Question 49

Loss of organizational trust

Offshoring the customer relations department and requiring current staff to train the new offshored staff can lead to a significant risk of loss of organizational trust. This occurs as existing employees may feel undervalued or insecure about their positions, which can affect morale and productivity.

A) Higher-than-expected cost of capital

This option is incorrect as it pertains to financial risks related to funding and investment rather than the interpersonal and trust dynamics within the organization. The scenario focuses more on employee relations and trust rather than financial costs.

B) Loss of organizational trust

This option is correct as it addresses the potential negative impact on employee morale and trust within the organization. Employees may feel threatened by the offshoring decision, leading to decreased trust in management and the company’s direction.

C) Loss of innovation

While offshoring could potentially impede innovation if employees feel demotivated, this is not the primary risk highlighted in the scenario. The immediate concern is more about trust and morale rather than a direct loss of innovative capabilities.

D) Higher-than-expected transaction costs

This option is incorrect as it relates to the costs associated with transactions and operations rather than the trust dynamics between employees and management. The scenario does not indicate a direct concern with transaction costs.

Conclusion

The focus on offshoring and the requirement for current staff to train new offshored employees directly points to the risk of losing organizational trust. This crucial aspect can lead to broader implications for employee engagement and performance, making it essential for the company to address and mitigate this risk effectively. All other options fail to capture the interpersonal dynamics at play in this context.