Rock Ledge Resources > Russ Weybright > Representative Project - Business Reduction Due to Economic Downturn

Business Reduction Due to Economic Downturn

Business Challenge

With the economy taking a downward turn and sales and profitability declining, a company determined it must cut costs at all levels to remain profitable. To accomplish this, employee head count had to be reduced, duties reassigned and reporting structures realigned. The company wanted to go through this process only once, yet cut deep enough to cover any shortfalls during the remaining fiscal year.

Solution

A Rock Ledge Resources principal was assigned to manage the reduction process while maintaining the integrity of the business. It was determined that a 20% cut in expenses for the year would keep the company profitable. The principal established a process where each department's budgets were reviewed with the input of employees and managers. Each department was engaged in a discussion of cost cutting for their department only. Recommendations as to what was to be reduced, eliminated or moved to another department were submitted for approval. Retirements, resignations and not rehiring part-time help were also considered. The company's severance program was reviewed and clarified so that those involved in reductions had solid information. Benefit programs were also examined, with changes made, such as suspension of the 401K match for the year.

Results

The reductions were completed, bringing the company a projected saving of $2.5 million per year. Along with these reductions, criteria were established to determine when employees or programs could be reinstated.

Relationships: Russ Weybright | Operational Excellence | Manufacturing