The Layoff

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Executive Summary

The Background

The case revolves about Astrigo home-improvement stores, and Robin Astrigo is the CEO of the Company. Robin’s father started this business since 1968 & he had run the firm capably since his father’s death in 1996. Now the current scenario is- Astrigo is through financial crisis. His father always insisted on keeping several million dollars in the bank just in case the company needed to make critical acquisitions. And his father also taught Robin that to keep its reputation for great customer service and the company had to treat employees well. But the situation is not good in terms of profits & that’s why company is thinking about the layoff strategy. It has tried reducing inventory and unnecessary expenses. Lay off is like a last resolution. Robin is in a fix about the possible solutions to save the company’s image and also its employees.

The Issues

1. Recession Period

2. Profits decreasing at a drastic rate.

3. Aggressive Promotions and Price Cuts

4. Loss of Customers to cheap retailers with worse customer service

Possible Solutions suggested by the various top level employees:

Morris Meyers (CFO): 10% workforce reduction to generate enough profits, proposed FIFO (First in first out) policy. He suggested early retirement package to old employees. Lisa contradicted him by sighting an example of Meese Brothers, where they had to give compensation on 18 million dollars for getting rid-off the deadwood.

Lisa Warren: Performance Based Lay-off based on December’s evaluation. Eliminate lower 10% of the lot. Morris rejected this idea as he said that there was a lot of office politics involved during the rating period and it gave a wrong but positive impression about the company.

Bob Slater (Executive Director): His view emphasized on LIFO (Last in First Out) policy. He believed with this the company won’t have to pay huge amount of severance to the employees. More so, there is very little...
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