Lakeshore presentation master slides v final

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  • High-end active wear manufacturer. In current economic environment, significant reduction in purchase of luxury goods. Seen our market share decline; drop in sales for Active by Anne and Nordic Ridge lines; suffered losses in the past two quarters for the first time since we founded the company. If things stay the same, we’re headed for insolvency. Have to find a way to reduce costs. No easy way to say this: we’re outsourcing our IT department; all but a small handful of functions will be handled by partner firm in Hyderabad, India. This has been a very difficult decision.
  • We can’t compete in the high-volume, low-cost arena. We knew from the start that when we reached a certain production level, we’d offshore our manufacturing, and did; but we never had plans to outsource IT. IT is not a core competency of ours; very important, but not core. If we’re not saying goodbye to 30 people now, we’ll be saying goodbye to 300 people later.
  • We need your help in the transition; can’t do it without you.
  • Understand you need to be looking out for your own interests (searching for new job, etc.), and we want to help. Want to make this as easy as a difficult thing can be. Providing severance packages We have already arranged for a resume and job placement service for those of you whose positions will not be retained; Tammy will tell you more Offering a bonus to those of you who are able to stay with us through your portion of the transition; Yaw will discuss the details.
  • We’re going to ask that you write down your questions on cards; this will allow you to ask whatever you want, anonymously; it’ll also allow us to get through to the end of this. And now, here’s Yaw to discuss: The fiscal realities in which we find ourselves What this Transition will allow us to save How the end-of-Transition bonus is going to work
  • Good Afternoon everyone. I will be discussing our: Goals for Future Success; Financial state; Where were are relative to our competitors; Our strategies for improving our contracts; How these improvements will translate into cost saving and future Growth.
  • 3 Critical Targets that we must achieve to remain competitive now and going forward. Create A More Efficient & Financially sound organization. Respond to Business Demand by focusing on what we do best. “Rightshore” our company by balancing In-house functions with Contracted functions.
  • In 2008, we returned a 12% profit after taxes. GOOD NEWS: We were slightly under our planned admin expenses. BAD NEWS: We had 4Q08 and 1Q09 losses for the 1 st time in our history! In 2009, we’ve had to revise our revenue projections downward to $83M . In addition, we are almost 3% over our Planned Admin Expenses for the year. We’ve identified that the Key Drivers of our increased expenses are our IT Administrative Expenses.
  • We have always led our industry, but our market share is declining. We Are Losing our Competitive Advantage because of our IT Cost. If we eliminate our IT Admin. Expense Gap, we will dominate our industry again.
  • We have transformed our Contract Management Strategy to leverage economies of scale. We know this model works because: Our China Manufacturing Offshore initiative generated $7.5M savings . We plan to use these $s for Retention Bonuses and building Cash Reserves .
  • Analysis of all IT workloads revealed that our use of In-house IT is out of proportion for companies our size. We determined that we can’t maintain our skewed IT admin. expenses and remain competitive or viable. The Board of Directors has approved a Plan to contract with India.IT to carry-out all of our IT functions. A few Key positions will be retained to manage IT Project workloads during and after the transition. Geneva will discuss this plan in more detail in a few moments.
  • Our Expectations include: Contract Transparency: Service Delivery/Termination -> Fees/Expenses We can dictate the Services We Need Monitor India.IT’s Financial Viability Notification of Any Impending Legal Charges “ Trusted Partner” agreement protects us against the release of proprietary information Fraud Protection Clause Independent Board of Advisors and Auditor We maintain Overall Accountability for IT Projects/Business Practices
  • IN SUMMARY: We expect Immediate & Significant Savings by contracting with India.IT. Overall, savings in 2010 & 2011 will rise 5% to 15%, respectively. This will translate into an eventual $13M in savings! Geneva is in India now. However, she has recorded a video detailing how we will accomplish our IT Transistion. Here’s Geneva.
  • Some employees will be eligible for severance pay The severance amount will be determined by salary level and years of service to the company. Severance pay will be paid out as pay roll for a specified period of time following the last day of employment You are not considered to be employed while receiving severance pay.
  • Employees are eligible to apply for and receive unemployment insurance benefits, while receiving payment for severance. Unemployment insurance benefits begins as of your last day of employment. The waiting period for UI is generally one week from the date of claim, and not one week from last day of employment. To avoid a delay in receiving UI benefits, visit your local UI center as soon as possible. We recommend applying on your first day of unemployment
  • COBRA allows employees and their dependents to elect to continue to receive health care coverage under a company-sponsored health plan. COBRA coverage lasts for 18 months COBRA may be extended for up to 36 months in certain circumstances COBRA requires a qualified beneficiary to pay 102% of any applicable premium costs to maintain coverage. COBRA eligibility begins on the first day of unemployment Chicago Insurance Associates is our COBRA Administrator Employees should be prepared to pay for the current and next month’s premium at time of application. Employees must pay for each month’s premium within 30 days of the due date. If payment is not received in the specified timeframe, coverage will be cancelled. Employees will received a certificate of proof of insurance coverage from Lakeshore. The certificate is used to prove continuation of coverage when applying for future insurance policies.
  • As a career counselor, I will be speaking to you today regarding two key topics, first, redeployment issues Second the career counseling services that will be available to you which will include support functions and the availability of those services.
  • Right now and in the months to follow, you will be experiencing a time of organizational change led by these outsourcing and restructuring paths. HR will be helping to identify practical solutions to any re-employment opportunities that will be identified as your department moves ahead with its transition processes. What we have set up is a career counseling resource that you and your managers can use for on-site support with your career transitioning and career planning processes. All this, in an effort to maximize opportunity for new employment.
  • We are ready assist you with these support functions: 1. We will help identify any internal position options that are currently open and assist with Career change and job transition services for those who apply in accordance to the company’s “promote from within policy”. 2. We will establish an Outplacement program that will offer, skills assessment, and job search support services for those who will seek new employment opportunities. This will include resume preparation, interviewing skills and networking skills development. 3. Office support will also be available M-F from 9am to 4pm in HR. This will allow those seeking outside opportunities access to the Internet, phone usage setting up interviews and secretarial services. We only ask that you please arrange time with your manager during the workday or feel free to come in on your days off to utilize the facilities. 4. Please be certain Management will maintain an open door policy to deal with any issues that may develop during this transition process.
  • A Professional Career Placement Agency, ITtech will be available on site each day from 8am to 1pm beginning December of 2009 to March 1, 2010. They will be available to all employees to Advise – provide unbiased objective career counseling Assist- linking you with external training programs and IT career opportunities outside of LAKESHORE Alleviate- as much stress while you go though this process. In addition to our open door policy, a 24-hour hotline has been set up and will be operational as of the close of business today. You can either listen to pre-recorded messages regarding the services that will be available in HR in the upcoming months.
  • As the reorganization occurs we want to… Illustrate our concern for maintaining the economic viability of our company Provide you with better practices in managing transition Uncomplicate and streamline the process Play an active role in helping employees with alternative staffing strategies and outplacement programs We all understand how difficult this time will be We want to be certain that during this difficult time you receive as much assistance as possible and as quickly as possible. So as the reorganization occurs we want to Illustrate our concern for maintaining the economic viability of our company Provide you with better practices in managing transition Uncomplaicate and streamline the process as much as possible Play an active role in helping employees with alternative staffing strategies and outplacement programs. Again we will be here later to address your questions but for now I want to turn things back over to Mark for a few final words.
  • SUMMARY : Conclusion: Should we call this slide “Summary” or something other than “Conclusion”? It has been really difficult to come to this decision; this company is like a family to me; sorry it has come to this. Again, if we’re not saying goodbye to 30 people now, we’ll be saying goodbye to 300 people later. Your manager will be reaching out to you to discuss your role. When we reach the end of this Transition, we want to have a little ???? to acknowledge all of the work that you guys have put in to make us what we are today. These are our coworkers and friends, and we will not let you go without acknowledging your contributions. Not mandatory; there will be many difficult feelings; I understand if you don’t want to be there, but we can’t let this milestone pass without marking it. Yes, it will cost us a little bit of money, but we can afford it, and it’s worth it to acknowledge your contributions. I know you must have a ton of questions, so we’d like to open the floor; we will take as long as it takes to get through every card.
  • Lakeshore presentation master slides v final

    1. 1. June 17, 2009 IT T ransition I nitiative I T I T
    2. 2. How Did We Get Here? <ul><li>Market conditions: </li></ul><ul><ul><li>Reduction in luxury purchases </li></ul></ul><ul><ul><li>Sales drops in Active by Anne ® and Nordic Ridge ® </li></ul></ul><ul><ul><li>Losses for past two quarters </li></ul></ul><ul><li>If things don’t change, we are headed for insolvency. </li></ul><ul><li>We are outsourcing our IT department to reduce costs. </li></ul>
    3. 3. What Does This Mean to the Company? <ul><li>Some alternatives considered: </li></ul><ul><ul><li>Lower-cost manufacturing partner </li></ul></ul><ul><ul><li>New low-end brand </li></ul></ul><ul><li>This was not planned from the start </li></ul><ul><li>IT not a core competency for us </li></ul><ul><li>If we don’t say goodbye to a few of you now, we’ll be saying goodbye to all of you soon. </li></ul>
    4. 4. What Does This Mean to You? <ul><li>Most IT positions transferred to partner firm in Hyderabad, India </li></ul><ul><li>Applications migrated over the next seven months </li></ul><ul><li>Calling this the IT Transition Initiative </li></ul><ul><li>We can’t succeed without you. </li></ul>
    5. 5. What Does This Mean to You? <ul><li>We understand your concerns </li></ul><ul><li>Want to make this as painless as possible… </li></ul><ul><ul><li>Severance packages </li></ul></ul><ul><ul><li>Resume and job placement service </li></ul></ul><ul><ul><li>Retention bonuses </li></ul></ul>
    6. 6. What’s Going to Happen Today? <ul><li>Mark Albright, CEO: Background & current situation </li></ul><ul><li>Yaw Ofosu, CFO: Fiscal implications, retention bonus </li></ul><ul><li>Geneva Todd, CIO: Position migrations, app migration plan </li></ul><ul><li>Lisa Greenspan, HR Director: Severance packages, insurance options </li></ul><ul><li>Tammy Smith, Training & Development: Resume & placement services </li></ul>
    7. 7. Yaw Ofosu, CFO <ul><li>Critical Targets </li></ul><ul><li>Financial Metrics </li></ul><ul><li>Competitive Intelligence </li></ul><ul><li>Contract Management </li></ul><ul><li>Projected Savings </li></ul>
    8. 8. Critical Targets <ul><li>More Efficient Organization </li></ul><ul><ul><li>Remove Duplication </li></ul></ul><ul><ul><li>Consolidate Support Functions </li></ul></ul><ul><li>Respond to Demand </li></ul><ul><ul><li>Engage Contractors and Other Partners </li></ul></ul><ul><li>“ Rightshore” Organization </li></ul><ul><ul><li>Outsourcing & Reemployment </li></ul></ul>
    9. 9. Financial Metrics +2.8% -0.4% - Administrative LAKESHORE Fiscal 2008 Fiscal 2009 (Projected) Annual Revenue $97.6M $83M Annual Profit (After Taxes) 12% 4% Expenses (And Percent of Revenue) - Salaries & Benefits $27.1M / 28% $28.8M / 29% - IT Legacy Systems $2.6M / 7.4% $2.8M / 11.2% - Real Estate $1.9M / 5.5% $1.7M / 6.7%
    10. 10. Competitive Intelligence Sources: Crain’s Chicago Business, 2009 Book of Lists Market Share 2005-2007 Average 2009 2012 LAKESHORE 65% 50% 70% EXCELSIOR 25% 30% 20% IN-MOTION 10% 17% 7% ORION Inc. N/A 3% 5%
    11. 11. Contract Management <ul><li>Renegotiate All Contracts </li></ul><ul><ul><li>Terms and Conditions </li></ul></ul><ul><ul><li>Service Level Agreements </li></ul></ul><ul><ul><li>Fees </li></ul></ul><ul><ul><li>Low-Cost Offshore Delivery Locations </li></ul></ul><ul><li>Reduce Costs </li></ul>
    12. 12. Contract Management: IT Project Allocation <ul><li>Current In-House IT = 65%-80% </li></ul><ul><li>SOLUTION = Contract Out All IT prior to 2010 </li></ul>
    13. 13. Contract Management: India . IT Expectations <ul><li>Transparency </li></ul><ul><li>Services </li></ul><ul><li>Financial Viability </li></ul><ul><li>Notification </li></ul><ul><li>“ Trusted Partner” </li></ul><ul><li>Fraud -> Terminate Relationship -> No $ Penalty </li></ul><ul><li>Checks & Balances </li></ul>
    14. 14. Projected Savings: 2010 - 2011 <ul><li>Help Desk Operations Support = 5 - 10% </li></ul><ul><li>Network Service = 10 - 15% </li></ul><ul><li>Application Hosting = 10 - 20% </li></ul><ul><li>Projected Overall Savings = $13M </li></ul>
    15. 15. Geneva Todd, CIO <ul><li>IT Outsourcing Plan </li></ul><ul><ul><li>Application Movement By Date </li></ul></ul><ul><ul><li>Positions Impacted </li></ul></ul><ul><ul><li>Positions Retained </li></ul></ul><ul><ul><li>Hardware/Software & Other Considerations </li></ul></ul>
    16. 16.
    17. 17. Lisa Greenspan, Director of HR <ul><li>Severance Pay </li></ul><ul><li>Unemployment Insurance </li></ul><ul><li>COBRA </li></ul>
    18. 18. Severance Pay <ul><li>All employees are eligible </li></ul><ul><li>Employees < 5 years, 3 months’ severance </li></ul><ul><li>Employees 5+ years, 6 months’ severance </li></ul><ul><li>You must sign a separation agreement </li></ul>
    19. 19. Unemployment Insurance <ul><li>Eligible on first day of unemployment </li></ul><ul><li>To find your local office visit: http://www.ides.state.il.us/ </li></ul>
    20. 20. COBRA <ul><li>Consolidated Omnibus Budget Reconciliation Act </li></ul><ul><li>Continuation of Employer-Sponsored Heath Insurance </li></ul><ul><li>Chicago Insurance Associates will contact employees directly </li></ul><ul><li>Employees will receive information within 30 days </li></ul><ul><li>Effective from last day of employment </li></ul>
    21. 21. Tammy Smith, Manager of Training & Development <ul><li>Internal Opportunities </li></ul><ul><li>Career Counseling Services </li></ul><ul><ul><li>Support Functions </li></ul></ul><ul><ul><li>Availability </li></ul></ul>
    22. 22. Re-employment Opportunities <ul><li>HR Resource Support </li></ul><ul><li>Career Transitioning </li></ul><ul><li>Career Planning and Placement </li></ul>
    23. 23. Career Counseling: Support Options <ul><li>Internal redeployment possibilities </li></ul><ul><li>External placement program </li></ul><ul><ul><li>Job search experts </li></ul></ul><ul><li>Office services support </li></ul><ul><li>Social support services </li></ul>
    24. 24. Career Counseling: Availability <ul><li>June 2009 to March 2010 </li></ul><ul><li>Outplacement service </li></ul><ul><li>Counselors available to… </li></ul><ul><ul><li>Advise </li></ul></ul><ul><ul><li>Assist </li></ul></ul><ul><ul><li>Alleviate distress </li></ul></ul><ul><li>24-hour hotline: 800-FOR-HELP </li></ul>
    25. 25. Why is this relevant to you? <ul><li>Maintain economic viability </li></ul><ul><li>Manage the transition </li></ul><ul><li>Streamline </li></ul><ul><li>Assist employees </li></ul>
    26. 26. Final Thoughts <ul><li>Stay tuned for individual meetings </li></ul><ul><li>Difficult times, difficult decisions </li></ul><ul><li>If we don’t say goodbye to a few of you now, we’ll be saying goodbye to all of you soon. </li></ul><ul><li>Acknowledging your service </li></ul><ul><li>Thank you </li></ul>
    27. 27. Questions & Answers
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