Analysis of the effect of using labour from brokers on operational costs, efficiencies and employee morale : a case study.

Abstract

Low cost and high efficiencies are probably the most common of strategies used in large businesses today. This requires, however, optimum levels of commitment and performance from the employees coupled with an excellent taste for change. The transition from the use of Mondi employees to labour broker employees is a change process that impacts on a company's most valuable asset - their employees. It is with this in mind that the researcher conducted a case study aimed at identifying the impact of using labour broker employees in the waste handling operations on the morale of the affected employees. The researcher found it essential to evaluate the impact of this change on operational costs and efficiencies of the section. The three research questions that were outlined to meet the above aims were: (1) Does the use of labour broker employees in the waste paper handling part of the recycling operations impact positively or negatively on the morale of the Mondi waste paper handling operators? (2) Does the use of labour broker employees in the waste paper handling part of the recycling operations reduce the operational costs in that section? (3) Does the use of labour broker employees in the waste paper handling part of the recycling operations decrease or increase the operational efficiencies in that section? The initiative to use labour broker employees in the waste paper handling operations was not set up as an experiment. It was already in motion and the researcher opted to study it. Direct observation and unstructured interviews were used to answer research question (1). It was found that the change had completely demotivated the Mondi waste handling operators. Their morale levels dropped to particularly low levels as they felt disliked, not part of a team and unappreciated for their efforts and past service. The impacts of this low morale were hidden due to the plant being under utilised against its design capacity. They also had a prevailing sense of insecurity and uncertainty regarding their jobs, which made them uneasy. Factors associated with operational costs and efficiency was measured before (2004) and after the initiative (2005) to establish the impact of using labour broker employees on them. Direct observations and a quantitative analysis of data from the company's finance and technical departments were used to answer research questions (2) and (3). It was noted that there was a decrease in the operational costs due to the lower rate of pay of the labour broker employees and them doing overtime. The use of labour broker employees resulted in no significant improvement on the operational efficiencies.