Assignment: acquisition integration, workforce restructuring and transformation
Mechanical-engineering company with 4,500 employees
To help ensure the seamless integration of a strategic acquisition, we need to eliminate redundancies and adapt the organizational structures for optimal alignment to current market requirements.
Facing overcapacities and rising costs in the mechanical-engineering sector, our client acquired the global business unit of a competitor, a move that made it essential to integrate a new business unit into an existing unit. Strategic decisions on target processes and organizational structures, as well as the continuation of certain technologies, needed to be made. Moreover, in addition to abundant employee duplication and an unsustainable total number of employees, all of the job descriptions in one key business division were in need of revision and reassignment.
Our client commissioned us to assist the management team in its efforts to complete the extensive preparations and to execute the project. Our aim was to complete the complex integration and transformation project on time and on budget. Whenever negotiations for a mutually acceptable and socially equitable severance plan ran into complexity-related roadblocks, we swiftly adapted the master plan to account for individual staffing changes.
We began by ascertaining the current employee situation on the basis of the designated jobs. Working together with the management team, we used this as a basis for working out the organizational adjustments in each of the relevant business divisions. The comparison with the actual employee situation then yielded a detailed account of the necessary adjustments. This enabled our client to conduct informed negotiations with the members of the employee council on the necessary adjustments.
Given the need to complete the HR adjustment in a socially responsible manner, we ran model calculations for the relevant scenarios, making sure to account for the labor market dynamics in each of the relevant locations. This detailed assessment reinforced our client’s ability to conduct effective negotiations.
Accurate, up-to-date and comprehensive HR data are necessary when it comes to making socially equitable layoff decisions, including all compensation measures. We therefore began by recording of all of the relevant HR data (e.g. relating to contractual terms, qualifications and social backgrounds) for the approximately 4,500 employees. We compared these data to those in the HR system. Commensurability issues were clarified with the respective managers. We then repeated our query of socially-relevant data before the conclusion of negotiations to ensure a proper rationale for all layoff decisions.
A basis had thereby been established for making employment decisions in accordance with the statutory provisions for equitable workforce restructuring. With the help of our software solution, equitable decisions were then made and successively finalized in the ensuing weeks as other staffing changes became known. The ability to respond rapidly in the framework of negotiations during the finalization phase was especially important to our client. Indeed, our client maintained an overview of the impact the changes were having on the workforce throughout the entire phase and was therefore able to negotiate effectively in matters relating to the volume of the restructuring operation.
Thanks to our integrated software for complex workforce transitions, we were able to complete the entire restructuring operation, involving around 1,800 employees in 7 legal entities at 17 locations, in only eight weeks. This work included: recording and evaluating the relevant HR data (e.g. relating to contractual terms, qualifications and social backgrounds); making the final layoff decisions in accordance with the statutory provisions and in consultation with each of the relevant managers; drafting the layoff notifications; concluding all of the relevant contracts; preparing for all employee council hearings regarding transfers, reassignments and terminations; issuing all notices of transfer, reassignment and termination; and preparing the new job descriptions.
The HRM office was tasked to submit the measures to the relevant employee council offices, to hold the employee meetings with the written material supplied by us, and to bring each of the planned measures to completion. Our client found it especially helpful to also have our support in the area of financial controlling. In keeping with the client’s needs, we were always able to prepare the necessary data on short notice. This enabled our client’s CFO to negotiate effectively at all junctures.
We were able to implement all of the necessary restructuring measures on time and on budget. At the end of the operation, our client had the best possible team on board. We were able to extensively reconcile all decisions with the wishes of the employees while at the same time providing socially equitable workforce restructuring to our client in a manner reflective of the latest developments on the relevant labor markets.
Assignment: restructuring – private equity
Automotive with 3,800 employees
Imminent liquidity crisis. Incorrect application of the selection process for terminating employment contracts. Several negative employment protection judgements: we must do something quickly and purposefully to avoid the situation getting worse.
Due to the crisis 300 employees must be dismissed. The social criteria which formed the basis of the selection process was the result of a compromise reached between the board and the works council and was inherently incorrect resulting in a series of court cases: The climate between management and works council was dominated by hardened fronts and agitation, on top of that the managing director of HR became unavailable at short notice.
We were called into this situation by the investor to support the new CRO in the restructuring of the company group. In addition an experienced consultant was to take over the function of the HR director.
We first analysed the situation and worked out the best possible solutions for the previously misguided actions and decisions. New measures were necessary which we progressively built up by systematically involving all relevant managers. In order to make an accurate selection of the social criteria applicable for the termination of employment contracts, we had to examine the comparability of the employees. The personnel files proved to have large gaps or indeed had not been completed at all. We investigated, talked to managers and employees, explored the prevailing contractual conditions of employment and produced a comprehensive overview for the management board.
Finally we developed a model for the social criteria, the aim of which being the retention of as many high performers as possible. Due to our systematic approach we could also step by step convince the works council. The very tense situation relaxed because of the clear and precise presentation of the facts and information which provided transparency.
Clarity for the management, a new relationship of trust to both the works council and union and good prospects for high performers. Negotiations were completed quickly and concrete preparations made in the event of litigation.
Assignment: merger & acquisitions
BPO industry with 5,000 employees
We find ourselves in the middle of a bidding process. For a successful conclusion we need a convincing personnel concept.
In the middle of the tender process: The take-over of the service section of a German subsidiary. Due to new technology the number of staff should be drastically reduced. The bidder was looking for specialists with experience in HR due diligence and with knowledge of near shore outsourcing solutions.
The company was constantly subject to incredible public scrutiny making it of vital importance to consider the political effect of every decision. Drastic reactions from the staff, strikes and negative headlines could easily have cost the seller shares in the market.
We accompanied the due diligence process designing a personnel concept which developed and fully evaluated alternative location structures integrating this into a personnel costing model. This involved close consideration of several economic and political scenarios: Which employees and areas of responsibility should remain in Germany and which should be relocated abroad? In which locations, within Germany and abroad, would bundling be advisable? How could this be realised taking into account the need to balance interests? How could the social plan expenditure be kept within limits?
It was a complex challenge to combine concrete figures, unclearly defined negotiation points and political factors all in one model. Through the comparison of possible scenarios we were able to convince the seller and all interested parties of a clear take over concept and near shore planning. Our client became the preferred bidder.
Construction supply industry with 450 employees
The price war in our branch compels us to make further redundancies, the works council fights on all fronts. Good cooperation though is essential also after completion of the necessary measures.
The price war in the industry caused the long term crisis which now was affecting the heart of the company – tool manufacturing. Employees and works council were fighting on all fronts and the HR director was out of his depth in this situation. Trustful cooperation with the works council was out of the question at this point in time.
We were asked to close down the tool manufacturing department. We started by first contacting the works council to explain our role and to include them in our considerations and to build trust. We analysed the situation of the company and interviewed workers as well as management.
It became clear very quickly that despite massive problems at the site, the concern was not in a position whereby they could operate in other projects without the know-how of the German tool manufacturers. The loss of competence would endanger the reputation of the concern and was therefore classified as critical. We developed an alternative concept: Although the closure of the tool manufacturing department was inevitable, essential core competences were retained for the concern.
Our concept convinced the board. The inclusion of the works council and staff meant that they were also in agreement on the proposed changes. The end result was a rapid agreement, avoidance of escalation and a new basis of cooperation with the works council.
Assignment: merger & acquisitions
Shipping company with 2,800 employees
As part of the sale we must make massive staff reductions which the buyer is demanding be done promptly. The operational process must be optimised whilst maintaining normal production.
Following a take-over, the integration of the new subsidiary into the concern was imminent, during which staffing levels had to be reduced by 1,000 jobs. The works councils refused any form of cooperation and threatened protests to draw public attention, potentially causing considerable damage to the reputation of the company.
Despite internal optimisation measures and the transfer of 1,500 employees to new companies with new working conditions, the daily business must also run smoothly.
We were certain of one thing: Arbitration proceedings would be unavoidable. With this conviction we systematically developed the project documentation and conducted the information and negotiating phases.
During this time the respectful and open dealings with the works council and employees were essential. This was the only way to reach a successful conclusion in cooperation with each other.
Due to our precise preparation and reliable assessment of the situation we were not only successful in the arbitration proceedings but we were also able to convince the works council to cooperate in finding practical solutions at a corporate level – without external mediation.
Print and media industry with 650 employees
Our long-established company is threatened by a very real crisis. Without a significant contribution from the staff we aren’t going to survive.
The company was used to being successful but was hit hard by the changes in the market. Steady innovations and quality leadership simply couldn’t compensate the overcapacity and price erosion in the market. From a lack of success a full-blown liquidity crisis was threatening to follow. The owners recognised the danger and decided in favour of tough restructuring.
Contributions from the employees side in the form of a collective restructuring agreement must be demanded. Time was running out and yet the company seemed paralyzed, unable to move.
Before we could talk about contributions towards the restructuring of the company we had to inform and include the staff. Not an easy task after 70 years of being one of the most highly respected companies in the business. Union representatives and their advisors supported the works council in their analysis of the situation, the evaluation of the restructuring concept and the decision-making process. With the help of the owners we were able to swiftly turn the attitude of resignation of the employees into one of solidarity and commitment.
Due to good cooperation we could quickly work on the options for a solution. However, each side was persistent in the negotiations – not least because the banks had to be convinced.
The liquidity crisis could be averted but the issue of a lack of success could not be solved. The owner family decided to sell the majority of the capital intensive parts of the company. We took over the HR responsibility for the division of the family business and the sale.
The good reputation, highly qualified staff and the strong innovative drive of the company meant that we were able to sell the business units very well. In the end only 135 jobs were lost.