|By: André Larabie, CBC, MBA, PhD|
In this section of the Business Turnaround Plan, you will provide an overview of all those positions you will be keeping and why they will be retained in the post-turnaround period. You will also discuss those positions that will be terminated and why.
It has been my experience that the most significant cost savings you will realize during a business turnaround procedure will be in the personnel area. This is simply because the cost of personnel is very high and usually, there are a lot of nonproductive people associated with a company that is in distress.
Cutting staff and employee positions can bring significant savings in a very short period of time. In comparison, transforming and streamlining business processes, and realizing the associated expense reductions, is a much more detailed and drawn out process.
For example, if you know that a particular department is losing a tremendous amount of money, and this department could be transformed into one that is slightly profitable, but this transformation will take a year to complete, then do you really want to expend the resources to do this? I think for any business manager that is facing a bankruptcy or a complete business failure, the choice is obvious. It would be nice to keep these people, but it is not cost-justifiable or sustainable, especially given the dangerous situation the business is in.
As a result of this fundamental principle, the Personnel section of the business turnaround plan will likely contain a lot of information about terminating positions. This is an inherent part of the process.
Include an overview of the cost savings that will result. Again, list the time lines for the turnaround changes with enough detail to create a formal project plan.