Remember: Employees Are A Big Portion Of Your Wealth!ByRaymond D. Matkowsky
The other day, I reviewed a video of a plant wide meeting announcing the closing of the plant and moving its production to México. I watched the clip in horror because the person speaking did not seem to give any consideration for the effect of his words. This plant is closing down and 1014 employees are losing their jobs!
It’s nothing personal, just a business decision
What bothered me was how detached management was. The jest of the meeting was “it’s nothing personal, just a business decision.” It may have been a business decision to management and one that had to be made. I am not disputing that! The owners-shareholders are in it to make money. But, it certainly is personal to the employees. After all, they have to put food on the table, they may have mortgages to pay, the employees may have kids in college and the accompanying tuition. Human capital is the most important capital your company has. Don’t throw it away by throwing away the goodwill of the employees. You have to keep today’s demanding workers happy, engaged and productive.
The manner in which this closing was announced was the problem. It was all about the company and not the employees.
Ramifications
The consequences of this meeting goes far beyond this one plant. First of all, the company just announced its biggest profit in history. This closing will not sit well with many employees. They will wonder who is next. Their productivity drops. They disengage and ask themselves, “Why should I break my back for someone who may discard me in a blink of an eye.” There comes a time in every business that one has to ask for the help from the employees. This company will get it grudgingly, if at all.
As an example, several years ago, a large American airline was facing bankruptcy. Its equipment needed to be replaced. Because the company treated its employees well in the past, each employee contributed money out of their own pocket to buy that equipment. Remember, your employees represent a good portion of your wealth! The last thing you want to do is antagonize them.
When I first started out in business forty five years ago, I worked for a company who happened to have a very low regard for hourly employees. They spent millions of dollars a year fighting employee lawsuits. They also made it easy for a union to walk in. After several years, new management came in vowing to repair the damage done with the employees. The lawsuits stopped almost immediately and the unions began to cooperate with management.
Due Diligence
Moving plant production is a very serious consideration that may have many reasons behind the decision. There have been many people that have made the decision to move only to regret it later and move back. However, the cost of moving back may exceed the benefit of doing so. This needs to be weighed also, BEFORE a move is made.
Major considerations are productivity, the costs of shipping and manageability. Productivity varies from country to country. Even considering a lower labor rate, is making three units in the same time that it formerly took to make four profitable? How long will it take to bring the new employees up to speed? One year, two years, one hundred years? Where is your product going? Shipping adds to its cost. Does this make your product less competitive? Can you manage the plant across a distance and time zones?
There are many reasons and hidden costs to consider. This is not the type of decision to be made lightly. Alternatives and there are always alternatives to review for both the benefit of management and the employees. The reasoning behind each decision should be made known to the employees. This will also help management justify their decisions in their own eyes.
If the decision is to move, what are you going to do for the employees? Remember your answer must resonate with all employees, not just those losing their jobs.
Do you have any other suggestions, please share them with your fellow readers. Email me at rdm@datastats.com.
|
