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After the Layoffs What

next?
Mismanaged layoffs? Crisis Management?
.

Case in Brief

A major apparel distributor


Midwests growing population of affluent female baby boomers.
New CEO Harry Denton making necessary changes to rejuvinate a boring
outdated chain.
Turn around fun, vibrant shopping experience.
Successful in transforming. Revenue soars over 400 million. Stock price 20%+
Achieved thru layoffs. Righsizing.
Some decisions acceptable by staff like closing of restaurants / distribution
centre.
Layoffs and the way it was done was not appreciated.
Crisis of attrition arises. Sales force unsure / scared, who next?
Downsides : un-happy taskforce, low company morale, employee turnover.

Questions we need to ask

Problem / issue highlighted in this case

Facts of the case that support this Problem

Analysis

Conclusion

Recommendation

Problem / Issue

The main problem/issue within this case revolves around the new CEO of Delarks,

Focused on strictly downsizing the company by laying off a significant number of employees (20%
for a total of 3,000 people)

Closure of businesses that did not fair well in terms of business.

Seniority was not taken into considerations when laying off the employees

Very quick layoffs because he thought that this was the least intrusive and the most gentlest way.

Denton was under a lot of heat from the surviving employees after the downsizing and even from
the new employees brought into the company.

His inefficient methods of communication with terminated employees.

Monies sanctioned for refurbishment & renovation. Layoffs to offset this cost?

Facts of the case that highlights the


problem
New CEO brought in to rejuvenate financially, but worsen the state of affairs.

Laying off 3,000 personnel with no warning. St Paulss townhall Mae Collier
survivors were not upset about all the layoffs that occurred but mostly about the ones where good employees
who made a difference

Restaurants were rarely busy; closing them eliminated about 400 jobs

Focuses on renovations and allocating costs towards it.

Erratic behaviour??
Slvia ODonnell - closure of the Madison. A letter informing closing down and Laying off the staff.
HR head - Thomas Wazinky in the know but fear of termination.
Layoffs because employees are older?

Can the new CEO be trusted with change with in?

HoDs leaving for rival company as sudden fear and disappearance of security.

Many employees follow their HoDs to new workplaces.

Analysis

Denton decisive, fits, manager's view of change.

Closing unyielding sections; rightsizing to lessen the financial burden.

Expenses of termination. Expenses of renovation.

Surviving employees upset over lack of communication before termination.

Denton lacks communication skills?

Total chaos and dissatisfaction throughout Delarks.

Presenteeism?

Conclusion

Short term :
Fulfills objective as the CEO- financial stability, despite dissatisfaction of
Dentons downsizing procedures,
Seemed that Delarks would continue to bring in a positive net cash flow
for the future as well.
Working at the company no longer feels gratifying to surviving
employees.
Survivors would quit soon.

Long-term :
May cause the closure - perception Management has erratic behavior.
Can not handle organizational-wide change

Recommendation

Handle townhall meetings better learn issues that is plaguing the employees

Clear understanding of CEOs vision for the organisation by the employees

Building back the trust

Denton must hire. Bring in staff that is aligned to his vision

Put the interest of employees before the interest of the wall street

Turn around using employee centric mode. May take longer but will be steadier.

Layoffs could have been the last option.