Kelloggs Case Study Example

Kellogg’s developed the proposal to introduce temporary workers that would be paid less because of high production costs. The company defended its move while citing the need to remain competitive as a motivator behind the need to find a cheaper workforce. In addition, the company’s management said that the current labour cost structure is higher that what their competitors have, and there is a need to cut it and adopt a sustainable budget. Furthermore, the company spokeswoman, Kris Charles, cited that there have been fewer demands for breakfast cereal because of the fast economy and life. People have to eat a snack at work or school because of limited time. The new move is set to save the company $460 million a year. The proposal has resulted in a lot of criticism from both the lawmakers and clergy who actively advocate the rights of the temporary workers and the subsequent lock-out on benefits such as health insurance.

Even though the move will save the company a lot of money, it is bad for its reputation and the corporate responsibility on which it was founded. For a while, the company has been on the good side of workers and consumers because of its benefits and good pay of its workers. There was a feel of solidarity on the way workers were treated, and it had the reputation of a company that put its employees first. However, with the adoption of such working patterns, the consumers will lose faith in the company and its ethical codes. The issue might be seen to be outside the scope of the consumers because they do the buying and nothing else. However, everybody feels for the plight of the worker. A company that treats its employees well earns a good reputation and improves its image with both the consumers and shareholders. Corrupting that reputation is one way of breaking the loyalty it has built. The consumption of cereal has considerably reduced and has the probability of a continuance because of the current proposal. Most consumers of cereal are family-oriented. They understand the plight of a normal worker. Already, the move has led to activism in the community at Memphis. There has been a show of solidarity between the workers and the community. Therefore, the company should not use temporal workers who will have no benefits and would be paid less.

The company can find other ways of reducing costs. For instance, instead of introducing many workers who have no benefits and substantially lower pay. Kellogg’s can use the workers that it has already. It can reduce few benefits and pay from the existing workforce as opposed to having many temporary workers with no benefits at all. Because of the many workers available, the company can deduct a negligible amount from their pay and benefits and achieve the desired results. Such an amount should be negligible. A worker in the Memphis plant earns an average of $100,000 annually. The figure could be cut down to $98,000 on all the 31,000 workers that work for the company. Instead of the lock-out, such means could prove to be more effective. The company can take away 3% of the total amount of benefits and salary from every employee and still manage a sustainable cost structure. The cut will reduce the payment system from being a fantastic one to a good or above average system. In the current economic environment in America, such a system is still workable and would ensure that the employee needs are met.

The move created panic on the minds of permanent workers who are of the opinion that they will be completely replaced by the cheaper labour afforded through temporary workers. The other Kellogg’s plants in different states around the USA are looking at the Memphis plant with suspicion. The move could be extended to other areas as well. Such suspicion is bad for employee motivation and eventually reduces their productivity. Employees are a big part in the profits accrued at the end of the day. Therefore, the company should continue with the salary and benefits program that has steered its success since it was founded. Even though the costs of production might be high, the productivity of workers ensures that the profits also remain high. Furthermore, the long-standing ethical responsibility that the company owes to the community is important for business. Many people see the move to introduce cheaper, temporary workers as a sign of greediness on the part of the company. To save its image and retain employee motivation, Kellogg’s should sustain the previous remuneration structure. There is no need for the saving of costs and registering of low profits.

Moreover, the move faces a considerable amount of legal scandal if it is implemented into the company. There have been questions regarding the illegality of the proposal that would reduce the amount pay and benefits of employees. The law requires changes that have to do with labour and hours of work to be consistent with all the other parts of the organization. In this case, the workers have the hope in the law since such changes require negotiations with all the plants of the company. Secluding Memphis has been termed as illegal and discriminatory by the lawmakers in the state. A legal battle is both expensive and damaging to the company’s image. Because of this, Kellogg’s should maintain the salary regime that it has always had.

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