Employee Buyout Packages 1

Where I worked, the company president, at a state of the company meeting, casually announced to a room that had about 400 people working on a specialized tech project, that the company had decided to no longer pursue such projects**. 80% of them fled the company over the next year. When the next such meeting came around, the company president expressed dismay at being unable to pursue such projects due to the number of people who had left.

**The reason for not going after them is that the company had underbid, to the point of making no profit. Apparently the bid was 30% lower than the next competitor. Makes sense to tell the engineers to get lost instead of the upper management and their 'bid to win' concept.

Wait... both articles say the company is roughly 6,500 employees. They expected 10% (650 bodies) to take the deal. Instead, 3,300 took it, but they're calling it 25% of the workforce...

Uhm, that's over 50% using my math, what about yours?

Dan - Owner

If you read the initial article carefully I think you will see that the 6,500 number was NOT the total number of employees, but rather the number who would technically qualify for the buyout package. Of this number, they expected that only 10% would opt-in (or out, depending on your point of view). Taking the statistics as stated in the second article, if the 3,300 is 25% of the total workforce, that would put it around 13,200, and therefore the original estimate would have only been about 5% of the workforce, which, based on my own past experience working where programs like this were offered, was a very reasonable target.

John R. Baker, P.E. (ret)
EX-Product 'Evangelist'
Irvine, CA
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Dan,
Neither the news media nor HR departments are renowned for their skill at arithmetic. I believe the offer was made to 6,500 of their workers, not implying that the total company workforce is 6,500. JohnB seems to have figured out the rest.

The morning news radio shows were having a giggle about the situation. Pundits suggested that with this many taking the offer, most of them would be star employees, rather than dead-wood types. The irony is that if Shaw makes good on the offer, they will soon have to hire back about 2500 people!


STF

"give selected employees the opportunity to think critically about their future with the company"

implied that it wasn't the entire workforce.

TTFN (ta ta for now)
I can do absolutely anything. I'm an expert! faq731-376 forum1529 Entire Forum list

3DDave,
Why were you still there?

PS, this week a coworker and I wrote a cost estimate for a bid, shaving time down as much as we felt safe, and adorning it with lots of CYA words because the RFQ was so badly written and full of obvious errors. We could tell that the person who wrote the RFQ had no understanding of the work being requested.
Management just told us today that they will submit the bid for 1/2 the cost we estimated.
Has anyone EVER come up with a system to tender bids that doesn't cause all the bidders to cut their own heads off to get the contract??

STF

Ha - I wasn't in the specialty. It was a company that had a tremendous variety to the work - vehicle mods, postal equipment, airborne stuff, missile launchers. It was like working for 20 companies or more over 30 years time without having to relocate. I enjoyed the constant challenge of solving unique problems.

Management had decided to take on a specialized area, specifically underbid on one project to get some credibility and then, having proved the company and the development pipeline, screwed up the next bid by not understanding the market. The second system was done in less time, with lower costs, significantly lower production problems and didn't make the money they wanted. It was through RDGT before the first system was. So everyone was feeling pretty good. And then - boom - they blew it up. It was like seeing the Statue of Liberty sticking up out of the sand in Planet of the Apes.

Even that would have been OK for the rest except we got spun off to a bunch of MBAs who gutted the operation over a series of spin-offs and sell-offs. Some were even sued for concealing side-deals as part of the sales and I think one went to jail.

Then there were the crippling hires of like-minded management who would think things like - money is tight, so let's build a new headquarters instead of staying in a building that's probably taxed $20 a year. (One year they put a for-sale sign on the building. I guess that established the commercial value of the property and should have been close to 0.)

Depending on the bid, some agencies will ignore bids that are too low to be real, but some will take anything and hope their legal department is better than any weasel supplier's lawyers.

Some places underbid and hope to make it up with spitefully following the requirements and then arm wrestle for contract mods and more money. Like one weasel company I dealt with which supplied encoders with a split-pinion. After some other production problems, one unit came in, the assembler removed it from the box, and the pinion fell off. Others were checked. Words were exchanged. They first claimed it was abused, but then noted that our requirements didn't have an 'axial retention requirement' for the gear. They also claimed that their parts were passivated even though rust was forming on them due to condensation (it was a 'special' treatment, which turned out to be in-process machining oil.) (24,000 words describing these losers omitted for brevity.)

I didnt see anything in either article relative to feelings or fun, its just business. Buyouts before layoffs is a common way of meeting business needs in downturns, the only real surprise in either article was the company's low expectation of how many would accept it. Granted, my previous employers have always been top-notch with their generosity, but the standard joke I've heard regarding buyouts is that lobby doors should be propped open and turnstyles set to freewheel prior to their announcement. IME usually 75%+ of those eligible accept since its usually a much better payout than a layoff/severance and often precedes the job market being flooded when the bulk of the layoff occurs which makes it easier for folks to get hired elsewhere.

" the company's low expectation of how many would accept it."

This usually goes hand in hand with why the company needed to do a separation package to begin with. I've been the recipient of offers to relocate, twice. The first time was McD offering to move our group to St. Charles, from Huntington Beach; the management was bewildered by the fact that there was a 0% acceptance rate. The last time was Northrop's moving a division to Rolling Meadows; I don't know the exact numbers, but out of about 1100 employees, rumor had it that 45 accepted.

Then, there was an early retirement effort, which I was too young for, but my project manager, who was more than a little disliked, got a special lunchtime visit in the cafeteria from our VP of engineering, who said, "Joe, what can I do to personally ensure that you'll take the early retirement package?"

TTFN (ta ta for now)
I can do absolutely anything. I'm an expert! faq731-376 forum1529 Entire Forum list

IRstuff, I can understand about the problem of getting people to move from SoCal to a place like Missouri. When I was working for MDC, the joke around the office was that "First prize was a week in St. Louis. Second prize was TWO weeks in St. Louis."

John R. Baker, P.E. (ret)
EX-Product 'Evangelist'
Irvine, CA
Siemens PLM:
UG/NX Museum:

The secret of life is not finding someone to live with
It's finding someone you can't live without

I remember that contest ;-) They did better one year, when somebody in Yugoslavia, I think, paid for a plane with canned hams; I think it took 3 holidays to unload all those hams on us.

TTFN (ta ta for now)
I can do absolutely anything. I'm an expert! faq731-376 forum1529 Entire Forum list

"Some places underbid and hope to make it up with spitefully following the requirements and then arm wrestle for contract mods and more money. "

Scope creep being the mirror image of that. On one contract engineer's time was bid at cost. But any extra work engineer's time was billed at 4 times that. Then you talk the customer into upgrades...



Cheers

Greg Locock


New here? Try reading these, they might help FAQ731-376

Yes, and they sold those canned hams through the 'company store' in Long Beach and would really advertise that fact around the holidays, like Christmas and Easter. They also sold a couple of MD-80's to Jet Blue for tickets. For about six months, every time anyone in our office had to fly somewhere that Jet Blue serviced, we were "encouraged" to take advantage of the 'deal'. The problem was that the full retail 'value' of the ticket was still charged against our cost center, meaning that if we just bought a regular ticket, even if it were on Jet Blue, it would have probably cost our department LESS money. Of course, Jet Blue was trying to use the least number of tickets possible to pay-off the cost of the plane.

John R. Baker, P.E. (ret)
EX-Product 'Evangelist'
Irvine, CA
Siemens PLM:
UG/NX Museum:

The secret of life is not finding someone to live with
It's finding someone you can't live without

The first buyouts are pretty easy. Offer some employees some money or other treats and ones who were on the fence about retiring or leaving will take it. Unfortunately, the ones who leave aren't always the ones you want to leave (old burnouts), but sometimes employees who got something left. But that's the least of your problems. The rest of your workforce sees the writing on the wall and starts getting restless. People jump off, what they see, is a sinking ship at an alarming rate.
It's a tough balance, reducing workforce, maintaining morale and keeping productive. But I lived through a department that went from 1200 engineers to 200 engineers in a couple of years. I'll tell you, the ones who were left were pretty tough.

Back in the mid-80's, I was managing a group of pre-sales support personnel for our Mid-west region when I worked for McAuto (the computer services division of McDonnell Douglas). They implemented a 'voluntary severance' program across the company and for my group, which was comprised of about 20 people, I was given a quote of at least one person who had to 'volunteer' or else I had to pick someone if they didn't. Now we were NOT allowed to say much about this to individuals, only HR could do that, so I could not express anything that could be seen as targeting an individual or encouraging someone to take the deal being offered. Note that the severance package for anyone who was involuntarily let go was not nearly as attractive as was the 'deal' being offered to anyone going voluntarily. All I could disclose is that I had a quota and what that quota was, and confirm the details of the two possible outcomes. The employees were given two weeks to make their decision, and I, as their manager, was given orders to have a name ready at the end of the two weeks if no one took the deal. In the end I lucked-out. The guy whose name was written on the 'backside of my ink blotter' turned out to the guy who eventually volunteered, but he waited until the last possible moment, I assume hoping that someone else would jump and he would be able to keep his job.

About six months later I was offered a lateral transfer to a staff position for the VP of software development and they didn't have to wait for me to make my decision, I took the offer in a New York minute, even though it did mean that I had to move my family from one side of the country to the other for the second time in less than two years. However, it was the best move I ever made, for several reasons, not least being that I really hated being a manager, but at the time the position was originally offered to me, it was the only way that I could move up in my particular part of the organization. But during that period things changed back at headquarters and when I saw that there was another path opening up for me, they didn't have to twist my arm when it was made clear that this new job was mine for the asking.

John R. Baker, P.E. (ret)
EX-Product 'Evangelist'
Irvine, CA
Siemens PLM:
UG/NX Museum:

The secret of life is not finding someone to live with
It's finding someone you can't live without

JohnRBaker said:

the guy who eventually volunteered

Click to expand...

Possibly somebody took a moment to "bump into him in the hall" and give him a hint. It didn't have to be you.

STF

He worked in one of our remote sales offices so I had no face-to-face contact with him during the two week period. However, he called me late in the afternoon the day before the deadline and all but begged me to tell him whether he was going to be the person that I was going to pick if no one volunteered. I had to tell him that I could NOT discuss that with him and that the decision was totally up to him. The next day, he waited until one hour before the deadline to call me again and ask if anyone else had taken the deal. When I informed him that no one had, he said "OK, I'll take it." and that was that. All I have to say is that along with the other reasons why he would have been my choice, his behavior during those last couple of days confirmed for me that if I would have had to 'fire' him, I would have been making the right decision. For the record, I had nothing to do with him having been hired in the first place as he was already working in that remote office when I took over as the new manager of the pre-sales support team for our Mid-West sales organization some 16 months earlier.

John R. Baker, P.E. (ret)
EX-Product 'Evangelist'
Irvine, CA
Siemens PLM:
UG/NX Museum:

The secret of life is not finding someone to live with
It's finding someone you can't live without

I've volunteered for every headcount reduction package that's been offered here. We get 4 weeks pay for each year of service, plus 4 weeks. We also get accumulated leave paid out (that's a surprisingly large part of it). Rumor has it that if they really want you to go they also bump your pension a bit.



Cheers

Greg Locock


New here? Try reading these, they might help FAQ731-376

...that's been offered here

Click to expand...

Uh, how can you refer to more than one package and just one "here" in the same sentence?
Did the same company lay you off, only to hire you back again later?

STF