My Worst Nightmare – Sell or Downsize? Fifteen Considerations (Part 2)

Situation: The Company is losing money and has been approached about a merger. The CEO’s ideal outcome would be to get cash on the table, integrate with the merger partner and continue business. The other alternative – downsizing – may hurt company morale. What are the best options available?

Advice from the CEOs:

  • The downsizing experience is wrenching, but results were far more positive than expected.
    • A 10% cut resulted in a 30% increase in productivity.
    • Employees once thought to be critical were not missed post-layoff.
    • The employees generally understood more about the situation than the CEO knew, and those remaining responded positively to a restructuring that allowed them to keep their jobs.
    • Some companies used a layoff as an opportunity to cross-train employees and increase company flexibility.
    • If concerned about loss of key talent, consider rehiring a laid-off employee on a consulting basis for a limited period.
  • Smoothing the layoff process:
    • Communicate with the employees. Let them know the truth, and share enough of the situation so that they understand.
    • Challenge employees to come up with ways to save money or make processes more efficient and cost-effective. This can have a remarkable impact.
    • Consider a cross the board salary reduction as a temporary alternative to layoffs.
    • Position as a layoff to restructure expenses – keeps you on the right side of employment law.
    • Obtain assistance from a personnel consultant who can help to handle the process effectively.
  • Summary: If you can save expenses, return to profitability and stay independent you will be happier than you may be post-merger.

Key Words: Merger, Negotiation, Ownership, Downsizing, Mitigation, Layoffs, Profitability 

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