Shanghai Silk Pharma Ltd. - A Written Case Analysis

Core Problem

The apparent problem identified by the General Manager of Human Resource Department (GM-HRD), Zhang Xi, of SSPL is a high rate of voluntary employee turnover between the periods of 2011 to 2014, with machine operators having the highest quitting rate. Thus resulting in an increase in organizational costs and having a detrimental impact on the production and sales of the company.

Cause of Problems

The complication of employee turnover and retention can be attributed to the below mentioned causes.

1. Centralized Hierarchical Structure
2. Abuse of 'Guanxi'
3. Lack of Learning Opportunities
4. Monotony of Daily Work
5. Defective Appraisal System
6. Lack of Emotional Incentives
7. Employment Tenure

McKinsey 7-S Analysis

The following modifications should be considered in each of these aspects of the company to implement a more effective organization model.

1. Structure

• Decentralization within teams and departments, working on a project jointly, to encourage teamwork and interdepartmental communication.
• Delegate decision-making power to low level employees to make them responsible.

2. Strategy

• Include a clause in the employment contract that extends the tenure of employment to 5 -8 years.
• Award shares of the company, or its subsidiary, to senior employees with tenure period of more than 8 years, so that they become invested in the success of the company.

3. Systems

• Work procedures should be revised and updated according to the current systems in use to conform to prevailing market trends.
• Employees should be allowed some freedom in work operations to reduce the feeling of redundancy.

4. Style

• Employment of a more relaxed leadership style involving an open system of communication where employees can easily approach their managers thus reducing the high-power distance.
• Elimination of the abuse of ‘guanxi’ and adopting fair and impartial treatment of all employees.

5. Skills

• Organization of mandatory training sessions and programs periodically for all levels of company employees.
• Providing employees with an ‘Employee Handbook’ so that they may familiarize themselves with the jargons and operations in use in SSPL.

6. Staff

• Consider organizing a raffle for prizes, such as a paid vacation or shopping gift card.
• Start an ‘Employee of the Month’ system to show appreciation to the hardworking employees.
• Revise company policy on appraisal system of employee performance and overtime policy.

7. Superordinate Goals

• The organization of team building exercises, such as an interdepartmental sports competitions, family days, karaoke night, company barbeques and excursion trips might aid in creating team-spirit among the employees of the company.
• Conduction of surveys shall keep the company informed about the state of employee satisfaction.

Conclusion

Through the application of the above mentioned model and implementation of solution, it is possible to resolve the problems of employee turnover and retention faced by SSPL and bring a positive change in the existing culture of SSPL.