Assignment:
(Note: This case is a work of fiction.) Addition/Subtraction Company (A/SC) is a textbook publisher for math education, including 1st grade through graduate school levels. The company has been supplying textbooks to public education schools (grade - university level) for 55 years. The company has always prided itself on the loyalty it shows to its employees in that almost all of its authors are full-time employees, and very little of the work done in the organization is farmed out to independent contractors.
However, over the last 10 years, the earnings of the company have taken a huge hit, partly because of the No Child Left Behind Act, which caused some of A/SC's textbooks to fall out of print before they made a profit, and partly because of the increase in costs due to the company's health insurance premiums when a large number of their employee base (and their families) contracted serious illnesses requiring lengthy and expensive treatments which has impacted the bottom line of the company. The HR Vice President has reviewed the business practices of their two main competitors, and realized that they are making their profits because they rely mainly on independent contractor authors, paying them only royalties on sales versus the salary/benefits packages which A/CS employees make.
Further, because the other companies have a wide open subject matter expert pool by using independent contractors, they are much more nimble at reacting to changes in need of the market, and they can offer more math areas in their textbooks, giving them a larger market share.
In fact, the last projection which was done by the marketing team showed that A/CS was going to be out of business in two years if they don't change something quickly. The HR Vice President is going to recommend to her CEO that the author group of employees (numbering 510) be downsized out of the company and replaced with independent contractors.
Further, because of certain employment laws, none of those who are downsized will be invited back as independent contractors. The publishing team will be expected to work with independent contractors and manage all book writing projects using less human power as well. That team will be downsized by 15% over the next year. Choices of "who" will be downsized will be based on a review of the last two years of performance evaluations, seniority, and roles.
This week, discuss the barriers that will exist to successful implementation of this change. Along with discussing how the change itself will be perceived by the employees, talk about risks to the company, internal and external factors which will create barriers, and challenges to overcome them.