Dear Ms. Michelson,
As we have discussed previously, JVA is at a crossroad and needs to determine the best route to increase profitability and preserve employee morale. Currently we have a few options on the table such as closing down international factories or making some changes in the areas of performance management. In order to maintain employee satisfaction and achieve the goal of cutting costs, I believe it is necessary to review performance and revenue every six months. This allows JVA to make adjustments to pay increases or decreases twice a year based upon the organizations overall profit or loss.
Performance management should be adjusted so that we are placing importance on individual performance and making pay increases accordingly. Leadership will play an important role in maintaining morale and keeping employees motivated to meet and/or exceed their individual goals. It is possible that we are able to produce more so as long as everyone aboard has the right mindset. I propose this to be a permanent part of the way we conduct performance reviews.
From a temporary standpoint perks such as travel rewards, discount tickets, cell phone discounts, gym memberships, and home/auto insurance discounts should go away until there is consistent stabilization within the organization. It would be explained to each employee why these amenities are going away with emphasis on the overall goal of sustaining employment and encouraging profitability. It should also be noted that the loss employee perks is not nearly as critical as job losses. JVA values its employees and would rather face a temporary loss of extras than to lose quality people. I reiterate this because it is imperative that this message is communicated to our employees.
JVA needs to reduce spending from 8% to 5%. The proposed benefits cuts mentioned above will help us achieve this. These cuts would have to be across the board meaning stateside and international. Other areas we would have to consider making changes are production and goods marketed. Currently, employees are eligible for bonuses for both categories. Under the new compensation plan, employees would only be paid bonuses based upon goods marketed semi-annually at a rate that’s half of what’s being paid now. Like other incentives that