CLOSING OF FACTORY
I was looking for a new challenge. And they were looking for someone “that would not give up” (Interviewers words, not mine).
The challenge I was looking for came in a form of a plant closing. I had done one previously, so part of the job was familiar to me. The real challenge came as to where this unit was. In the middle of a drug dealer neighborhood.
Happens, not that unusual. In order to save costs, many factories are located in the middle of poor districts, where the rental costs are smaller and blue collars are easy to find. Most of the people that live in those areas are hard working, there is always a small percentage that enjoys the “easy life”. Or the “glamorous side of living”. Or “feeling empowered because is holding a big gun”. The list of excuses goes on and on, but the outcome is the same: they work with drugs because they choose to.
Anyway, management was concerned that by closing the factory, the situation would escalate quickly, because this would represent 200 “families” without a job, most of them single income dependent.
For the first time in my professional life, money was not an issue. As long as we could run things smoothly, I would be able to use every penny of a very fat budget.
The thing that most people tend to forget, is that money is a short term solution. Once you run out of it, or the expenses are higher, the frustration will come back again, sometimes even stronger. And what should be a solution, becomes a problem.
It was clear to me that we needed to find a long term solution for that matter. And I had 6 months to make that happen.
On top of this, output had to remain the same throughout the process. There was no desire to fire anyone or lessen productivity at all until it came time to close the factory.
In short, I had 3 risks I needed to address:
Long term solution…what do those people needed the most? A pay check. Something that would make sure they could pay the bills by end of the day.
First we did an internal analysis of the manpower. What knowledge/experience/background our people had? What were their strengths looking their current role.
Second phase was to look what the labor market was looking for. What were companies nearby hiring? Could we offer our manpower to them? I listed and called all the companies that were hiring to understand what they were searching. How the perfect candidate should look like. What their main concerns were. I spoke with colleagues as well as production managers.
First I was treated with suspicion. It is not every day that a person calls to ask HR what do they need and does not ask for something in return.
I came to the point of asking if they would wait a couple of months to get a ready-to-go person for that position. I asked about compensation, benefits…all much needed information for my feedback to our employees here. I didn´t knew at the beginning if it would be an easy task or how hard it could get. All I knew was that we needed to find those people some perspective in order to avoid major issues when the closing was due.
I also knew that some of our employees would have other plans, like opening their own business or just enjoy their retirement (5% of our team was due to retirement).
It became clear that we needed to offer them 3 possibilities for transitioning:
And we had some general issues that needed to be handled, such as health plan, financial planning (what to do with the severance payment) and emotional support during times of changes (how to handle the pressure of what would come)
In the meantime, our head office was trying to convince our management team to make the announcement per video.
I still remember that 3 am meeting in the office. No coffee (and boy, I am no human being without coffein). 6 people sitting around a speaker and listening to the CEOs idea of doing it by using a big screen and a projector. The local CEO looked than at me and asked: “What do you think we should do?”
“I think we should do it live. People need to feel they are respected. They need to feel that this was no easy decision and that you are suffering as much as they are. They need to feel that you are all in the same boat.”
And the voice came through the speaker
“Are you willing to be responsible in case something goes wrong with it?”
“Yes, I am. Because I know nothing will.”
“Are you sure?”
“Yes sir, if the local management agrees, I have no problem in being responsible for that.”
So, we had the how and the when…the missing point was the “what”
Back into the office, I had already enough information on our people´s capabilities and what companies were looking for. It became time for a cross check and the next step of the plan covering the gaps.
I requested a meeting with the local technical school to understand how they could help us in that venture. I knew they had the training program, but I needed to keep people onboard and producing during the whole transition period. How would I make that possible and offer them training if not using our own facilities for that matter?
Part of the office area would be emptied as soon as we made the announcement, so I could use the free space to create classrooms for the trainings. The practical part could be done using our production area after work (Sundays or evening)
It was also clear to me that no matter how good you are, if you are not able to put in on a piece of paper, nobody would ask for an interview. So Resumee writing also needed to be added to the action plan.
Day of announcement was arriving and I finally got clearance to communicate my team of what would happen. We were supposed to make the announcement in the afternoon, so that people could leave and be back for the individual session with HR next day.
Management made the announcement. And while the left, I stood there with my team to give a brief description of what would happen. 2 things were crucial for the success of the meeting:
We agreed that the announcement was enough information for the group and that a brief summary of what would happen over the next few days should be delivered also on paper, so that people could kept that information, in case they were too shocked with the news.
People need time to process things. Especially bad news. It is worthless to give them any information if they have not let the first information sink in. Sometimes it is more productive to approach an issue on steps. So, this is what we did.
On the next day, we had group meetings with the employees in which we explained how the “outplacement” project would work, as well as the other initiatives. Lots of questions came up. No anger, since they felt they have been treated with care and respect.
Some people might disagree, but in my experience, respect has always been the key success factor. At any given time.
After the group meetings we had individual meetings with each employee, so that we could go over it´s severance package, health care issues (we had some long term treatment patients and chronic diseases that would require special attention), what they were expecting as next steps and…not the traditional approach, but yes, we listened and supported them with all our attention. I still feel proud of what my girls did those days…because it was the purest essence of Human Resources: taking care of people.
After those initial days, life came back to its normality. People were working as usual and having classes after work. We had 5 classrooms with 20 people each capacity. It was not perfect, but the maintenance team did a great job. Then the phone rang. It was the community “secretary”. He wanted to have a meeting with me.
He had heard of what we were doing for the people and came to ask me if I could open the training for the rest of the community. Management saw no problem with that as long as we did not spent extra money with it. Classes were paid by teacher and not participant, so we were also able to offer that to those people who lived close by.
Two weeks later, the HR Coordinator asked to have a meeting with the Industrial Director and myself.
“The workers are asking if you would agree if they organize a “farewell party”. They want a last happy gathering before going different ways.”
Of course, we brought that to the management and got the approval for it. If they wanted a happy occasion, we would make that happen.
Last day came. Barbecue was scheduled to start at noon and buses would leave our premises at 11.
The industrial director came into my office with tears in his eyes.
“They are cleaning their working space.”
I went downstairs and saw it: people were sweeping the floor and taking the dust of shelfs.
The building would be destroyed and people were still working and doing what they were supposed to do till the very last minute. Talk about commitment, talk about being there.
We budgeted 2 Mio Euros, 1 only for legal expenses. Not one single labor claim was filed. 80 % of the workforce was rehired, 100% of those who applied for outplacement. EUR 50,000 were spent with training. Orders were delivered within expected timeframe and we were able to build a 3 months inventory that would cover for the start-up phase in another state.
Total savings of 950,000 Euros.