Case study

Redundancy: the options

Planning ahead to avoid making redundancies - Easibind

Easibind International provides consultancy services in product packaging, promotion and presentation, incorporating techniques such as 3D mechanical design and advanced finishing processes. The company is based in Heanor, Derbyshire and currently employs around 100 people. Here, managing director Harry Skidmore describes how lessons from the 1990s recession led the company to introduce measures designed to strengthen the business and avoid making redundancies in the future.

What I did

Learn from the past

"In the late 80s, Easibind experienced rapid growth, largely through expanding our customer base and thereby increasing sales volumes. Riding the wave of economic prosperity, our sales force ballooned and we were growing at 30 per cent year on year.

"When recession hit in the early 90s, a sizeable number of our customers went to the wall, severely denting our revenues. We realised then that our customer acquisition tactics had merely amounted to buying sales, rather than adding real value to the business or investing in its future.

"Drastic action had to be taken, including reducing the workforce from over 200 to just 70 people. That was a bitter regret to the management team, especially since our company is closely integrated with the local community. It took several years to recover from that position and we vowed that we wouldn't let it happen again."

Re-evaluate everything

"Good intentions are fine, but you have to do more than just talk the talk. We undertook a top-to-bottom review of the company.

"Debt collection practices were an early target. While the money had been flowing in, we'd been too relaxed about debtors. We put strict new procedures in place which we've continued to adhere to ever since.

"We also re-visited our business model, focusing on a smaller number of higher value customers and placing greater emphasis on distribution via trade partners. This reduced our sales and marketing overheads from 15 per cent of revenue to just 3 per cent.

"In addition, we invested in new digital printing technology and product innovation, forging partnerships with key suppliers and undertaking Knowledge Transfer Partnerships (KTPs) with universities in order to share resources.

"Perhaps most importantly, we re-skilled our workforce and changed the structure of our sales teams. Employees on the production side received training to enable them to work more flexibly across a variety of different machines and processes.

"On the sales side, we introduced graduates into the mix, working alongside older and more experienced employees who moved into customer-relationship-management roles. This was a conscious move away from traditional sales management, where one person is responsible for a single account. It means we can utilise different skills at different stages of the sales cycle, according to customer requirements."

Keep looking ahead

"As well as laying foundations for longer term stability, there are things you can do at a tactical level, to be deployed at relatively short notice if necessary. For example, in early 2007 we spotted signs of market corrections as evidenced in market reports and information gleaned from trade associations and customers.

"As a precaution, we introduced a wage freeze for all employees. This was discussed with our workforce and implemented with their co-operation, on the understanding that if conditions improved, bonuses would be payable to make up the shortfall.

"We also introduced annualised hours, again in full consultation with employees. This is a system by which employees' hours are calculated on a yearly rather than a weekly or monthly basis. The employer and employee then agree the spread of hours worked according to business needs during a particular week or month. This has worked extremely well for us by increasing our flexibility to react quickly to fluctuations in demand."