Thursday, January 1, 2009

The Vacation is Over

By Fred Leeb 
Urgent to Take Action Now
It is now almost certain that Michigan will continue to experience a very harsh economic climate, possibly a depression, for many months if not years.  If no actions are taken now, there will be many fewer options and resources available in six months than are available today. Without decisive action, a downward spiral could develop that is almost irreversible once cash is drained from the organization and management has lost credibility from inaction and broken promises.  Also, the best employees will leave the organization because they do not want to be associated with a failure.  There is no time to waste.
Time is needed to:
  • Analyze the issues and develop a new plan of action as well as a contingency plan.
  • Cut out all low-performing businesses and dead wood.
  • Generate net benefits from reducing expenses.  For example, severance and vacation payments could more than offset initial payroll savings; time is required to renegotiate contracts.
  • Communicate with and enlist the support of all other stakeholders (e.g., vendors, customers, banks, employees, etc.) to build the credibility of the organization, and explain the viability of the turnaround plan.  Obtain concessions and assistance.
  • Raise cash from asset sales because transactions will be slow due to the current illiquid markets (but there will not be enough time to wait for higher prices).
  • Put new managers and professionals in place, if necessary, to refocus resources and implement changes.

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