Case Study of Organizational Decline

Topics: Organization, Organizational studies, Organizational ecology Pages: 10 (3106 words) Published: December 12, 2013
Case Study of Organizational Decline - RW
This report is based on a case study of a large company with poor financial performance during the last few years and facing the falling of sales and profits and rising of employee turnover at the moment. The continuously worsening situation of sales and profits and employee turnover evidence the company is undergoing the organizational decline stage within the organizational life cycle. The layoff and hiring replacement of a top level manager are signs of the company’s reactions for catering the organizational decline. Layoff of a top level manager prepared a foundation to end the past practice and the hiring of the replacement generates an atmosphere to implement organizational changes to revive the organization from decline.

At the present moment, employees’ behavioral issues are at high priority. To improve the atmosphere will improve the employee turnover and retain more capable employees to help improve the company’s problems.

1. Problem identification
The data of sales, profits and employee turnover are giving bad signals. The causes resulted these issues are to be identified.
1.1 Possible causes of rising of employee turnover
Employee turnover, stated as one of the two issues of the company, can be possibly resulted by different causes. Since 1950s, in the studies of employee turnover job dissatisfaction is a basic tenet of cause (Holtom et al. 2008). In 2000s, job dissatisfaction is still commented as a trigger to employee turnover (Wagner and Hollenbeck 2005, p.143).

According to the Hygiene Factor theory, the factors that generate job dissatisfaction are including security, status, relationship with subordinates, personal life, relationship with peers, salary, work conditions, relationship with supervisor, supervision, company policy and administration (Herzberg et al. 1959). However, job dissatisfaction is not the unique cause of employee turnover. Employees also quit their jobs with more private and personal reasons that triggered by shocks (LEE and MITCHELL 1994). The shocks can be neutral, negative or positive, from any place and any channel, covering the issues of family status, health, living environment and any other concerned area that initiate employees’ thinking and planning of quitting the current job for achieving the new objectives while they do not feel dissatisfactory of their current job. As a conclusion, the possible causes for the company’s rising of employee turnover are mainly job dissatisfactions and personal reasons triggered by shocks. Shocks are neither predicable nor manageable but job dissatisfactions are traceable and improvable.

1.2 Possible causes of falling of sales and profits
The decrease of sales is proportionally relating to the dropping demand and consumption of the product or service by customers. The possible causes are resulted from the poor performance among the four elements of marketing mix (Skinner, 1994):

a. Product - is anything that satisfies a customer need or want and consumers would pay for it. b. Price - is the value that consumers have to pay for obtaining the product. Page 1 / 6

Case Study of Organizational Decline - RW
c. Distribution – is marketing activities that make products available to consumers in a place and time acceptable to consumers.
d. Promotion – is marketing activities that make products known and attracted by targeted consumers. The falling of profits can be resulted from poor internal effectiveness. Such ineffectiveness, no matter it appears in operation or production, will be resulted in a high output cost that makes few or no profit. Even if the high cost is substantially constructed by raw materials or taxation policies or other external issues, once the company is in the market, its management is responsible to resolve the problems to retain competitive. When putting the falling of sales and profits together, it matches the symptoms of during the decline stage of the...
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