Our Game Plan

Remember that I said we must get costs out, yet we realize the importance of holding onto our valued employees. That means cutting costs and saving jobs at the same time. That sounds like an oxymoron, doesn’t it? Yes, but I am confident that we have a plan—a solution to the problem—that allows us to remove costs and minimize the impact on jobs here.

Here’s our plan. We will attack the $25 million in three rounds.

Round 1: Cost Cutting

We will aggressively take all unnecessary, noncritical costs out of the company. We will look for any costs that can be cut without compromising our core business activities and without having to lay off employees.

I’ve asked a task force of top-level managers to identify immediate costs we can cut and they have reported back to me. Today, I am announcing that we are suspending bonuses for all employees (including myself and the senior staff) this year. In addition, we are cutting the salary increase budget for next year by one-half. These two actions alone will reduce our losses by $5 million. That means we have $20 million to go.

Next I am directing all department heads to find ways of cutting nonessential costs within their units. I am asking them to involve you in this process. The goal is to get as much cost out as possible without compromising our core businesses and without cutting jobs.

If we can get all costs out in this round, we’ll be done. To be very honest with you, however, I don’t believe we will be that lucky. That’s why I want to prepare you this morning for two more rounds that are likely. Unfortunately, they are rounds that will affect people.

Round 2: Alternative Work Arrangements

Before we lay anybody off, I have instructed all department heads to get creative about how we employ people. Right now, almost everyone who works for (Company) occupies a full-time job with full benefits, and that’s the way we’d like it to stay. But what if we can’t do this? Are there any alternatives that might not involve full employment, yet avoid a layoff? I’ve asked the human resources department to advise a task force of senior managers on this issue. Their mission is to find other ways such as job sharing, temporary assignments, and the like that might be available to us. I will talk more about these alternatives in our next meeting, once the task force gets back to me. That meeting is scheduled in 2 weeks.

Round 3: Layoffs

I wish I could stand in front of you this morning and guarantee that there will be no layoffs. I would be lying, however, and I have always committed myself to being bone honest with you. There remains the possibility that we will not be able to get all of the $25 million in costs out in Rounds 1 and 2. If this is the case, we will have to resort to limited layoffs. I do commit, again, to you that we will take every step possible to limit or even do away with the need for layoffs. But to be frank, they remain a high probability at this point.