Hostess Case Study on Hr

Hostess Case Study on Hr

Hostess Case Study

The story of what happened to Hostess is quite long, winding and multi-faceted. Hostess ultimately fell into bankruptcy and finally liquidation as a result of several key issues that the owners and management failed to address on throughout the history of this company. Merger after merger resulted in a web of collective bargaining agreements with over 12 unions, 40 pension plans including participation in multi-employer pension plans (MEPPs) and over $2 billion in unfunded pension obligations. The key players in this debacle were unions, primarily the Teamsters, owners in the form of Ripplewood Holdings, and the main creditors of Silver Point and Monarch Alternative hedge funds. Most recently the impasse reached by the unions, creditors and owners under the weight of these obligations and the inability to reach concessions and compromise resulted in the demise of the beloved Twinkie producer.

Chronologically, the first issue that should have been addressed by owners is the layering of unions and burden caused by frequent mergers and acquisitions. There is one aspect of this scenario that causes problems simply from the added complexity of the multiple unions, bargaining agreements and pensions. Human resources should have during through each M&A activity to attempt to achieve the following: work with employees to consolidate representation under fewer unions, negotiate new agreements that were substantially similar to other agreements in place for simplicity and use the opportunity to update agreements based in the context of the new combined company’s needs and economic realities and transition employees to new pension plans that maintain a more straightforward and manageable structure. Also, HR should have participated in the employee/labor relations trend to move away from pensions and toward 401(k) plans. This should have been addressed as a matter of M&A or at least in a significant way during the first bankruptcy. A...

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