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From :

S.R. Chatterjee,
Personnel Manager,
Calcutta.


3rd January 2000


To :

B.P. Das Guptha,
Managing Director,
Calcutta.


GOLDEN HANDSHAKE



It is with regret that I present this report for your immediate consideration.


(1) Excess Staff

We had a boom in business during last five years. We were the leader in the field of air conditioners. Both our manufacturing unit and the regional sales offices were adequately staffed to handle the large business enjoyed by us. Today the position has changed topsy–turvy.


Three new competitors have entered the fray, though small companies compared to our size, they also manufacture quality product. Their staff size and overheads are very small in relation to ours. In view of this, they are able to sell their product at lower price. Any buyer will prefer quality product at lower price. In view of this reason, these three competitors have taken 65% of our past business.


This drastic reduction in turnover has made many staff members, both in manufacturing and sales network with the related administration, accounts and personnel departments finding no productive work to do.


(2) Gradual Loss in the company

Many machines in the production unit will idle and you will agree with me that we have paid heavy sum for purchase. With poor sales, the net profit has gone into negative side ending up in substantial loss.


(3) Future is Uncertain

With our present infrastructure, it will not be possible to see profit. We cannot afford to reduce our prices. With our existing prices, as mentioned before, our market share is going to be quite low. As such, our future is bleak.


(4) Our Immediate Strategy

The Only way out to cross the woods is to reduce our prices and try to get a lion share of the market. This is not possible with the current level of expenses. Expenses should be brought down to a large extent.


(5) Golden Handshake

To cut down the expenses, reducing the staff strength is vital. Except, for very talented employees, many people in all the departments can be got rid of. Towards this, the top management can think of offering voluntary retirement scheme, which in modern management is most popularly termed as Golden Handshake arrangement. Of course, this will apply to those who have put in certain minimum number of years of experience. Rest of them can be retrenched. The methodology can be worked out by the top management.


It is unfortunate that we are forced to take such a decision and the same is inevitable in view of the precarious predicament that we are confronted with.


(S.R. CHATTERJEE)

PERSONAL MANAGER


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