Reasons for Change
Lowes is one of several organizations well known as a home store which, draws customers that’s homeowners interested in do it yourself home projects or contractors. According to research Lowes has employed over 238,000 people, with the economy taking a turn for the worst Lowes was also affected. Which caused them to lay off over 1,700 employees in 2010. Many were in manager positions that had been with the company for years and was hired during a time when business was booming.
Lowes decided by laying off full time higher paid employees that it would benefit the organization as a whole by replacing them with part time employees. Lowes intended on hiring 8,000 to 10,000 part time sales associates between the 1,725 stores statewide. These workers would be paid less due to their positions being entry level for instance sales associates that would be paid a lot less. Part time employees would not be entitled to any benefits such as: health insurance, 401k, retirement, and etc.
Although, most Lowes would possibly lose one manager position the store would be given 4-8 part time workers to compensate for the loss. The manager that lost their jobs would be compensated by receiving severance pay and assistance with job placement. Those workers that wasn’t laid off witness how some employees received pay cuts depending on their position. One of Lowes competitor is Home Depot which was placed in and unfortunate situation that led them to laying off many employees. This lead to them letting go full time employees and replacing them with part time associates that was paid less.
As a result Home Depot received a lot of back lash due to this decision. Lowes was advised to pay close attention to how their customers react to the many changes. Because, the changes made within the organization will affect employees and customers. Lowes took a chance on downsizing and reconstructing which had a 46% success rate according to research (Leban & Stone,2008). By Lowes making these changes it allowed them the opportunity to lay off higher paid employees while replacing them with lower paid sales associate’s within the organization.
The purpose for this change was to save the organization money while continuing to accommodate their customers by maintain good customer service. Another reason Lowes felt it was essential to make changes within the organization was because, of the economy and the downturn that effected the construction industry. Lowes receiving over half of their business from construction industry so when business slows up so does Lowes. Some of Lowes customers are homeowners also which was affected by the turn in the economy which caused them to do fewer home repairs.
Lowes organizational change could have been categorized by total quality management. Lowes began to focus mainly on the sales associates and how they interacted with the customers. Due to the middle managers not previously playing a major role within the organization. Lowes decided that the middle managers that’s not managing a department or currently working on the floor that remained on with them was instructed to monitor the sales associates. The organization strategy was to hire more part time workers to better serve their customers while building a rapport while becoming a asset to the organization.
When reconstructing and downsizing, quality management driven change will work well due to the success rate being 37% ( Leban & Stone, 2008). With the economy going downhill it would benefit Lowes to increase their prices however, it may not be wise at this time. Although, changes would be essential to too save money within the organization. Once Lowes made major changes within the organization they increased its quarterly profit by 17% from the previous year (Portillo,2011). According to research within the first 9 months in 2005 profits increased by 3.5% (Portillo, 2011).
One must question how Lowes was able to lay off some of their full time managers and hire many more part time workers. This change occurred when the economy was bad and a lot of people had already lost their jobs. Lowes was looking for a way out that would benefit their organization as a whole. Their solution was done with hopes of saving money while increasing profits. This change has made a difference thus far and hopefully in the near future they will be able to promote part time employees and offer benefits.