Rock Ledge Resources > Our Services - Business and Strategic > Representative Project - Business Reduction Due to Economy

Business Reduction Due to Economy

Business Challenge

With the economy starting a downturn and sales totals declining, and profitability of the business being reduced, a company needed to reduce costs at all levels and bring the business back to solid profitability. In order for this to happen, the business had to reduce the number of employees, assign these duties to other employees and realign the reporting structure of the business. The goal was to make these reductions deep enough to cover any short fall that might occur during the current fiscal year.

Solution

A Rock Ledge Resources Principal was assigned this duty to make these reductions and yet to maintain the integrity of the business. It was determined that the business needed to cut costs by 20% for the coming year to be profitable. Each department was reviewed with the help of the employees and management for the department, and costs for the department were analyzed. Recommendations as to what was to be reduced, eliminated, or moved to another department were submitted for approval. Each department was allowed to only discuss reductions for there department. Retirements, resignations for new positions, and not rehiring part-time were considered to help reduce the number of employees. The severance program for the business was reviewed and clarified for those that would qualify. Benefit programs were reviewed and changes made such as elimination of the 401k match for the year.

Results

The completion of the reductions resulted in projected savings of $2.5 million per year. Along with these reductions, a plan was also developed to determine when employees or programs would be reinstated based on profitability of a department and needs of the business.

Relationships: Jerry Isensee | Business and Strategic