Management is very important to an organization. With good management, owners or managers can manage their companies more effectively and efficiently. As we know that, efficiency means doing the task correctly and refers to the relationship between inputs and outputs; effectiveness means doing the right task, which in an organization translates into goal attainment. On the contrary, poor management could not benefit to a company. Watsons Water is very popular in Hong Kong.
Their production plants are located in Hong Kong, Beijing, Shanghai and Guangzhou, and it is one of the largest manufacturers of distilled water in the world. Watsons Water is production of commercial and retail bottled distilled water, they also provide delivery services. During the report, we attempt to explore and analyze the case of Watsons Water strike occurred in Aug 2009. Base on the managerial theory, we will find out some managerial problems and will provide several advices to Watsons Water for improving the management and avoiding the recurrence of industrial disputes.
Last year, there was a dispute in the Watsons Water. The delivery assistants of Watsons Water staged several protests and launched a strike. About 400 delivery assistants participated in making the final agreement with the company. Finally, after a long period of negotiation, the company agreed most of the demands for the workers, including raising commissions and limiting working hours. Besides, there are similar incidents occurred within a year. In 5th August 2009, more than two hundred delivery assistants started a strike and staged a protest outside Watsons Water’s Tai Po headquarter.
Since the company decided to increase in the number of workers per truck with unchanged commissions, the employees found out that their salaries would be reduced about $1500 per month after the change. Therefore, Watsons Water Union requested the company to change the unreasonable commission system and increase the commissions to 48 cents per bottle water delivered (a 12. 5% increase). There were three negotiations in these days. Since the company rejected to raise the commission, the first and the second negotiations were broken.
Then the Watsons Water Union blocked entrances to the company’s factory, attempting to obstruct departing water delivery vehicles. Finally, the two parties could reach a common ground in the third negotiation. Watsons Water decided to scrap the practice of assigning five delivery assistants per truck and the employees accepted it, withdrew the earlier demand for a commission increase. The strike ended after three days. According to the news, there are three combination of the delivery truck that is the delivery truck may be in four, five or six delivery assistants.
The commission earned by an assistant per bottle of water is 38 HK cents if there are five or six delivery assistants on a truck, but if four are assigned, the commission raised to 48 HK cents. However, compare to the six delivery assistants per truck, five delivery assistants per truck have a fewer assistants and have a heavier workload proportionally but receive the same amount of commission per bottle of water. Because of feeling unfair, they voiced out and demanded the company to change the arrangement or enhance the commission of the delivery truck in five delivery assistants.
According to the equity theory which is developed by J. Stacey Aams, the situation of the workers in five delivery assistant on a truck is inequity. Equity theory states that employees want to receive and maintain they deserve. It says that “employees perceive what they get from a job situation(outcomes) in relation to what they put into it(inputs) and then compare their input-outcome ratio with the input-outcome ratios of relevant others”. On the basis of one’s inputs, such as effort, experience, education, and outcomes of others.
On the basis of one’s outcomes such as salary levels, raises, recognition, and other factors. In this situation, the five delivery assistants on a truck are under rewarded since they receive same amount of commission (35 HK cents per bottle of water) with those six delivery assistants on a truck but have a greater input than them. Because of the inequity, the delivery assistants attempt to correct it and experience tension. And this tension provides the basis for motivation as they strive for what they perceive to be equity and fairness.
However, their basic salaries ($3000) are unchanged during the inflation and the commission rate of the arrangement of five delivery assistants on a truck is unreasonable, comparing to the commission of the truck in four. When there are five delivery assistants per truck, they need to share the commission by a smaller proportion. Actually, their total income would decreases by $1000 to $2000. With the basic salary plus the lower commission, they may not have enough income to cope with the daily needs due to the high inflation rate.
As a successful company, it should have a good image and become socially responsible. Social responsibility is a business firm’s obligation, beyond that required by the law and economics, to pursue long-term goals that are good for society. The company should consider different types of stakeholders when they designing the policy of five delivery assistants per truck. Hutchison Whampoa Limited (HWL) is a leading international corporation committed to innovation and technology with businesses spanning the globe.
Its diverse array of holdings range from some of the world’s biggest port operators and retailers to property development and infrastructure to the most technologically-advanced and marketing-savvy telecommunications operators. Hutchison has five core businesses – ports and related services; property and hotels; retail; energy, infrastructure, investments and others; and telecommunications. And Watsons Water is under retail business. As we find that in the web site of Watson Group Ltd, the net profit before the interest and tax was 4.
374 billion HK dollars. The sales and the net profit before the interest and tax in the first half year in 2009 were 53. 444 billion dollars and 1. 873 billion dollars. This can be reflected that although the financial tsunami happened, the company still has stable and impressive revenue this year. When earning a stable profit, the company should pay close attention to their workers and should not cut the commission in order to reduce the expenditure