Factors leading to Downsizing in Fairfax Media
Discuss about the Structure and Determinants of Wage Relativities.
The issue of downsizing is a crucial decision for the organization to make. The organization decides to downsize its existing staffs when it feels that there is a shortage of financial resources and capital or when the business is not yielding the desired results. The organization can put forward the process of downsizing by implementing a number of notices as well as taking some hard choices. The employees who lose their jobs start protests and rebel against the organization to put forward their grievances. This makes the importance of the trade unions and the labor unions relevant in the modern context. These bodies have been established to address the issues and concerns of the employees so that the employees are not exploited against. The concerns of the employees can be addressed by partially accepting some of the concerns of the employees. The essay deals with the decision taken by the Fairfax organization to cut down the jobs of 1900 of its employees and to digitalize the print media platform into digital media so that he organization can boost its revenues in the market. The decision to downsize was met with enormous protests and reactions from people belonging from diverse backgrounds such as media, film and trade unions. The essay elaborates upon the decision to cut out on the employees and the immediate consequence of such decision. The essay also elaborates upon the issue of addressing the issue if it occurs again. The essay details about the issue faced by the Fairfax organization and how it was mitigated by them. The Fair work act is also elaborated in the essay. The main emphasis of the essay is on addressing the concerns of the employees and the workers who are constantly worried about the future and outcome of them in the organization. The process of downsizing involves the proper planning and implementation by the managerial authorities. If done properly, the process of downsizing can reap great dividends for the organization in the long run.
Fairfax Media is considered as one of the largest media corporation operating in Australia and New Zealand and invests in the print media such as newspaper and magazines as well as operating in the radio and digital media outlets. John Fairfax who bought the Sydney Morning Herald in the year 1841 established the company. The Fairfax family has since then had controlled the administrative and business aspectof the company. The company also possesses ownership rights for the most prominent Australian newspapers such as The Age, The Australian Financial Review and holds the majority of the shares in the Domain Group and the Macquarie Radio Network (Erdogan et al, 2014). The Fairfax Media also has joint ventures in the streamline sector such as Stan and the online publishing agency HuffPost Australia. The present chairperson of the group is Nick Falloon while the chief executive officer is Greg Hywood (Johanson & Matson, 2015). The issue of cutting down the staffs and restructuring the organization is a global phenomenon and occurs in all the organization from time to time. This is done when the business of the organization is undergoing a slowdown and the organization decides to cut down its costs and expenditure by downsizing the employees. Downsizing the employees can result in a positive impact for the sales productivity as well as the growth of the organization. These beneficial factors entice the leadership of the organization to downsize a certain number of employees from the organization. The implementation if done properly can yield excellent outcomes for the organization in terms of increased sales and revenues and if implemented poorly, results in a number of unwanted situations and turmoil for the organization which can even result in the filing of a lawsuit against the organization.
Impact of Downsizing and Employee Concerns
In 2012, Fairfax Media decided to downsize 1900 of its existing staffs and started to digitally convert its operations in publishing newspapers such as The Sydney Morning Herald and the The Age (Vogt, 2016). The decision to downsize its existing staffs resulted in a number of protests mainly from the employees who were about to lose their existing jobs. The employees were supported by a number of organizations such as the Australian Manufacturing Workers Union (AMWU), the Media fraternity, the people in the Entertainment industry, the Arts Alliance (MEAA), the Australian Services Union (ASU), the United Services Union (USU), the Communications Electrical and Plumbing Union (CEPU) and the Australian Council of Trade Unions. The Fairfax media’s decision to cut down on the jobs meant the loss of at least about 1900 people losing their jobs (Hartwell, 2017). This was a tough decision to make considering the fact that the organization was running low on capital and financial revenues. The organization had no other option except to opt for downsizing in order to maximize its revenues and keep the business afloat. The decision of the Fairfax media to scrap the job of 1900 people also meant the joining of the trade unions with the different fraternities and the people from diverse backgrounds uniting in order to manage the problem of downsizing. This issue gained public attention from a large section of the population.
The main issues in contention during the downsizing process by Fairfax Media, which resulted in the loss of about 1900 employees losing out on their jobs in the organization. This issue highlighted the importance of the management and the roles and responsibilities, which they are supposed to exercise. The Management is the process which involves how to deal with and control the people (Jacobi et al., 2017). It is the body which serves multi-purpose activities and coordinates the business by managing the people and the work. It involves the process of generating work and achieving the desired objectives through the people. In recent years, the importance of management has increased mainly because it has to balance the employee relations in accordance with achieving the objectives in an environment of high internal competition. The Management board has tomaintain the labour costs and flexibility in their operations so that the business results in the generation of profit (Veblen, 2017). The external constraints force the Management board to take some hard decisions which sometimes prove unfavorable for the employees. Management policies and application are in a great need to be comprehended in the wider framework of business objectives. The Management is dependent on the aspects as to who governs its policies and frames the laws and rules regarding its work. This separation of ownership from the control is based on the two models of Management which are followed and practiced in different parts of the world accordingly. The first form of ownership control model is known as the Anglo-American outsider system. In this model, the management process is in alignment with the very intent with which the business is run which is to concentrate solely on profit maximization. This model emphasizes on the fact that in all likelihood, the external stakeholders who have substantive amount of stakes in the company have every right to protect and safeguard their interests and seek ways to profit maximization even if it leads to the point wherein they have to take some hard and unfavorable decisions (Galbraith, 2015). This model is followed in the United States of America, the Western countries of Europe and Australia. The critics of this model argue that this model of management undermines the value and investment done towards the employees and other capital stock and taking any decision which results in the loss of these investments is totally unethical and against the principle of justice. The employees and the workers are also investing some amount of time and energy in the running of t he organization’s business so in a way, they are also shareholders. In contrast, the insider model holds the view that the leadership of the organization have the responsibility to nurture and take the important decisions for the organization more than that of the external stakeholders. This form of management model is followed in the Asian countries particularly in Japan (Carriger, 2017). This management model emphasizes on the fact that the employees and the workers are a crucial part of the organization and the organization has every right and obligation to protect the rights and privileges of the employees and the workers.
The Role of Trade Unions in Addressing Employee Concerns
The Fair Work Act 2009 is an important Australian legal document which was passed by the government of Australia. The main aspect of this law was the reformation of the system of industrial relations in Australia. The former Work Choices Act was replaced by the enactment and passing of this Act. The core principle of Fair Work Act of 2009 was to promote the Good-faith Bargaining among the dissenting groups which arises mainly due to industrial conflict involving the different viewpoints of the employees and the management board. The Fair Work Act attempts to evaluate and consider the concerns of all the members involved in the conflict and solve them in a way so that the majority of the concerns can be addressed by them. The Fair Work Act 2009 is based on the principle of Good-faith bargaining, in which the parties involved take sincere and honest steps to negotiate with each other so that they can arrive at a common stand point (Carrera, 2016). The parties involved here were the management board of the Fairfax organizations and the employees of the organization who were supported by the various media and trade unions. The Trade Unions are a form of employee representation and the Trade Unions are established with the purpose of safeguarding the rights and concerns of the workers and the employees of the organizations so that no injustice is inflicted upon them. The labour unions were established in Australia from as early as 1911 (Clibborn, Lansbury & Wright, 2016). The initial purpose of establishing labour unions were to spread awareness among the workers regarding their rights and duties. The leaders of these labor unions realized the fact that union must enter into alliances with the different organizations at both the state and the international level to maintain a productive relationship with the workers and the employees (Preston, 2018). The prime function of the trade unions and the labor unions is to provide a platform for the employees as well as the employers in order to allow both the parties to enter into a positive relation with each other and make dedicated, conscious and constructive agreements for the employees’ welfare. In Australia, the Australian Council of Trade Unions (ACTU) is the largest representation of trade unions and labour unions and it had 46 registered unions and 9 trading and labour councils. The Australian Council of Trade Unions has membership in the International Trade Union Confederation (Axelsson & Easton, 2016) . Besides the trade unions, the non-union employee representation bodies are also gaining significant attention due to the constraints witnessed in the employment relations and the enlarged representation gaps (Kalev, 2014). With the ever growing decline in union membership, the non-union representational bodies have emerged as a viable alternative due to its flexibility and efficiency. Their main focus is on addressing the concerns and grievances of the employees and that the employees get proper and fair treatment from the employers. The employees are to be safeguarded against any form of exploitation whatsoever. However, the establishment of non-union representational bodies has been severely constrained by the present Australian regulatory system which emphasizes on promoting a union substitute.
Management Policies in Balancing Employee Relations and Achieving Business Objectives
The dispute was resolved by the slashing of 1900 employees who lost their jobs as a result of the downsizing process by the Fairfax organization. The amount of panic created by the decision to downsize the number of employees resulted in the outburst of reactions from a large section of the population across different working groups. This issue was supported by the media fraternity, the trade unions as well as the people employed in the printing industry. The main outcome of the decision of the organization to digitalize its print media platforms such as the Sydney Morning Herald as well as The Age resulted in the loss of all the people who were employed in printing of the papers (Beharrell & Philo, 2016). The downsizing of the existing staffs meant that the years of investment which were provided to the employees were all wasted as from now onwards the media information will be printed in digital form. The digital media would be free for the people to a certain extent after which the charges would start applying in the digital media applications. Any form of industrial conflict if it arises, can be mitigated by the consultation of the managerial leadership with the aggrieved employees and workers (Calveley, 2017). The employees who are protesting can be either protesting in a covert or overt manner depending upon the scale and magnitude of the downsizing policies taken by the organization. In the case of the Fairfax organization, the protesters were protesting in an overt manner. The journalist protesting against the downsizing policy of the organization realized that it is time to invest in journalism instead of editing newspapers as the business of publishing newspapers is facing a lot of turmoil and low business revenues (Rawling, 2015). Richard Hyman proposed a theory wherein he stated that the industrial conflict arises as a result of the unhappiness and inconvenience of the employees and they vent out their anger and frustration by trying to sabotage the existing functions of the organization (Gore, 2017). The outcome of such a conflict can be accessed from the fact that the actors who perform the act of protesting which in the case of the Fairfax organization were the employees and the trade unionists , they protest in order to put forward their bargaining power. They will call off their protest as soon as the proposal in the bargain is accepted and the organization accepts to reconcile the employees and the workers (Brigden & Milner, 2015). This is followed by the arbitration process wherein the employees demand a rule or a law to safeguard their future in the organization. The main argument of the employees is to put forward a law which safeguards their laws and rights as employees of the organization. The employees argue that the investment done by the organization on the employees must be respected and acknowledged. They agree that it is important for the organization to opt for profit maximization but more than that, it is imperative that the organization acknowledges the time and energy given by the employees in the organization. Taking a decision to cut out the employment opportunity will be a form of injustice upon the employees of the organization.
The Fair Work Act of 2009: Addressing Industrial Conflicts
If the dispute still persists, then it is important for the leadership as well as the managerial board to make a conscious effort to understand the nuances of the industry- employee relations. The preconceived notion among the managerial boards is that the trade unions increase the costs and pose a threat to the productivity is embedded in the neoclassical economic theory. It is also referred to as the monopolistic approach of the trade unions to demand a rise in wages. The Organization views the trade unions as mischief mongers who are intentionally causing a misallocation of resources. This leads to the adjustments in employing the right people. Then, the unions decrease the output by limiting the ability of the management boards. The management boards can miigate the dispute by taking conscious efforts into the trust-building process. The trust deficit which exists amongst the employees and the management board can be reduced by holding meetings of the leaders of the union and the management board. The meetings must be held with the intent to solve the issues affecting the leadership as well as the work afflicting the organization. The impact of the protest can also be mitigating by partially accepting the demands and requests of the aggrieved employees. This can be done by accepting some, if not all of the demands. Doing this will allow the organization to stop the protest from escalating further to an enormous scale and magnitude. The protest becomes bigger and gains maximum attention if it is able to escalate on a lengthy basis. The trade union can influence the organization leaders to take a conscious decision to accept the demands by making them concerned with the disruption in the work caused due to the impact of the riots and the protests (Freeman, 2015). The protests are afflicting the work of the managerial boards by deflecting them from focusing in the key aspects of the business and concentrating more in the resolvement of the protests and the disruption of work. Another way to address the issue is to provide and upgrade the employees with assisting them by providing them technical assistance and knowledge about the relevant changes in the technological areas which have taken place in the world. The emphasis of any business is on innovation and up gradation of the resources, whether it be the manpower or the technical aspects. The up gradation of the manpower can result in the efficient outcome of the resources and the chances of employees protesting can be averted way before it happens. There should be an ideal relationship amongst the employees and the owners of the organization so that the leaders can assist the employees and gain the maximum output from the employees in order to generate more output from the employees. The efficiency of the employees can also be increased if they are motivated at all the time. The motivated employees have the ability to perform at the best of their potential (Freeman, Doucouliagos & Laroche, 2017). The decision to downsize can demotivate even those employees who are not to be affected by the downsizing decision.
From the above analysis, it is clear that the organization can benefit from the prospect of downsizing if it is implemented in the proper fashion. The issue with the organization is that they take the decision to downsize without ever consulting the employees or at least informing them about the outcomes of the process of downsizing. The issue of downsizing can be averted if the organization can make alternative plans regarding the placement of the employees in some other organization or work. The trade unions are doing a great task in addressing the issues and concerns of the employees. The trade unions were established based on the principle of offering the employees some sort of assistance and help in the work front. The trade unions seek to safeguard the employees from exploitation and extreme difficulty. The trade unions must be given more powers so that all the employees and workers can avail of the membership and the facilities which are provided by the trade unions. The trade unions can also play a dominant role in mitigating the strained and tumultuous employer-worker relations. The trade unions can foster a relationship with the workers and the employers by bringing them in the same table and making them attend the meetings. This process should be held more often so that the relationship among the two organizational bodies improves. This will enable both the employer and the workers to understand the concerns and the worries of each other and result in the better coordination and working of the organizations. The downsizing process can be effectively sorted out by the process of engaging the workers and the employers in an effective dialogue process with each other so that the discrepancy and misunderstandings are sorted out and there exists cordial relation among the two.
References
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