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