DATE: October 19th 2013
TO: Chief Executive Officer, Phoenix Paper Products Inc., (National Paper Products Company)
FROM: HRM Consultancy, Inc.
SUBJECT: Recommendations for Post-Merger Conflict Management
Phoenix Paper Products Inc., a national family owned and operated paper products manufacturer with 650 employees based in Stamford, CT is founded on strong Christian principles and has a long tradition of family members occupying senior management positions.
In February 2013, Phoenix Paper Products Inc., acquired Oracle Consolidated, a similar sized (500 employees) paper manufacturer. Oracle Consolidated has a strong focus on employee diversity and inclusion. In addition to the expected financial synergies from the merger, Phoenix hopes to embrace Oracle’s inclusive culture as well.
Immediately following the acquisition however, senior management at Phoenix realizes that turnover rates/resignations are alarmingly high among former Oracle employees working in the HR department compared to the Phoenix employees.
An investigation reveals that in the recent few months following the acquisition, management within the HR department (all of whom are from Phoenix) have been showing blatant favoritism towards their own employees including but not limited to:
Nepotism (giving preference to family members) and/or hiring people that “fit the mold” i.e. Christian applicants only
Violation of federal employment laws by hiring, firing and offering promotions based on applicants’ religious affiliations as opposed to qualification/merit-based
Offering flexible work schedules and other perks to Phoenix employees only
Assigning better and more visibility projects to Phoenix employees only
Retaliation (including but not limited to assignment of grunt work etc.) against former Oracle employees who complain about the unfair practices
Due to these practices, the HR department is currently plagued with an atmosphere of resentment, low morale, intense conflict, deep divisions and low productivity. The problems within HR have resulted in an “us versus them” culture that is spreading throughout the organization. Management of the newly formed corporation has attempted to address the situation head-on by forbidding such behavior but the unethical practices continue to take place.
In an effort to resolve the deep-seated issues/conflict, senior management has hired HRM consultancy to provide conflict resolution recommendations to restore cohesion in the company.
II. Financial Impact
As indicated earlier, after the acquisition of Oracle Consolidated turnover rates at Phoenix Paper Products Inc. took a turn for the worse. However, after closer examination, it was evident to HRM Consultancy, Inc., that turnover rates at the company were declining prior to the merger as well.
To assist in identifying the underlying reasons as to why turnover rates were increasing at Phoenix Paper Products Inc., turnover numbers were evaluated and broken down into three employee populations—Christian, family member, and ‘other’. As shown in chart #1 in the appendix, in 2010, 35 ‘other’ employees resigned while only 2 Christian and 1 relative resigned. In 2011, 41 ‘other’ employees resigned, while Christian and family member resignations remained low. In 2012, 48 ‘other’ employees left the company, while 4 Christian and 2 family member employees left. Assuming the company is unable to hire for the vacated positions throughout the years, the turnover rates increased from 6.21% to 10.53%. From 2010 to 2011, that is a 28% increase, and from 2011 to 2012, that is a 33% increase. This signifies a growing problem for Phoenix Paper Products Inc. and highlights that ‘other’ employees are more dissatisfied than Christian and relative employees.
According to chart #2, between 2010 and 2012, Oracle Consolidated experienced low levels of turnover. In 2012, only 10 people resigned. In