Business Policy

In this case study Robin Astrigo an executive of Astrigo Holdings is contemplating what layoff strategy to implement. Astrigo Holdings has missed its earnings estimated by 20 cents per share and profits had dropped by double digits. The case provides us with an insight of the company's values and strategies Astrigo executives considered. "Pop" Astrigo, Robin's deceased father had started off as a hardscrabble Midwestern lumberyard owner and was a fiscal conservative. He believed that a strong cash position was crucial to the company's health but also believed in keeping a good reputation by providing great customer service. In order to provide great customer service they treated their employees well. Robin has been running the company since 1996 and always insisted on keeping several million dollars in the bank for acquisitions. The best strategy for Astrigo is what they refer to as "Rank and Yank", which ranks all the employees and eliminate the lowest 10%.

Morris Meyers, Astrigo's CFO did an analysis that determined a 10% workforce reduction would generate enough savings to keep profits in line with Wall Street's expectations. Meeting Wall Street's expectations is critical to the way the market reacts. Consistent periods of less than expected earnings can instill fear into investors, customers and employees. This can lead to a weaker workforce, less customers buying and probably operating at a loss. Lisa, Atrigo's CEO was the one who recommended the "Rank or Yank" strategy. This is a great strategy to implement because it develops a higher performing workforce; people usually perform better when they know they have something to lose. Astrigo focuses on providing great customer service and you need the right employees to provide exceptional customer experiences.

A few of the other executives recommend strategies such as First-in First-out or Last-in First-out, these policies are not efficient. It's not fair to lay-off employees who have been there for years and leave them with a fair severance pay. People have families and expenses that they need to be able to pay for. It wouldn't be right to let someone go just simply because they have been with the company for a long period of time. On the other hand, it's also not fair to let someone go because they are new to the company. A new employee can create a greater value than an employee who has been there for several years. The LIFO policy would be the easiest and cheapest but it's not the best. Even though a company may face financial hardships, they need to make decisions and choices that will or can create a greater benefit sometime in the future. This is also counter-productive for the company, Human Resources department spends a lot of time and money on recruiting the best talented workers and they are let go because they were recently hired. A perfect example would be Yukio, who runs new