What does it say about the leadership of Mr. Siegel that he called each person individually via videoconference? What are the ripple effects that this story will likely have throughout his company, to ZipRecruiter's customers, and the industry in which it operates?
This is the reading:
The toll the new coronavirus has taken on an economy that was healthy at the start of March came into clear relief when the government said Thursday that 6.6 million Americans had applied for unemployment benefits the week before.
No one weeps for the corporate bosses behind the decisions to lay off many of those people, but these bosses are struggling as they make the toughest calls of their careers. Marriott International Inc.'s CEO told analysts this surpasses the magnitude of 9/11 and the 2008 financial crisis combined. In a letter to employees , General Electric Co.'s CEO said this is an era where the unknowns outweigh the knowns.
Business leaders live by the calendar, attaching forecasts, projects and goals to a specific date or period of time. No one knows when state-issued mandates to stay at home will lift, and that renders a calendar about as useful in 2020 as an eight-track player. It is like stumbling around in the dark.
As quarterly earnings conference calls take place in the coming weeks, expect to hear a lot of "we don't know," "it's hard to say," and "I wish I had a crystal ball." These terms aren't typical for the managing class.
"CEOs are wired to take action," Jerry Colonna , a former venture capitalist who now counsels top executives, told me this week. "It's really hard when they don't really know what action to take. It's like taking a bucket to extinguish a fire and not knowing if the bucket is full of water or confetti."
Bahram Akradi, the Iranian-born founder of the Life Time Inc. health-club chain , is one of those CEOs looking for water in the bucket. I've talked with Mr. Akradi often in recent weeks about how his company is navigating the crisis.
The answer: It isn't pretty. Revenue has all but dried up, nearly $1 billion in new developments are on ice. "These are the facts," he told me during a Wednesday FaceTime session from his Chanhassen, Minn., office. "Empty parking lots are a fact."
Like many honchos I talk to, Mr. Akradi would like political leaders to set a firm date to reopen businesses and end rigid sheltering rules—even if that date is several weeks in the future. He also wants everyone's bills across the country to be postponed in April. For instance, mortgages or car payments due this month should be deferred to May.
Topping the list of concerns Mr. Akradi can control: the 38,000 people on his payroll. He likens Life Time to a boat in troubled waters. "We are in a big, massive storm," he told employees March 25. "We have no idea how long the storm is, or how bad it's going to get. What I'm trying to do is make sure I keep everybody on this ship staying intact and alive. That's all."
Eight days before, when he closed more than 150 clubs in 30 states, he recorded a video message telling employees Life Time could weather a two-week shutdown without breaking much of a sweat. After that, he'd have to get creative.
Last week came another video in which he had to explain why roughly 36,000, or about 90%, of employees were going on furlough as of Wednesday. The move included a commitment to pay 100% of affected workers' insurance premiums and an extra $10 million for a fund to help employees with essentials that unemployment checks won't cover.
This isn't how he wants it. "They've been with me 28 years, busting their rear ends." Now he's encouraging them to buy only the basics and try, if necessary, to negotiate favorable terms with potential creditors.
Mr. Akradi, 58, cut jobs before , during the financial crisis when a slowdown in discretionary income slammed several industries, including fitness. Even cutting under 200 jobs "felt like death, the ugliest thing I've had to do in my life." How much worse is it this time? "It is not even in the same orbit."
The day after my last chat with Mr. Akradi, I talked by phone with ZipRecruiter Inc. founder and CEO Ian Siegel as he kept an eye on two children at his home in Southern California. Mr. Siegel's had just finished a roller-coaster of a month that included laying off or indefinitely furloughing 500 people, roughly a third of the staff.
"All the way up to March 9 we were in a boom economy, and then literally overnight we were in a recession economy." Job seekers use ZipRecruiter to search and apply for jobs posted by companies on its website. Not all hiring has stopped, but listings rapidly declined starting March 10.
He had to decide whether the abrupt decline was a "shock to the system or the new normal." Without an accurate compass, he decided to plan for the worst-case scenario. "We knew we were going to have to make hard choices fast or harder choices later." He intentionally cut to the bone.
Mr. Siegel, 46, and his management team took about a week to figure out what to do. Keeping 700 employees would be manageable considering the company's liquidity and revenue levels. It likely gives ZipRecruiter enough head count to pivot back to growth if there is a sharp boost in hiring at the end of this crisis.
The process was gut wrenching; "definitely the hardest decision I've had to make." Mr. Siegel informed each displaced employee individually via videoconference, making it clear that each one was considered valuable. He hopes to rehire many of them.
Here's an important thing Mr. Siegel takes away from this process: A red hot startup like the decade-old ZipRecruiter can be sobered at a moment's notice.
"I really thought we were hardened, that we were operationally invulnerable," he said. The steps he took last month were "humbling."
These CEOs believe they will emerge and their businesses will eventually resemble what they looked like a month ago. Mr. Siegel said making necessary cuts now means the enterprise can continue to live another day and Mr. Akradi says CEOs like him are as crafty as they are tenacious.
"I'm never going to be faster than the bear," Mr. Akradi told me. "I just have to be faster than a lot of other folks."
Good advice, but outrunning the other guy just got a lot harder to do.
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With our dream business in mind what be some of your responsibilities as an employer?
These questions are related to my business plan blog which I am making on the restaurant business. so, please answer all the questions according to that scenario.
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Screens Plus (SP) Screens Plus (SP) is a manufacturer of high end computer monitors. The company assembles Ultra HD computer monitors in Calgary, Alberta and sells them online and through specialty electronics stores. The most popular model retails for $4,995 and SP bundles the monitor with high fidelity audio components that are purchased from externalsuppliers. Two components that are currently bundled are a set of external speakers and a package of specialized power supplies and HDMI connecting cables. Due to ongoing delivery challenges with their Pacific Rim suppliers and carriers, SP has decided to buy from suppliers in closer proximity to Calgary. The speakers will be supplied by an electronics company with operations in Juarez, Mexico and the connecting cables will be purchased from a manufacturer in San Francisco, California. The purchase contracts have been negotiated in principle. The speaker supplier sells its products FOB Destination, Freight Collect and Allowed. The receiversupplier only sells its products FOB Origin, Freight Collect. The remaining issue for the SP transportation director is to evaluate the delivery options that her analyst recommended for each product and make a decision. Relevantinformation is provided in the following table: Speakers Cables Manufactured in Juarez, Mexico San Francisco, California SP purchase price $175 CAD per set $225 CAD per unit Weight 28 pounds 5 pounds Dimensions 30” L x 18” W x 18” H 18” L x 8” W x 4” H Characteristics Sturdy, bulky, not easily damaged Compact, vibration sensitive, theft risk Freight terms FOB destination, freight collect and allowed FOB Origin, Freight Collect Option 1 Weekly LTL delivery 200 units $2,485 CAD Cost per delivery Weekly ground delivery 200 units $2,169 CAD Cost per delivery Option 2 Twice per month TL delivery 400 units $2,946 CAD Cost per delivery Twice per week airfreight delivery 100 units $2,411 CAD Cost per delivery Whatresponsibilities, control, and costs does SP bear under each of the FOB terms offered? Whatis the delivery cost and landed cost per unit for each speaker delivery option? Which delivery option do you recommend for the speakers? Whatis the delivery cost and landed cost per unit for each receiver delivery option? Which delivery option do you recommend for the receivers? What other supply chain issues and costs must SP take into considerationwhen making these transportation decisions? Describe the potential social impacts that accompany both choices and recommend strategies to manage these for each supply location. Describe the areas of major risk that pertain to this logistical plan if the Mexican supplier was to be used and propose strategies to manage these. Describe the elements of compliance that apply to importing the product assuming the US suppler was to be used.
In: Operations Management
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