Wednesday, December 13, 2006

"Who Wants A Buyout? How About A Forceout?" update 12/12/06

If you just looked at the Headlines one would think that everyone is looking for a buyout to escape from their company and get a chance to start over.

Corporate Buyouts are not new and have been popular for at least 20 years. I can still remember the first one my company gave out in 1986. It was presented that if a certain number of managers did not accept the buyout there would be force layoffs and the package would be substantially smaller.

This went on from 1986 each year until I left (no buyout) and went to another company in 1997. However, the buyouts at Ameritech continued on and are still going on after being acquired by SBC.

The company I went to was eventually bought out by AT&T, which also had yearly buyouts that also continue to this day after being, acquired SBC.

I eventually took an early retirement (buyout), which has allowed me to go into education full time, which is always what I wanted to do since going back to college in 1976 (I am Lucky, or maybe I was prepared).

There is a small percentage of people in each buyout that welcome the news because they also are at a time in their careers where they also qualify for benefits which makes there next job search much easier. I was one of those fortunate people. It always seemed strange to me that I requested an early buyout 5 times before it was granted.

Now for the rest of the folks it is a Forceout (aka Downsized). Forceouts leave little options because the company gives you ultimatums that basically say if you don’t take our generous offer of crumbs you will be forced out with little or no crumbs (crumbs = no benefits).

Today the Buyout/Forceout is getting major headlines because the auto companies are announcing plans weekly. For example, Ford Motor Company announced that mid-lower level managers have until January 5, 2007 to decide if they want to buyout. Ford also announced if they don’t hit some ”bean” counters (finance people) number they will be forced to involuntary cut workers. The key is Leaders never let you know what the numbers “really” are and how many have taken the buyout so you are forced to play Russian Roulette with your career. In addition, you will never be told about how many Senior Leaders are being forced out nor the “true” amount of their golden parachutes.

How about the Big Boy GM? They have been forcing out regularly over the past year and still announced more next week. A major portion of their buyouts is to Union Workers. Mostly workers deny the offers because of Health Benefits. Unfortunately they don’t realize the price they will have to start paying (no longer free) will be just as bad as being let go and starting over.

The only advice I can give here is to take a good amount of your buyout and put it in some guaranteed savings and pay your own Medical. I know this cuts into the cash but in reality it will be about the same that would be coming out of your check if you did not leave.

Now let’s look at what else goes on behind the scenes with these so-called buyouts. First, the number of Union Workers especially in the UAW is dropping at an alarming rate. GM and Ford and soon Chrysler will be back filling with younger worker at much lower wages. Soon there will be so many low paid workers they will be just glad to have a job at negotiation time the retired workers will be paying more and more for their benefits.

The younger less paid workers are needed to fund the older workers (just like Social Security) pensions. This is not a new strategy it is just the timing is right because major corporations in trouble can also take out what they conceived as roadblocks under the disguise of going out of business.

Needless to say Financial leaders never use Systems Thinking when addressing the numbers to Forceout, after all many of the mid to lower level finance folks will also be affected by the cuts. The problem is the morale of the workers both management and non-management stays in at least in a two week funk each time their department is hit by these type of cuts. Believe me no work gets done. These cuts have even surpassed the other major moral letdown each year and that is rating and raking time and who gets the bonuses and who does not.

I have also written before on the lack of training and knowledge that is being lost and passed to new workers. This takes years to recover from in a manufacturing environment.

People must realize that the problems we face result from the “bad” decisions made by managers (they own the system) over time. Selfish and Me attitudes that resulted in poor decisions 10 years ago are just filtering up through the organization and then people blame the government or the competition instead of the piss poor decisions they made years earlier when dealing with contracts, suppliers, customers and employees.

Don’t forget that less money will send children to college, less taxes for communities, less bonds being passed in local communities, less homes being bought, etc… What you will find is more Banks, Credit Unions and other Loan Type companies being built in your area, this is so they can lend you money and later get fat off the interest or your total belongings.

And the beat goes on …

and so quickly ...


More Buyout/Forceout Offers at Ford
10,000 additional salaried jobs need to be cut

Another week at Ford Motor Co., another massive buyout/forceout offer.

"I wore all black today," said a single, thirtysomething engineer who was offered a buyout early Monday.

Ford spokeswoman Marcey Evans (Wonder if she is in Finanace) said it is far too soon to know whether the company is on pace to reach its reduction target. Salaried workers who accepted buyouts during the first wave aren't expected to leave the company until Dec. 31, she noted.

"There are a number of heads down and people heading out of the building quietly."

One worker with nearly 20 years of experience said he wasn't sure if he would take a buyout. If he takes the deal, he said he would get a salary for 12 months. But if Ford must fire workers in his department to make its goal, he would only get nine months' salary. Then, he would face the challenge of finding a job, possibly uprooting his family and trying to sell his house. He said he is balancing that challenge against Ford's uncertain future.

"It's dire and getting worse," he said.

"We need a true discussion on how we keep a middle class in this country," he said.

"I always thought a college education meant better opportunities," said the Ford employee at a Starbucks

Several of the employees said they wished they were offered the same generous deal secured by UAW leaders for union members.

qualityg says ...
I heard all this before, as far back as 20 years. I wrote then that if other industries did not start looking at what was happening with competition and the Demise of American Management (Dr. Deming wrote about it 25 years before me) they too would be facing what was going on in the Telecommunications Industry. Too bad people are selfish and will not understand "Systems Thinking."

and the beat goes on ...

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