Appendix D: Sample Speech - Announcing Alternative Work Arrangements (Round 2 of Cost Cutting)

Overview

Good morning. Thank you for attending this morning. We met 2 weeks ago to discuss the strategy the company is following to remove $25 million in costs from our operations. In that meeting I announced the first of three rounds in this effort, finding ways to remove costs without impairing our core business operations and influencing employment. We have completed that round, and I am happy to announce that we have found ways to remove $10 million of the $25 million that the company must remove to regain profitability. Suspending bonuses and cutting raises in half alone saved us $5 million, and we did not have to cut any jobs or cut into base salaries.

We still have $15 million to go, and the purpose of today’s meeting is to describe the second round in our efforts, the introduction of alternative work arrangements. Over the last 2 weeks, I have asked a task force of senior managers, assisted by the HR department, to explore ways we can cut employment costs while still retaining people, at least on a part-time basis. The idea is to find alternatives to full-time employment that will get compensation costs down, while avoiding layoffs. They have found three creative alternative arrangements that will be feasible in our situation. They are:

1. Job/skill sharing. The first is called job or skill sharing. Under this arrangement two people will go back to part-time work and share a single job. The downside is that you earn only part of your normal salary. The upside is you retain at least part of your job and income, and you retain full benefits (including health insurance).

2. Contracting. The second way is contracting, an arrangement under which you change from being an employee to being a contractor to the company. In effect you go into your own business, and we become your customer. The downside is that you lose employment status (and the benefits). The upside is that you retain income, accomplished through the professional fees charged to us for your services. You become responsible for paying your own benefits and paying your own income taxes. The company will also extend your health benefits for 2 months and, under the COBRA regulations, you can purchase the company’s health plan for up to 18 months after that. You may want to consider other alternatives since COBRA is expensive. If you have a spouse, see if you can be covered under his or her plan or consider other options for individuals. I hope that some of you who take these routes truly become successful entrepreneurs and that the company will be the first of many new clients you serve. We know we run the risk that you find the contracting situation very desirable, and if we might want to rehire you in the future you may not wish to come back.

3. Special assignments. The third alternative we are considering is to take some people whose jobs have been cut and keep them either as full- or part-time on special assignments. Many of you have specialized skills that we can apply to specific projects. We can’t guarantee employment long term, but we can use your talents on a project-by-project basis. The upside is that you retain all or part of your employment status with us. The downside is that there is no guarantee of continued employment after the project is finished.