EXIT STRATEGY

 

BUSINESS WEEK (5-13-2002:92) reports that nearly 3 million jobs in manufacturing have been lost since the crash of the spring of 2000. They also strongly suggest that the jobs won’t return, because it is more profitable to keep those occupations unfilled here in states, because foreign countries’  wages is roughly  7% of that paid in the United States.

 

Downsizing has become part of the vernacular of Americans, and the exit strategies are extremely brutal to very encouraging. The most common appears to be the first. Workers receive notification and soon thereafter are gone from the plant. Or, the entire plant is closed for good. Jobs and careers are destroyed. The family suffers and many return to the work force poorer and underpaid. Welcome to the Global Information Society, where investment capital can move almost anywhere and workers can not move.

 

Recently, the author retired to an encouraging exit strategy. An educational system (college) can be a regulated utility. Thus, some of the rigors of the market system is soften by the strength and numbers in a public system.

 

Rumors began to emerge when the state began to receive record losses in revenue and cuts throughout the state were required. The president of the college called for a campus wide meeting of employees to discuss the diminishing funds disbursed to the college from the state. A number of options were presented and the last and worst scenarios was across the board wage cuts or termination of new less senior workers. The most lucrative cut would be to downsize the older workers who had earned greater salaries based upon the length of time in the system.

 

A buyout was offered. Those who had worked 20 years or more with the school could command a pension and a promise (but not a guarantee) that they could work part time for the school. The last year salary was multiplied by 1.75 and paid to each “retiree” in a lump sum over two years. Life and health insurance would continue. The pension was established for the rest of one’s life.

 

Of the 60 potential faculty, 47 chose the package. A retirement ceremony was initiated

and each received an appropriate momento. The entire program was taped and sent

to each retiree. Nearly a thousand years of service were noted and a website was established.

 

In the author’s department, numerous individuals retired. They would be replaced with entry young full time workers, and adjuncts. Previous to the buyout, there were 23 full-time professors and nearly 100 adjuncts.

 

The first year costs were considerable, but long term savings were immense. The exit strategy appeared to be a success.

In a world where workers are thrown off the cliff into unemployment and the CEO receives a hefty bonus, this scenario is very much the exception rather than the rule.

 

And so it goes.

 

JOEL SNELL MA, MIBA

PROFESSOR EMERITUS

KIRKWOOD COLLEGE,

CEDAR RAPIDS, IOWA

 

RESEARCH FELLOW

ARLINGTON INSTITUTE

ARLINGTON, VIRGINIA