Astrigo Position Statement:
The problem in the case is that senior executives are facing a decision about whether or not to lay off workers. The root cause can be attributed to the changing market conditions (the economic recession) and possibly poor financial decisions. The recommended course of action to help solve the problem is to use a portion of the money in the company’s bank account and enact a pay cut across the executive team in the short-term. In the long-term Astrigo should focus HR efforts towards constant employee evaluations to prepare for a performance-based layoff policy, focusing on older middle management employees, in case more costs need to be cut.
Due to the economic recession possibly coupled with poor financial decisions, Astrigo missed its earnings estimate by 20 cents a share and profits had dropped by double digits, regardless of efforts to slash inventory and expenses. Although Astrigo enacted aggressive promotions and price cuts, the Astrigo home-improvement stores were losing sales to cheaper retailers with far worse customer service.
During the time of their financial struggle customer service was still upheld, talented team members remained innovative, and steps were taken to cut costs and drive sales (promotions, price cuts, slash inventory and expenses). There were strong implications, however, that Astrigo’s executive team may have been spending money in the wrong places. These implications come from the fact that the CFO, during a time when Astrigo was financially unstable, was making decisions about whether or not to layoff workers in an expensive and exclusive dining club. Considering Astrigo is short on funds it would have made a lot more since financially if the CFO had chosen to discuss whether or not to layoff workers in an inexpensive restaurant or his office where just as much could have been accomplished. The fact that the CFO would find it acceptable for Astrigo to pay the bill for he and his...