Sharing a chat with maxi background, that I had with an ex-colleague on #LinkedIn, on how I managed to handle a stressful job of getting a BIFR company into a Going Concern. This called for retrenchment of “Humans” many who were with this Organisation for years, more than my age at that time.
There was this Company which went sick and referred to BIFR. With Manufacturing unit for Electronic Version of the product (let me call it EB for Electronic Box) in #Bengaluru (which was a 2 year old unit) and a much larger and older unit for Mechanical version unit (let me call it MB for Mechanical Box) in Chennai (40 year old Unit).
With technological advances and end process deficiencies MB was slowly but surely on the way out but for some weird reason the Management resting on the then Market Domination (>65% Market share) never saw the writing on the wall. Market was moving, albeit with a lot of resistance from the end-consumers and immediate customer, towards more accurate and precise, process efficient EB.
Buoyed by this resistance, they hoped against hope that it was a temporary and the market would revert back to MB (to be fair, there were some business in the replacement market, less than 1% of FG inventory per month)
EB units tenders increased in numbers and Organisation was forced to start a unit in Bengaluru to design and manufacture of EB. To the credit of this organisation, they were also the first one to have a significant installed base of the Electronic version in the market.
However, despite almost zero demand for the MB, it never resized their production, nor redesigned the lines for EBs. Production continued with same strength and to the designed capacity. FG inventories piled up. With no shipment, it was stressing the Cash Flow as also increasing the Creditors. Labour Unions did not agree for scaling down production.
Servicing the Bank loan/advances, Payment to Vendors were taking a hit. Old habits die hard – Unions never gave any leeway for the management to reconsider any aspect of production – Double wages for Over-time (yes production of MBs working Over time, that only piled up in the FG Stores)
The Bengaluru unit (headed by yours truly at that time) by itself was Profitable EB unit, with rationalised process, optimal personnel, but was being bled by the MB unit, which was a White Elephant. EB Unit Capacities were no where near the requirement to handle the entire organisation. This continued for 2 years and the inevitable happened.
MB unit (which for 5 years was a drain on the organisation with zero contribution to top line) began pulling down EB unit and started sinking. Despite good order book, it became extremely difficult for EB unit to continue and the vendor support shrank due to non-payments, and employees in this unit began idling due to lack of raw materials.
Finally, the Organisation was referred to BIFR and upon their enquiry, declared it a sick unit. Accepted a proposal for revival. With two bankers as primary operating agency and with me as Chief of Operations, a revival package was worked out.
Barring a couple of executives the entire management was changed by the operating agencies. Then began the painful process of revival. The first task for to retrench Humans (I don’t want to reduce them to a pair of hands), who worked for this organisation for more than 35 years (which was my age then).
The chat with my then colleague yesterday was about how at that age I managed the entire process (with grace of God and my Guru, very successfully) and the psychological impact it had on me (who was one of the resource, I insisted continue with me during the revival process). Let us call him Mr K, then an young but brave lad with two years of experience
First step was to shift the entire manufacturing to Chennai, from Bengaluru (where we operated out of a rented premise). We explained the situation to the staff here, and made an open offer to all the employees to join us there on same terms (with an assurance that if things go as planned, it can be reviewed upwards).
Most of the production staff being ladies had difficulties moving and they were given a 3 months buffer with full pay, to look for alternate. Some of them (around 30 out of 80+) decided to continue and move to Chennai. Rest of them found alternate employments within the buffer period.
As always, financial institutions wanted me to revive the unit with no resources 🙂 And were pressurising me to let go of everyone here too. It was then (so many years back) that I coined what still remains my favourite phrase – these are not head counts for me, but heart counts (recently I saw some motivational speaker using this in a TED talk).
To make it a going concern, we need those who are passionate and who believe that it can be done. We also need people with knowledge and Skill to work. There was no way we could find any resource from the MB unit in Chennai (Incidentally, they went on a strike at the unit). Finally I was allowed to have 22 (out of 80+ from this unit) and 8 of them had to be left behind.
With Vendors breathing down our neck, resisting this shift, it was the first major challenge to be overcome. Threats, blackmails were an everyday affair, heavy doses of which I had to live with. We then had a meeting with operating agencies and all affected parties, explained the situation and got their buy in for the only way forward. To reduce cost, do some businesses, work out some formula and time period for pay-outs.
Finally, in 2 months time (and one month ahead of target) the entire unit was shifted to Chennai. Next was the challenge to move the EB manufacturing facility into the MB unit. With the employees there on strike, they resisted this tooth and nail and we had to move the line in, with heavy security. A part of the line was set up in another facility to begin production pending settlements.
We know had the biggest challenge of all on hand. To convince the promoter/erstwhile management to infuse funds for two purposes, one to negotiate a golden handshake and second to restart the production. Lesser said the better on how this challenge was overcome. But overcome we did.
The most challenging part of the whole process began. Inviting the representatives of the Labour force for a negotiated settlement. Political arms of Labour unions got involved and things were only messed up even more by them. It was then that my HR head directly talked to the employees.
I explained that at this point of time, I have some funds which can be the settlement amount and if there is any delay, even this position will become precarious. Also acknowledged that this business owes it to them for the successes till 5 years back but today they have no contribution to make in the changed business scenario.
I also offered them a re-employment provided they acquired the skills and at par with existing employees (not their existing scale). Finally, I just made it a situation of – either we all sink together with nothing or take something and let those who deserve float and begin sailing.
The deadlock continued and despite their request for another settlement offer, I was clear I had nothing extra to offer and in fact the funds available towards this head is reducing with every passing day. Exactly 62 days later, about 200 of them signed a petition and accepted the offer and it was immediately accepted and settled. It was just a matter of time for remaining to accept and move on.
Vendors accepted a revised proportional payment settlement. Some of them continued to support us in the revival process and some of them we lost forever.
Bankers were convinced to reschedule the loans, interest components to be waived. Government was approached to provide a temporary tax exemption.
Customer confidence was won, purely based on the quality & ruggedness of our designs and clear intent shown. In 33 months, from the time I took over this became a going concern.
Now K’s doubt was, Sir! How did you even manage! We were dealing with Humans in the entire process. Suddenly one fine day, bidding them goodbye and not to come for work. Looking back (though the thoughts were not like this), I only had the interest of organisation and larger number of affected person in mind
To protect interest of 350 people and their families, I had to otherwise sacrifice more than 400 employees and their families who were contributing to the revival, then comes Vendors and their employees and their families.
So decision was clear! It was only about alleviating the pain of 350 people, which I did sincerely by negotiating the best possible settlement under the circumstances (it was a hard bargain which the world never knew) – they wanted to settle for nothing.
Though I spent sleepless nights, remembering the sad and tearful faces of affected people, in the end, it turned out to be successful. This business was then sold to another corporate and is currently doing extremely well.
Recently attended the naming ceremony of the grand daughter of one person who was retrenched. When I apologised for the past, he said nothing to apologise – YOU DID GREAT. My BLESSINGS! We knew we were to get nothing. But you heard our abuses patiently, fought for us and got us amount which was princely sum those days.
Lesson for K:
If you are focused on the task sincerely, all other factors are redundant. Whatever it takes to fulfil the task becomes the guiding factor.
37 year irrelevant experience meant nothing that day for us, 2 year’s relevant experience like his helped us settle even those much experienced employees.
All along, even thereafter, I had to manage workforce or peers and colleagues who are aged much more than me. But if we are clear on the objectives of why we are in an organisation, does age or experience of the other person matter?
As long as there is no malafide, or biases, or preferences or even aversions, if we stick to being professional, we will be talking only business and not emotions or sentiments. There is a different place and time for that.
In my previous employment, the guy who hired me had to report to me within a year. He was totally uncomfortable. Tried to convince him that his job and he as a person still has all my respects, just like I have for anyone else. We are here for a task and generally as a rule, I don’t lead. I only facilitate people to do their jobs. Unfortunately he did not think alike. He opted not to have his contract renewed and retired.
What worked for me in my work, is never to treat a person as a pair of hands (or a piece of brain in IT industry). Respect him or her as a whole person, then they enjoy working with you. They look forward to come to work and not look for excuses to take holidays.
It is in a manager’s interest to keep everyone around happy. Else even manager looks for excuse to take a holiday. A lively bubbling workplace is something everyone enjoys being in. And I have a selfish motive to keep my workplace a happening and happy place.
Because happiness and enthusiasm is infectious 🙂 It rubs off on me too.
IT WORKS. Try!
1) Though I had many opportunities to work for reviving Sick Businesses, I never accepted any offers to do it again. Today with increased awareness in me, I know it is pain that I may not be upto. Those days, I never even realised but simply did the job. In the process, for quite some time it resulted in poverty thinking and mental stinginess in me. This took a lot of effort to overcome.
2) The same management killed another group company (automobile industry), which had 80% market share for the product, because they refused to work on Electronic product of the same. Today’s vehicle do not have mechanical version at all.