Problems At My Company

[andrew_uk]

I don't want to give too many details as it's confidential and I have privileged access to information but I thought i'd give some insider knowledge of a 10M turnover company with about 270 staff.

The company I work for has been growing in turnover and profits pretty consistently for 10 years since it's creation. The last board meeting was a wake up call as after an average 10% profit growth each year the profits fell last quarter by a large amount (they were trending much lower the quarter before). Each department has been tasked with finding ways to cut costs (redundancies not being an option as we're already lean). Projects are being stopped, the MD has a one track mind and the department heads are all now under massive pressure.

About 25% of our work is marketing related but in reality it's an across the board reduction. Cost reduction seems key especially for marketing but other projects are being cancelled. Public service companies and those that used to be are still spending money like water but all private companies have changed there attitude.

I'm sorry I can't give more names but I don't want this tracing back to me. I probably haven't given a good anecdotal as I didn't want to name redundancies/planned redundancies but I can see trouble ahead.

Big companies seeem to hide redundancies quite well. I'm seeing high paid jobs being made redundant but cheap temporary polish staff being hired.

One fact that you might've read is about Boots making people redundant last year this was actually happening for about a year before it was reported in the news. They reduced head count by 3,000 before it was big news. A hiring freeze if seldom reported.

[non-FTBer]

Very true. And a freeze on hiring is the first stage, before they get to redundancies.

[dnd]

Big companies seeem to hide redundancies quite well. I'm seeing high paid jobs being made redundant but cheap temporary polish staff being hired.

Immature consipacry theory to mitigate my own poverty?

OR

the slow realisation the govenment is using immigration/outsourcing to keep wage inflation down?

[MarkyB]

I don't want to give too many details as it's confidential and I have privileged access to information but I thought i'd give some insider knowledge of a 10M turnover company with about 270 staff.

The company I work for has been growing in turnover and profits pretty consistently for 10 years since it's creation. The last board meeting was a wake up call as after an average 10% profit growth each year the profits fell last quarter by a large amount (they were trending much lower the quarter before). Each department has been tasked with finding ways to cut costs (redundancies not being an option as we're already lean). Projects are being stopped, the MD has a one track mind and the department heads are all now under massive pressure.

About 25% of our work is marketing related but in reality it's an across the board reduction. Cost reduction seems key especially for marketing but other projects are being cancelled. Public service companies and those that used to be are still spending money like water but all private companies have changed there attitude.

I'm sorry I can't give more names but I don't want this tracing back to me. I probably haven't given a good anecdotal as I didn't want to name redundancies/planned redundancies but I can see trouble ahead.

Big companies seeem to hide redundancies quite well. I'm seeing high paid jobs being made redundant but cheap temporary polish staff being hired.

One fact that you might've read is about Boots making people redundant last year this was actually happening for about a year before it was reported in the news. They reduced head count by 3,000 before it was big news. A hiring freeze if seldom reported.

very labour intesive company by the sounds of it... with a 10 million turnover company, and yet still 270 staff!

sorry to hear that, even the water man who delivers water to me said on his rounds he was hearing redundancies everywhere in the midlands, even in governmental offices.

with information like that... it make for interesting reading.

[The Masked Tulip]

Isn't 270 staff an awful lot for a company with 10 million turnover?

If each person earned £1,000 per year that would be £270,000.00

If each person earned £10,000 per year that would be £2,700,00.00

Lets' bump that up and assume the average wage is 20K then the wage bill is £5,400,00.00

Hmm, no, on seconds thoughts that could be about right. Interesting.

[Cornwall Sceptic]

Your MD should be working on the basis that each employee effectively earns the company £150k each thus the turnover should be way higher anything less thats what a VC who wanted to buy into my company told me.

Not all businesses turn over large amounts per head of employees

He did not say anthing about how many full time staff they have as opposed to part time - there are many variables

If the VC you quoted thinks you can get that sort of turnover per head in service industries then he'd have to be prepared to pay £1000 for a meal out not £100 - there are many, many industries that are operating on a shoestring budget but this makes them much more robust when the bad times arrive

If the cash rich operations like some finance and IT rely on figures like that then their overheads must be huge - they will go with a big bang if and when a recession comes

CS

[JonoP]

Not all businesses turn over large amounts per head of employees

He did not say anthing about how many full time staff they have as opposed to part time - there are many variables

If the VC you quoted thinks you can get that sort of turnover per head in service industries then he'd have to be prepared to pay £1000 for a meal out not £100 - there are many, many industries that are operating on a shoestring budget but this makes them much more robust when the bad times arrive

If the cash rich operations like some finance and IT rely on figures like that then their overheads must be huge - they will go with a big bang if and when a recession comes

CS

Yeah, something like a call centre outsourcing business. Their biggest cost is staff wages. Those figures would easily stack up.

[Cornwall Sceptic]

Point taken.

Not neccesarily, if they have no financial reserves their first experience of a customer (possibly only customer) going bust could wipe them out

Proper management of cost cutting and delving into the rainy day fund should sort them out during rough times. The same applies to any company no matter how big. Same goes for individuals only in most cases individuals only have one "customer" their employer! All eggs in one basket problem.

Can't (and wouldn't want) to dispute your comments - perhaps my point should have read that there are literally thousands of small(er) players, especialli in the service sector, that contriubute a huge amount to UK Plc but are nowhere near the blue chip league in terms of profitability. Few smaller businesses (IMHO) have a rainy day fund, the sensible ones have developed a wide customer base and shouldn't be hit by bankruptcies too badly - my business will survive a recession because I will make it survive - come hell or high water - there are some newer types of business that have never been through a recession, call centres, health clubs, some types of IT, telecoms....... - the overheads in some of these industries are huge and I'm not sure how long their rainy day fund would last, if times get tough and people are broke the gym will be near the top of the list.

Any business that only has one customer deserves it if their single income string goes belly up (you have to work harder than that for a balanced business portfolio), similarly any employee who hasn't made a contigency for possible redundancy in this economic climate also deserves what is coming to them

Sorry for being straight and to the point but life's hard - you only get out what you put in

CS

[andrew_uk]

A few quick responses:

If your from the south the staff/turnover rate will sound implausible but if you start with a minimum wage of £5.05 even doing 40hrs a week that's only 10.5K/year and yes some of our staff get the minimum. Lots get minimum + upto £1. Also <21yrs have a much lower minimum wage.

This might help explain some of the lack of support for firemen wanting 25K/yr outside of London.

Overall a recession will probably do us much more good than harm as it'll drive some of our competitors out of business and in later years give us more room for growth. I don't particulary fear us going bust as I've been made redundant before/seen failing companies and we aren't in that category.

PS If we wanted all our staff to generate 150K/year in turnover we'd need to move into drug dealing or forgery and even then it'd be hard to hit 150K each.

[CrashedOutAndBurned]

Yes, larger companies can hide a reduction in the number of jobs. Only in dire circumstances do you have to slash hundreds of jobs in one go. Far better to not replace people, have a single manger for three departments rather than one. You can often let staffing slide back dramatically when you have a high staff turnover without being seen to 'slash jobs'.

My present company probably has a thrid of the better paid management jobs as it did ten years ago. Now everything is centralised and new job growth is in low-grade, poorly paid positions.

Edited June 7, 2006 by CrashedOutAndBurned

[teddyboy]

Isn't 270 staff an awful lot for a company with 10 million turnover?

If each person earned £1,000 per year that would be £270,000.00

If each person earned £10,000 per year that would be £2,700,00.00

Lets' bump that up and assume the average wage is 20K then the wage bill is £5,400,00.00

Hmm, no, on seconds thoughts that could be about right. Interesting.

Depends what type of company - but our print works has a turnover of £10-12 Million (orders can fluctuate in qty). We had at peak 98 staff - now we have about 88. These are mainly skilled staff and average wage would be about £25K. We made a slight loss last year, but there was a lot of capital expenditure so was expected.

This year, sales are rocketing! Lenor, Arial, Fairy Liquid, Comfort, Castrol, Texaco etc. But we do expect a downturn in September. We mainly have BLUE CHIP clients and BIG BRAND names. But as this recession hits home - I expect their sales volumes to drop and have an affect on us.

Touch wood, everything will be alright.

TB

[teddyboy]

Interesting a friend who makes the prototypes for new bottles for the big names like the Lenor bottle has had work drop off now, for nearly 3 months the works dried up and this includes the phone not ringing. Another first indicator of a pending recession?

Sort off but in the Homecare sector a lot of new products/Designs/Packaging are normally out in the market by May or so. People tend to wash more often in the Summer. Maybe change of clothes coz of sweating, getting grass stains on clothes when visiting a parks etc. All the R&D for products will start again in about September I would imagine. Like any trade there are peaks and troughs. Another firm I worked for did a lot of Coca Cola and Pepsi so November/December was always busy (Christmas) and depending on weather MAY JUNE JULY AUGUST were busy. FEB/MAR/APR generally quite unless the summer started early.

I would not worry about it. If he gets no work in September then start worrying.

TB

[steve99]

Job market is definatly changing, think there are many skilled jobs disapearing, manufacturing, IT, Telecoms that Im familiar with, for eg my last job in IT lasted 7 years, and for the last 5 was no pay rise of any sort, while at the same time work load increasing dramaticaly followed by recent redundancy. There is a deliberate ploy at government level to keep wages low so that various figures look good, ie CPI, as we all know,. the way they are doing this is by importing cheap labour for the McJobs and exporting as many other jobs to India, Eastern Europe and China. Being out of work at the moment feels much colder than it did 7 years ago.

[isv]

Job market is definatly changing, think there are many skilled jobs disapearing, manufacturing, IT, Telecoms that Im familiar with, for eg my last job in IT lasted 7 years, and for the last 5 was no pay rise of any sort, while at the same time work load increasing dramaticaly followed by recent redundancy. There is a deliberate ploy at government level to keep wages low so that various figures look good, ie CPI, as we all know,. the way they are doing this is by importing cheap labour for the McJobs and exporting as many other jobs to India, Eastern Europe and China. Being out of work at the moment feels much colder than it did 7 years ago.

I totally agree. The threat of substitution by overseas workers has kept UK IT salaries pretty much static for some time now. Most people I know in IT are preparing themselves for a second career in something completely different - typical choices seem to include: carpenters, bakers, dry stone wallers, thatchers, electricians... mate of mine has fortunately managed to convince his son to not enter IT but train as a Quantity Surveyor instead...

[Zzzzzzzzzzzzzzzzzzzzzzzzzz]

I've seen many clients quietly cutting temp/fixed term positions for the last 6 months.

Also know that Lloyds TSB have made some heavy cutbacks recently but haven't noticed this being reported in the news.

G

[boo]

I totally agree. The threat of substitution by overseas workers has kept UK IT salaries pretty much static for some time now. Most people I know in IT are preparing themselves for a second career in something completely different - typical choices seem to include: carpenters, bakers, dry stone wallers, thatchers, electricians... mate of mine has fortunately managed to convince his son to not enter IT but train as a Quantity Surveyor instead...

[i]mate of mine has fortunately managed to convince his son to not enter IT but train as a Quantity Surveyor instead...[/i]

this is one of the reasons skilled jobs go overseas, we no longer have the people with the skills to do it. The biggest numbers on degree courses are studying media studies, there are very little business, finance and IT graduates anymore.

Why train to be a carpenter? When you wil get undercut by a polish guy!

Incidently I have a friend who is from Mumbai who says that programmers over there are now getting paid the same rate as people over here, I can see the work coming back here in time, its already happening with call centres.

[isv]

[i]mate of mine has fortunately managed to convince his son to not enter IT but train as a Quantity Surveyor instead...[/i]

this is one of the reasons skilled jobs go overseas, we no longer have the people with the skills to do it. The biggest numbers on degree courses are studying media studies, there are very little business, finance and IT graduates anymore.

Why train to be a carpenter? When you wil get undercut by a polish guy!

Incidently I have a friend who is from Mumbai who says that programmers over there are now getting paid the same rate as people over here, I can see the work coming back here in time, its already happening with call centres.

I would disagree that Indian programmers are paid the same as their UK peers. However it would certainly be true to say that Indian programmers earn more than their Polish peers. Perhaps we should convince the poles to stop coming here and clear off to India instead!

[Als]

There was a report late last year by The Association of Technology Staffing Companies who used the freedom of information act to find out how many foreign IT workers were being given work permits in the UK. They highlighted the practice of 'On-shore offshoring' where companies bring more affordable Indian workers into this country. Here is a quick link I dug up. I can't find the original report.

http://www.cbronline.com/article_feature.a...66-E4AB5C0AEE5C

I read somewhere that it is estimated that the Indian pool of IT workers may dry up by 2007 though. So I think it's difficult to say what will happen at the moment.

[heather5]

On-shore-off-shoring has been going on for quite sometime under the guise of not enough people qualified in IT to do the job.

I do recall in early 2000 being on an IT course with loads of IT profs from a well known Management Counsultancy who had been made redundant but had been given a "training budget" as their redudancy package.

On another floor, on another course, were a whole load of Chinese programmers - not qualified, and not with experience, who had been brought in and were being trained from scratch from another well known company who had been advised by the MCs to take this route.

I have no doubt, since Asia is the place to be - that they took the qualifications and are now sitting pretty in Asia.

Absolute madness.

As for current outsourcing plans where I work. We could be compelled to outsource by this govt if they so chose, but at this moment, we're all in-house because it costs too much too outsource. The powers that be in the organisation went into great depths to work it out. But that was their conclusion - in the long-term it wasn't financially viable.

Rather ironically, they recently had a senior position, to fill, but it was at a considerably lower salary than private rates, so had problems getting applications - took on someone who had only ever done courses - provided by their ex-employer as part of their redundancy package. Not sure whether I can say this, that person also originates from Asia.

It's a bit bizzare that now IT is a dirty word so there are less grads - and then we're encourage to source from overseas - even if they having to be trained - when there are still IT grads in the UK just comping at the bit to get the chance and are not looking to return "home" after they've got their experience.

[Levy process]

I totally agree. The threat of substitution by overseas workers has kept UK IT salaries pretty much static for some time now. Most people I know in IT are preparing themselves for a second career in something completely different - typical choices seem to include: carpenters, bakers, dry stone wallers, thatchers, electricians... mate of mine has fortunately managed to convince his son to not enter IT but train as a Quantity Surveyor instead...

Yea, that's right, and none of those jobs can be done by cheap labour coming into the country, so they are absolutely secure. O hang on.....

[MarkG]

mate of mine has fortunately managed to convince his son to not enter IT but train as a Quantity Surveyor instead...

Just time for house prices to crash. I know a couple of quantity surveyors, and they were unemployed or working part-time for years after the last crash.

I can see the work coming back here in time, its already happening with call centres.

In that case, just wait and see inflation explode.

[AteMoose]

egh? we advertise and we get hundreds of applicants! where do you work to earn a 6 figure salary as a programmer?

[Als]

I've been advertising for the last 3 weeks for a trainee programmer position in my company and had no interest.

I was asking them what they wanted to earn and what sort of package they want but diddly squat.

In the end I have sort of managed to persuade a mates dad who has considerable SQL/Mainframe experience but no work for years who's now tapping into his savings to live to retrain, but this was only after telling him that I earnt a 6 figure sum last year as a programmer and even now I he doesnt seem that keen.

I think things are really wrong in this country becuase nobody is showing any get and go or they want it handed to them on a plate, yet I could get plenty of overseas people working over here for less money! What gives???? :angry:

In order to move back up north from London I applied for over forty jobs in Manchester and got just two interviews and two offers. It took me eight months of intensive applications and for most of that time there was very little interest at all from recruitment agents. Although I have references from good companies and a first class degree I got the impression that most companies insisted that I filled their profile exactly. I was lucky to be considered by two companies that were prepared to let me adapt and learn slightly different skills on the job. I've been very close to giving up this career to be honest.

[pobby]

I am a self employed area manager for a multi line import company in the entertainment business.Many of my contempories{I am some 34 years standing in the industry} are saying that this is the worst period that can be remembered.The recession of the 90s was bad enough,but this is some thing else.I control a large area with a huge data base of customers,and,if I was any younger,would consider a change of career.

[okonu]

My company has fewer manager level positions (by about 25%) than when I joined 13 years ago, but is over double the size.

Technology does let you do more with less...

In the bit I look after, have gone from 100 to 85 staff in 4 years, by attrition mostly. Wage bill has stayed the same, as have put the savings into higher salaries for the good people.