Ford Motor Company: An Analysis of Profit Loss and HRM Challenges

This report examines the challenges faced by the Ford Motor Company, specifically its loss of profits, which is attributed to human resource-related issues. The primary factors contributing to this financial decline include employee absenteeism, high turnover rates, ineffective recruitment processes, and both human and computer errors. The report underscores the need for Ford to implement comprehensive solutions to address these problems. It recommends creating targeted programs to reduce employee absenteeism and turnover, improving recruitment strategies, and conducting regular audits to identify and rectify system errors. The report emphasizes that by tackling these HRM issues, Ford can improve its profitability, reduce debts, and ensure long-term financial stability, making it a valuable resource for students and professionals studying leadership and management within the automotive industry.

Running head: LOSS OF PROFITS 1
Loss of Profits
Student’s Name
Course
Date

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Abstract
The report below focuses on the issues faced by Ford motor company. Th major issues
that has greatly bothered the company is loss of profits. Loss of profits is caused by HR related
issues such as employee absenteeism, employee turnover rate, recruiting the wrong employees
and human and computer errors. There is a need for the Ford motor company to come up with a
permanent solution that sees an end to this issue. This report provides recommendations to the
Ford motor company to help in ending the problem. The report suggest that the company should
create a program that will focus on solving employee absenteeism, employee turnover rate and
recruitment process. Also, it suggests that the company should hire an audit group to identify any
errors in the company’s system.

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Table of Contents
Abstract......................................................................................................................................................2
Table of Contents........................................................................................................................................3
Introduction...............................................................................................................................................4
Problem Description..................................................................................................................................5
Recommendations.....................................................................................................................................9
Conclusions..............................................................................................................................................11

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Introduction
The Ford motor company is a motor company that was founded in the year 1936 in
Michigan USA. The organization deals with the sale of SUVs, commercial and luxury cars
(Yang, Sudik, Wolverton & Siegel, 2010). Over the years it has been involved in the production
of tractors, motorbikes and other automobiles. The company was developed after the need to
develop automobiles that the normal working citizens with average incomes. This was the time
that America was facing industrial revolution and few people could afford an automobile at the
time. Cars during this period were considered a luxurious item and only the rich could afford
cars. Up to now, the company still enjoys this recognition due to its mass production of cheap
cars (Koshino, Nakagawa & Takahashi, 2011). The company enjoyed the privilege of producing
vehicles that were used in the second world war. These vehicles were specifically designed for
war and could handle the difficult terrain and the weight of the items being supplied to the troops
in the war. These vehicles were used as field ambulances and firefighting pumpers during the
war.
Today, the Ford motor company enjoys a large audience of customers all over the world.
It has been able to establish itself in over the seventy countries all over the globe. The company
has continued to produce cheap and luxury cars for its customers. Through this, the company is
able to produce cars that match the needs of its customers. It has invested a lot in the modern
technology to produce cars that are worthwhile to the customer (Wu, Dufour & Sun, 2010). To
be able to manage the needs of its customers, the company has employed over seventy thousand
employees to take care of the customers. It ensures that there is a good relationship between its
employees and its customers. These employees are customer friendly and ensure that all the
needs and the issues that the customers have been solved. To ensure that this is possible and the

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customers remain loyal to the company, it has ensured that the employees are also fully satisfied
with their jobs. Through the company’s human resource department, the company has invested
heavily in employees’ wages (Laudon & Laudon, 2011). It has increased wages and introduced
bonuses for employees that work over time. Through this, employee retention rate has increased
and productivity has increased. Skilled employees who are crucial to the company have been
able to be retained. The human resource department has ensured that employees are content with
their jobs through creating better relations between the employees and the company, allowing
employees to have unions so as to be represented during the making of important decisions. The
company has employee retreats that give the employees an opportunity to interact with each
other create good relationships between them. Through this, they have been able to provide a
positive working environment for the employees which is crucial for any company (Beigel,
Collins, Ratliff, Schoon, Schroeder, Smith & Subhransu, 2010). The company has been
recognized among the top employers in the world. By investing heavily in the human resource
department, the company clearly understands that this department is crucial as it acts as an
interface between the company, employees, and customers.
Problem Description
Over the years despite the success of the company, the company has been various
challenges that are slowing it down. These challenges are from the various departments in the
organization but the most affecting it are HRM related. One of the issues that the company has
faced is a loss of profits. Over the past few years, there has been a trend during the presentation
of the annual financial reports. The reports indicate that the profits have reduced over the years
(Andrianesis, Liberopoulos, Kozanidis & Papalexopoulos, 2011). The sales have reduced and the
debts have increased. There is a need to carry out serious steps and activities to end this issue as
it could lead to the downfall of the company. The company made a profit of net worth 2.5 billion

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dollars which were lower than that of the previous year. The number of cars in different
countries across the world also decreased. The Ford motor company made a total amount of
seventeen billion dollars from the sales of its vehicles (Lee & Choi, 2011). This was a bit lower
than that of the previous years. The debt also increased by two percent. From the reports, it was
clear that the organization needed to do something so as to increase its profits. This had affected
the company as there was a complainant, from the employees’ officials claiming that most of the
employees had not been paid their salaries. The company’s raw materials suppliers claimed that
there had not been paid their dues for the past one year and this was greatly affecting them
(Maynor, 2011).
Loss of profits is a major issue to the human resource department as it is mainly caused
by HR related issues. Loss of profits occurs when the expenditure used in the production process
is more than what is gained from the sales of the products (Rummler & Brache, 2012).
Entrepreneurship is all about making profits not losses. Loss of profits is caused by many factors
in an organization. These factors include employee turnover, recruiting the wrong employees,
low employee productivity, employee absenteeism, and human and computer errors. Other
factors that cause loss of profits include miscommunication in the organization, vendor errors
and contract noncompliance (Isaak, 2016). Recruiting the wrong for a certain job will always
cause issues in the organization. These employees may lack the knowledge and experience
required for the job (Hancock, Allen, Bosco, McDaniel & Pierce, 2013). Recruiting the wrong
employee can cause more damage to the organization than one thinks. The competition in the
marketplace is so stiff that every organization needs to make sure that it gets the value for money
in everything it does. The cost estimated for recruiting the wrong employee is extremely high.
The researcher has proved that recruiting the wrong employee costs an organization over two

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times the basic annual salary of the employee. this increases the expenditure that the organization
uses on the production of its products and services. This is because the organization has to cater
for the expenses of the employee in terms of salary, cost of recruitment, cost of interviewing and
the cost of time spent on the employee. all these costs are crucial to any organization and when
added up they become too expensive to cater for. This cause the organization to have losses since
they expenditure they are using in the production process is greater than the money they are
getting from their sales. Also, the effect is still seen when the organization discovers the
employee does not match the requirements. This means that the HR has to repeat a new
recruitment process to hire a qualified candidate which is an expensive affair to the organization.
Loss of profits is also caused by increased employee turnover. (Hancock, Allen, Bosco,
McDaniel & Pierce, 2013). Employee turnover may be voluntary, involuntary, desirable and
undesirable. Voluntary turnover may be the wish of the employee to leave the organization to
find better pastures while involuntary may be because of laying off workers and also firing
workers (Hogh, Hoel & Carneiro, 2011). Employee turnover has a great impact on an
organization as it creates difficulty in filling the empty position left by the employee. this means
that the organization will carry out a recruitment process to try and find the best-qualified person
to fill the gap. The recruitment process means that there will be a lot of spending in the process.
The cost caused by employee turnover include hiring costs, cost of training requirements and the
staff time devoted to the recruitment activities (Hom, Mitchell, Lee & Griffeth, 2012). This
expenditure may minimize the number of profits made by the organization since they will have
to spend more money on this process. Employee absenteeism is also another factor that causes an
organization to make more loses (Ybema, Smulders & Bongers, 2010). This may be a behavior
that is intentional for an employee to miss work. Excessive employee absenteeism has a major

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effect on the organization as it reduces productivity and has a major effect on an organization’s
finances. Loss of productivity due to employee absenteeism is very costly to any organization.
This is because these employees are being paid their wages and there is also the cost spent on
employee temporary workers to replace the absent workers (Mowday, Porter & Steers, 2013).
Also, there is a cost that is incurred in managing absenteeism. Such costs will always reduce the
profits in an organization.
Errors will always cause loss of profits in an organization. Errors may be human errors or
computer errors. Human errors are those that are caused by the employees in the organization.
Humans are bound to make errors and there is nothing that one can do to stop these errors other
than minimizing them (Epstein, Groeneveld, Harhay, Yang & Polsky, 2013). Human errors in an
organization are mainly caused by miscommunication between employees from different
departments. The employee may misread data input the wrong information. Also, they may not
fully have a clear understanding of the software that they are using causing errors. Despite the
employees of an organization being so much diligent, there are bound to make errors at a certain
point. Computer or machine errors may occur at different times. During computing the data, the
computers and software used may produce the wrong results misguiding people. Errors are very
costly to resolve in any organization. In the Ford motor company, if an error is made during the
production of vehicles, it would cost the company millions of dollars to rectify the error. This
means that they have to recall the cars that they had already sold to their customers so as to
rectify the error. By doing this means that the company is making losses instead of profits.
Loss of profits has a great effect on the company. The company has already started
experiencing the effects of loss of profits. Loss of profits may lead to reduced operations,
bankruptcy, and increased debts. Loss of profits means that there would be enough money to pay

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the wages of the employees. This is because the organization is spending more money on the
production process and receiving less money in terms of profits. This will prompt the
organization to borrow money from banks and investors to be able to sustain the costs. Debts,
when used correctly, is an effective tool to help the company grow. When the sales reduce,
revenue collected also reduces and also the expenditure used in the production process increases,
this means that there will losses experienced and the organization will be forced to rely more on
credits to carry on (Hylander & Ehrlén, 2013). These debts if not managed well will lead to a
decrease in the valuation of the business and loss of profits. This may lead to auctioning off the
company due to the debt incurred. Loss of profits may lead to reduced operations in the
organization. Operations that require a lot of capital to be carried will be eliminated to save cost.
Some operations such as the recruitment process for new employees will be halted as this is an
expensive process. This may also involve closing the underperforming business facilities. Loss
of profits may force the organization to lay off some of its workers. This is because it will be
unable to manage the wages of its employees. The effect of this will be a loss of skilled workers
who are crucial to the organization. The effect to this is that it will reduce productivity in the
organization.
Recommendations
As stated, the organization faces the challenge of loss of profits that is mainly HR related.
This is because it is caused by HR issues such as employee turnover, employee absenteeism,
recruiting the wrong employees, low employee productivity and human and computer errors.
There is a need for the Ford motor company to take on serious actions upon the issue of loss of
profits before it’s too late. The consequences of not curbing the issue at the moment will be so
intense later on. There is a need for the development a program that focuses more on the
employees to minimize the challenges caused by the employees. This program should address

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the issue of employee turnover, absenteeism, and low employee productivity. There is a need for
the company, FORD MOTOR, to understand that the employees are core factors of the company
as it through them that the organizations are able to run its functions. It is through them that it is
able to interact and maintain the loyalty of the customers.
The program should encourage the company to raise the wages of the employees. By
doing, employees will feel motivated to work harder and will become more productive. This also
gives the company an advantage as it will be able to demand more of its employees. Employees
who are well paid are always committed to their jobs and loyal (Hee & Ling, 2011). There is a
need for the company to reward the employees for their hard work. The company needs to
compensate them for the hard work done. This will be done by introducing bonuses. By doing
this the employees will feel motivated to work and the turnover rate of employees will reduce
and increase their productivity. Rebalancing the workload is also a step that the program should
offer. Some jobs are stressful, monotonous and extremely difficult to handle (Van der Aa,
Bloemer & Henseler, 2012). The program should explain the steps on how the company will
offload such jobs and equally share it with other employees. through this, they will be able to
manage employee absenteeism and turnover rate. The most important step will be encouraging
friendly relationships among employees. employees will feel motivated to work with each other
as there will be no grudges created among them. To enable such relationships, the company
needs to invest more in employee retreats to so as they can bond with each other (Yang, Wan &
Fu, 2012). By doing this, employees will find no reason to leave the company or miss work and
will be more productive.
To reduce human and computer errors, the company needs to carry out regular audits in
their technology. To eliminate human errors means eliminating human and that is not the

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solution. The solution to this monitoring employee to eradicate errors. The auditors will be able
to identify the source of errors and eliminate them once identified. By carrying out these steps,
the Ford motor company will be able to increase its profits for the next financial year.
Conclusions
FORD MOTOR faces a big challenge of loss of profits and there is a need for the
company to take serious actions so as to curb it. The problem is mainly caused by issues related
to HR such as employee absenteeism, increased employer turnover rate and recruiting the wrong
employees. the FORD MOTOR needs to create a program that focuses on solving the issues. The
program will focus on ways to increase employee retention rate and ways to recruit the best
workers. having an audit team to carry an auditing process so identify the source of errors and
eliminate them.

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