Arup Packaging Limited Case Study

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Human Resource Assignment Question

Arup Packaging Limited is a large manufacturer of packaging solutions. Arup’s products  include glass, aluminium, plastic and paper based packaging solutions. Arup mainly  operates in Australia and comprises of four business units. The business units are organised based on the material used in packaging solutions: glass packaging,  aluminium packaging, plastic packaging and paper packaging.  

Arup is an unlisted public company; this means it is a company that has issued shares  to the public but is not listed on the Australian Securities Exchange. In 2016, Arup  celebrated 50 years. The company employs around 800 people across its four  manufacturing plants, distribution centres, sales offices and corporate office. The sales  offices and distribution centres are located in Sydney, Melbourne, Brisbane and Perth.  Arup recently opened a sales office in Paris. 

The four manufacturing plants and the corporate office are all located in close proximity  to each other in Newcastle in New South Wales (NSW). Newcastle is located in the Hunter  region of NSW, about 160 kilometres north of Sydney. Arup is proud to be one the few  manufacturers that continues to exclusively manufacture in Australia. Arup believes that  its investments in advanced technology have resulted in consistently high quality  packaging solutions. The management team and the Board of Directors see product  quality as Arup’s competitive advantage, insulating it against competition from cheaper  production options overseas. Arup’s core values are teamwork, integrity, excellence and  innovation.  

Out of Arup’s 800 employees, about 700 are located in its manufacturing plants and  corporate office in Newcastle. Manufacturing employees are represented by the  Australian Manufacturing Workers’ Union. This union has generally had a harmonious  relationship with Arup management. Since it started as a plant with just 100 employees,  Arup has been a strong part of the Newcastle community. It is one of the largest  employers in the region and continues to attract local employees.  

Since its inception, Arup has concentrated on high quality packaging produced in large  quantities. Arup’s customers are some of the largest food and beverage manufacturers in  Australia. Arup has found that these customers have stable product lines and their  packaging solution requirements remain mostly stable. Often the biggest changes  requested by these customers are modification to existing packaging (e.g., larger size  aluminium can, different coloured beverage bottle). Only needing to make minor product  changes has meant Arup has been able to maintain high levels of productivity. While  orders from these customers initially grew rapidly, in the last 5 years the growth has  plateaued.  

In response, Arup’s Board of Directors initiated a strategic review and a risk analysis of  Arup in 2015. After this exercise, the Board of Directors and the top management team  identified their dependence on a few large customers in Australia as a significant risk to  

Arup’s future. The Board members and the top management team decided to look at  expanding Arup’s customer base while maintaining the company’s existing clients.  

In 2015, Annie Lee, CEO since 1999, retired and Franco Weller joined as the new CEO of  Arup. Franco was given a mandate to take the expansion initiative forward. The Board of  Directors encouraged the hiring of a senior manager to handle strategy and business development. This position reports directly to the CEO. Brenda Petersen started as Head  of Strategy and Business Development in April 2016.  

Since joining Arup, Brenda has been working tirelessly to attract new customers outside  Australia. Brenda’s most promising leads have come from Europe. Most potential clients  were impressed by Arup’s high quality products. After months of hard work, Brenda has  been able to secure packaging orders from a group of clients in France and Belgium.  

Orders will start in September 2017. Brenda is confident that this is the beginning of a  new market for Arup’s products.  

At Arup’s Board meeting in February 2017, the CEO, Franco Weller, reported these new  developments to the Board of Directors. The Chairman and the Board were pleased with  this outcome and asked the top management team to develop plans as to how this  initiative will be taken forward.  

The top management team (see figure 1 below) met early this week to discuss the  implications of these new customers to Arup’s business strategy. At the management  meeting, Brenda presented the new strategic initiative. She emphasised the following  factors in relation to the new customers: 

∙ The new customers require mostly paper and plastic packaging products at this  stage. 

∙ Unlike the customers in Australia, these European organisations are medium  sized and offer a wide variety of products. This means the orders for packaging  products are likely to be smaller and more varied. 

∙ These customers usually change their packaging designs at least once a year, so  stable product designs that Arup is used to will need to change.  

∙ The European customers are offering a higher price than Australian customers.  Even when freight costs are taken into consideration, Arup’s profit margins are  likely to be higher from these European customers compared to those in Australia. 

Brenda ended her presentation, emphasising that it was critical to ensure that the first  orders in September 2017 are completed on time and to high standards. She said that  the first orders should be seen as a first step towards attracting more orders and  potentially more European companies willing to buy Arup’s products.  

The following is a transcript of the conversation that took place after Brenda’s  presentation. 

Franco: I agree with Brenda. We need make sure that those first orders are perfect.  In my discussions with the Board of Directors, I requested permission to recruit a  General Manager to be in charge of these European customers. This manager will  report directly to me and will work closely with Brenda. The Board approved it.  

Franco showed the proposed organisational chart (see figure 2) to the top management  team. 

Jeremy: This might look like we are just adding another manager to the top  management team (refers to the proposed organisational chart), but this is a more  significant change. For the last 50 years, we have worked with large organisations,  our orders are large and design changes are very minor. Do you think we have the  capability to handle the design requirements of these customers from Europe?  

Franco: I agree that expanding our customer base into Europe is a significant  strategic change for us. But it reduces our reliance on a few customers in this  region. To answer your question, I don’t think we have the design capability at the moment. We need to develop that quickly in order to get to production in  September.  

Gabrielle: From an HR perspective, this is a huge change. Our employees and  managers are used to working on large orders and long production cycles. We have  always praised and rewarded productivity. This kind of change requires a complete  mindset transformation. Basically we need to rethink how we approach work.  

Brenda: Yes, but it will make us a more versatile producer of packaging solutions.  Remember, innovation is one of our core values, but our innovations have been  small and incremental. It is time we really lived that value.  

Jose: You know that we are all committed to the expansion strategy. It is just that  this is all happening quite fast and we don’t have a lot of time to get our act  together. I suggest that we work in smaller groups to work out what this means for  each of our functions. That way we can have a more concrete discussion when we  meet again this Friday. 

Franco: You are right, Jose, that is a great idea. I will leave it up to you all to work  out the smaller teams. Check with Brenda if you have any questions. Brenda will  email information about the September 2017 orders to you. As usual, my door is  open if you have any questions. We all need to work on this if we are to make this  happen by this September.  

Gabrielle, General Manager, Human Resources, was the first to speak as the other  managers walked out of the conference room. 

“Brenda, I really need your help to work out what employees we are going to need. Since  the new customers will mostly use our paper and plastic products, it will be great if  Manju and Chris can join us.” 

“I’ve got about 30 minutes”, said Chris. 

“Same here, I can spare about 30 minutes and then I have a production meeting”, added  Manju. 

Gabrielle, Brenda, Chris and Manju sat down. The following is a transcript of the  conversation that took place among these four managers.  

Brenda: First and foremost, we need to recruit a General Manager to head the  European Division. Someone who is familiar with both plastic and paper production  at the very least. Added bonus if they have experience in glass and aluminium  packaging. 

Gabrielle: Yes, and it is a new position. It will be like mixing Chris’ and Manju’s  jobs to create a new job. So I will need to do a job analysis first.  

Chris: Then we need some factory workers. Manju and I can give you an estimate of  employee numbers you need. But do you realise that the factory workers we need to  work in the Europe product line will need a different skill set to the factory workers  that we have at the moment? 

Gabrielle: Yes, and we also need to work out whether it is actually a new position  or very similar to the job description of our existing factory workers.  

Chris: We haven’t looked at the job descriptions of our current factory workers for  several years. Those might need updating as well.

Manju: Most of our supervisors look at job descriptions as bureaucratic paper  work. I am afraid sometimes they shift tasks around without considering the job  descriptions or letting HR know. 

Gabrielle: This is not a good look. A few minor changes are fine, but if there are  significant changes we do need to update those job descriptions.  

Brenda: I think one other thing we need to reflect on is whether we want to take the  same specialisation approach with the factory workers who will be working in the  European production line. Given our long production cycles, our factory workers  are trained in one specialised task. They rarely see the big picture as to how it all  comes together as a final product. A specialisation approach helped maintain our  really high levels of productivity, but that approach may not work with the new  venture. We may want to think about some cross-training and job rotation options.  

Chris: That is a great idea. Specialisation kept our productivity high but I think  some of our workers found the work to be mind-numbing after a while. Recently,  Joe who has worked on the factory floor for 15 years told me that he could stack  boxes in his sleep! 

Manju: Yes, but I think sometimes they take that as something to be proud of. On  our floor, the teams really see themselves as packing team, raw material team etc. They take pride in their section’s output. That’s great, but the downside is that they  get into all sorts of turf wars because they see themselves as their section and not  as part of the whole paper packaging team.  

Gabrielle: Another aspect we need to think about in terms of the new production  line is how rigidly we want to control factory workers’ schedules. With long  production cycles, at the moment the supervisor sets the tasks weeks ahead and  there is little the factory workers can do to change anything. With shorter  production cycles, we may need to let the team decide how to swap tasks around to  get higher productivity.  

Chris: Yes, that is an interesting point, something we need to reflect on.  

Brenda: You know something that I saw when I visited our potential customers and  their food and beverage factories? They start each day with a group meeting. The  supervisor talks with each team. Tells them about their performance the previous  day; for example, in production he tells them about the number of units completed  and how many had to be thrown out as defects. Then they talk a little about that  day’s performance goals. They also chat a little about social things related to  employees. For example, someone’s partner is in hospital, someone’s child started  kindergarten. All in all, it only takes about 5 minutes. I think it is something we can  think about adopting with this new production team. 

Manju: I have been thinking about something like this for a while. I like that idea. 

Brenda: Before Franco started, when Annie was our CEO, we used to do these  Town Hall meetings every quarter with each production line. Annie would talk to  glass packaging one day and then the aluminium packaging the next. It was a good  way to link employees to the big picture and show why their work really matters. I  don’t think we have done that since Franco started; we have all been busy with the  new strategic plan. I am going to suggest to Franco that we need to restart that.  

Gabrielle: Great ideas, but I am concerned that if we adopt these new strategies  only with the new production team, we will end up with two different factories under the same name; two different cultures really. That would divide our team.  Teamwork is one of our core values. So, as much as possible, as we think of  strategies for the European production line, we should see whether we can adopt  these with our existing factory workers. This “morning team catch-up” idea for  example, I think if we do it, we should do it with the current employees too. 

Chris, Manju and Brenda nodded their heads in agreement.  

CASE STUDY QUESTIONS: 

1. Gabrielle needs to recruit a General Manager Packaging – Europe. She has  decided to start with a job analysis of this position. Do you think it is appropriate  to conduct a job analysis in this instance? Why? /Why not?  

Describe the key steps that you would recommend to Gabrielle to conduct a job  analysis of this position. Ensure that you have covered the key aspects involved in  the process and applied these to Arup e.g., what data Gabrielle should collect,  what data sources she should use, what methods she should use to collect data.  Justify your recommendations.  

2. Using the Job Characteristics Model (Hackman & Oldham, 1976), identify which  core job characteristics are present or absent in the current factory worker  position at Arup Packaging Limited. By current I mean, the factory workers  currently working on products for the Australian market. What changes in job  design would you recommend to the top management team, in relation to the  current factory worker position?  

Use approximately 350 words per question in your response.  

You need to support your responses with relevant academic literature and  course material. Make sure you use the HR concepts discussed in this course  when responding to both questions. Look at the assessment feedback sheet  before you finalise your response. 

Human Resource Assignment Solution

Introduction: 

 The discussion is with reference to the case study focussed on Arup Packaging Limited expanding its clientele. Arup Packaging works on a large-scale basis to provide packaging solutions. The business units are categorised based on the materials. Various materials are used for packaging and could be specifically identified as paper, glass, plastic, and aluminium. The enterprise is over five decades old and has eight hundred employees. Franco Weller has been the new C E O of the company. He has focussed on expanding to the European markets. The discussion focuses on job analysis and job redesigning.

Question 1: Recruitment of General Manager – Europe for Arup by Gabrielle:

Conducting a Job Analysis – Justification:

It would be beneficial to have a job analysis done for the following reasons:

• Skill Assessment for recruitment: Job analysis helps to decide on the qualification, experience and various other skills that would be required for the role (Brannick 2014). It is essential to ensure that the right talent is engaged.
• Standards and Performance: various Key performance Indicators could be decided while doing the job analysis. While Gabrielle conducts research, the K P I could be set. This would help to judge an onboarding an effective candidate for the role.
• Compensation and Job design: Job analysis would help to know-how would be right to pay to attract an efficient general manager (Brensing 2014). It would help to decide on the responsibilities of the general manager of Arup.