informed before
firing the staff. Before terminating an employee's employment, the employer was
required to provide them with sufficient notice and lead time. These are mostly
to blame for the company's present legal troubles. Additionally, this has
caused indignation in political arenas, which is bad for any corporation
(Bordeman, Pinheiro and Kannan, 2019).
However, the business has disclosed a £36.5 million compensation package for the 800 fired workers. Compensation are based on the number of years of service and the employees' degree of experience. if the company is successful in getting the staff to sign an NDA. Some of the organization's legal problems can be resolved. Although, it appears that this choice may have been required because, as per P&O Ferries's CEO, the company may have to fire 3000 employees by end of the year.
The £270 million dividend payment to stakeholders should not have been made. It ought to have been kept for the business's continued sustainability made. It ought to have been kept for the business's continued sustainability. It was widely believed that the tourism sector would be impacted during COVID-19. The organisation's upper executives made a poor choice by giving them away rather than keeping them.
Mass layoffs and the impending collapse of the organisation
would not have been necessary if the organisation had conserved money (Clemens,
2017). The money might be used to support more corporate activities. The
business may have spent money on automation or information technology. The
company could track the data and positions of its ships far more effectively by
investing in an information system. They will be able to gather and analyse
client data as a result. With the use of data analytics, the company might make
recommendations to consumers based on their requirements and characteristics.
The organisation could provide a personalised travel experience for its clients
thanks to its capacity to customise, and by satisfying its customers, it could
quickly build a network of devoted patrons (Clemens, 2017).
To operate and locate a place, several technologies, including sonar, cameras,
radar, GPS, AIS, and others, are employed Gerakoudi-Ventouri (2022). P&O
Ferries may invest in MASS ferries that require less oversight from people. As
a result, the organization's requirement for labour will decline, cutting down
on operating expenses. Although the initial cost of these ships may be
significant, economies of scale will eventually be realised.
The company's ferries consistently fail
safety inspections. This is a result of the ferries' improper upkeep. The group
might have repaired the boats' damages and installed new equipment in addition
to refurbishing and upgrading existing equipment. These may have avoided the
mechanical disaster, preserving the organization's reputation (Dorsa, 2018).
Recommendations
The company exists in an honest, fair, and open manner by adhering to ethical principles. Additionally, the company has a zero-tolerance policy for underage labour, human trafficking, and slavery. But because of its recent actions, the company has been charged by a UK MP with modern slavery. The business has been able to pay lower salaries because of the abrupt dismissals and agency worker replacements. However, some of the staff members receive extremely low wages of as little as £1.83 per hour (Hermina and Saudi, 2020). The company should devise plans to pay employees according to their abilities.
To avoid unwelcome legal complications, the organisation should also make sure that labour unions are consistently spoken with. The ferry safety regulations should be strictly adhered to since failing to do so may result in a ferry disaster and government involvement. In order to compete with other organisations, the organisation should place more of an emphasis on innovation and talent management than on cost-cutting measures. If the carbon impact is considered, travelling by ferry is preferable to flying. The company, meanwhile, can perform better. The firm is able to replace all of its ships' generators with batteries (Hermina and Saudi, 2020). Their fuel consumption will be decreased by using a double-ended design. Equipment and machinery will be turned off when not in use via an effective power usage system.
The company
may switch to battery-powered electric ships that produce no carbon emissions
from petroleum. The organisation may cut expenses, identify problems right
away, and lower labour costs by utilising automated freight systems and ships.
Since rivals may copy technology, using information systems will enable
customization, which is essential to ensuring future survival. The ideal plan
is to focus on enhancing the customer experience and building brand loyalty
(Hermina and Saudi, 2020).
In order to better their ethical response, P&O
Ferries must have a CSR plan in place that allows them to manage the rights of
society's citizens and workers. They will be able to serve their consumers more
effectively as a result. They must emphasise the Triple Bottom Line more if
they are to effectively manage their ethical and social responsibilities.
Conclusion
The actions of P&O Ferries when they
are working are governed by a legislative code of conduct. Most citizens of
this nation are unaware of the workings of the English and Wales legal systems.
The Statutory Code of Practice is a significant resource when it comes to legal
issues. If made available to them, judges, lawyers, human resources experts,
and advocates might all greatly benefit from this knowledge. The firm places a
high focus on conformity to the Statutory Code of Practices as a result of
this. The actions required for bringing the code into action include setting
goals and objectives, conducting debates, and making public statements. Due to
its global reach, P&O Ferries is subject to the Employment Act of the UK
and the Equality Act of 2010. (Sparrow, 2022). People who are resistant to
change are individuals who refuse to adapt to novel situations or working
methods. A person's inability to alter their behaviours in reaction to shifting
circumstances might be characterised as this. On the agenda are formal action,
identifying important resistance causes, and soliciting the aid of resistance
management.
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