As HR Director of a family-owned building materials company, the current interim manager was faced with closing the previous headquarters of the acquisition target and reducing the number of staff employed there following the successful acquisition and post-merger integration of a competitor. In addition, an unprofitable plant was to be closed. And finally, the decision was made to halve the large number of internal sales teams spread across Germany.
Efficiency and cost benefits as objectives of the acquisition
The company is a northern German premium manufacturer of building materials. The dry mortar division took over a renowned competitor in southern Germany in 2015, making it the largest acquisition in the company's history. As a result, the company aimed to achieve significantly higher profitability and an above-average increase in market share. The cost and efficiency adjustments required to achieve this made restructuring with moderate staff reductions unavoidable. However, the employee-oriented company had little experience with this overall.
Walking the tightrope between employment costs and employer brand
The HR Director made it clear at the beginning that the cost reduction in the divisions would lead to annual savings in the high seven-figure range in the medium term. On the other hand, he emphasized the need to protect the employer brand as a socially committed company both internally and externally. The company enjoyed a good reputation as an employer in rural areas - and would also need skilled workers again in the long term.
Necessary headcount reduction implemented after acquisition without redundancies
The HR manager ensured that communication with the employees affected at the acquisition target's headquarters and their works council was legally compliant, swift, clear and respectful. At the same time, he made a conscious tactical decision not to start negotiations with the works council on a reconciliation of interests and redundancy plan too early. After the announcement of the closure of the site, negotiations were underway with the former parent company about "taking back" individual employees. On the other hand, he saw the opportunity for individual employees to successfully apply for jobs themselves at short notice and leave the company without severance pay.
Around 2/3 of the jobs could be cut in this way. Other employees who were to remain with the company were transferred to two nearby locations. In the end, only two employees remained, who were employed for another two years and then released into early retirement.
In the end, the budgeted restructuring costs were undercut by almost 70% thanks to the prudent behavior of the HR manager. A social plan was no longer necessary.
Closing further locations at low cost, quietly and quickly
The closure of a production facility and several internal sales locations throughout Germany required further negotiations. As not all of these sites were subject to co-determination, extensive negotiations with the individual employees were necessary. On the other hand, the legal situation permitted redundancies for operational reasons, so the litigation risk appeared minimal. However, in order to implement the staff reduction quickly, fairly and quietly, a termination agreement was concluded with almost all employees with payment of a small voluntary severance payment.
Aspiring goals of the cost-cutting programme are fully achieved
Within a year, the HR Director achieved the restructuring goals:
- The headcount reduction was achieved at low cost, in a timely manner and in a socially acceptable way that was also recognized by the employee representatives, i.e. without damaging the employer brand.
- The planned cost savings were already achieved from the following year. The company has repositioned itself on the market with higher profitability. Turnover, profit and market share have increased.
