TO:

Kate Keene, CEO, and Board of Directors

FROM:

Crystal Griffin

DATE:

April 1 2015

SUBJECT:

Business Opportunity

CHALLENGE

Over the years, Keene Financial Planning (KFP) has proven that they are a top company to work
for. For the past 10 years, KFP has rank in the top places to work for. As a company this is
something that were extremely proud of. While KFP now has many people who want to be a
part of the team, KFP didnt start this way. We have come a very long way from where we started
off at.
When KFP first opened up we struggled a bit to get to the top. Starting off, we had to get creative
on how to get people to want to join the KFP family. In order to get people interests, we gave
special bonuses and incentives to anyone who became employed by us. While this tactic was
important for the business at the time, it is now clear that these incentives have become a
liability.
It has now become apparent that these incentives might be causing issues for the company. There
is the obvious of the extra budget it is costing us to keep these people. Addressing this issue can
make KFP a much more profitable company. These incentives are also starting to bring down
employee morale. Employees who are doing the same job, and sometimes even more, arent
getting the same benefits as our veteran employees. They arent feeling as valued in the KFP
family. These incentives also are a factor in our veteran employees staying in their position
longer than planned. While it is great that we dont have to worry about training new employees
to take these roles, it is also making it impossible for other employees who want, to advance into
roles to do so. We risk losing these employees to our competition, or getting less quality work
out of them because they are not seeing the payoff for being a loyal member of the KFP team.
While we appreciate the loyalty and work that our veteran employees have given us it may also
cost KFP more money to have them in the company. A research paper done by William C.
Byham proved that veteran employee cost a company more money, have more health care
benefits, and more vacation time then new employees. (Byhann, 2008). We need to make sure
that we are taking every step we need to keep KFP a leading name. In order to make sure that
KFP is going to stay on top, taking a deeper look at the challenge is necessary.

ALTERNATIVES

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KFP has to address the challenge of rising salary and benefits cost. With a challenge like this
there are a lot of ways that we could solve it. Some of those options include:

Force retirement
Employee buyout
Phase out
Leave things the way they are

A discussion of each of these options, including the potential benefits and costs of each, follows.
Force Retirement Approach:
While a complete force retirement approach is illegal under the Age Discrimination in
Employment Act (ADEA), there are loophole around the law. We could do a restructure and
eliminate the positions that our original employees are in. After making eliminating the role we
then do not open up a new spot for them. (Berk, 2015) They are then force to leave the company
for good.
Taking an approach like this we will notice an immediate saving. This approach is also one of the
quickest to see results. We will start saving the same day we put this plan into effect. The time it
takes is however long we decide to give them before telling them they need to leave. This will
also give KFP a chance to open new positions in the company and let some of our other loyal
employees move up. Taking this approach will address all the issues we face with this challenge.
This approach though will do a lot of damage to KFP. It will look bad on KFPs PR. It could
look like were not doing well and that is why we are letting people go. It can also make us look
like we dont care at all about our employees. Making new employee not consider KFP or new
clients look to other companies for their needs. This approach will also leave for bad employee
morale. It might make people look for a new job in fear of being next to be cut, or make them
never want to advance in the company. We could lose a lot of important employees due to this
approach. This approach would also be a huge insult to our veteran employees. After all their
time they gave us we just toss them out. Odds are all the investment they have with KFP they are
going to pull too. Costing additional money.
Employee Buyout Approach:
An employee buyout would be us offering a certain amount of money, times a percentage of how
long an employee has worked with KFP. We offer employees to leave company. A company
called AON took an approach like this to help secure service from employee and help keep the
cost down for their business. (Roberts, 2005). We would have to offer this solution to every
employee at KFP in order to be fair to everyone, not worry about any lawsuits for unfair
practices.
With this approach, we wouldnt have to worry about bring down employee morale or adding
extra stress to our employee that they might not have a job soon. It will reward an employee for

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their loyal services to KFP. This approach wont take much time to roll out either. It will help
keep good PR for the company.
The biggest thing that KFP risk with an approach like this is how many and who all this
approach will interest. Interviewing Max Griffin, a former Union Pacific Railroad Train Master,
it was discovered during one there buyout approach they lost more employee then they were
planning on. Due to this they were forced to go into a huge hiring phase. (Griffin, 2015). As we
know, hiring a new employee cost additional money to the company on training and setting up a
new employee. KFP is also risking losing members of the team they werent planning on. While
you the company might see this as an upset to lose certain member it can also give us better
insight on employees. Tony Hsieh, CEO of Zappos, has a certain approach to where Zappos
trains an employee for 30 day. At the end of the employees training, Hsieh then offers them a
certain amount of money to leave the company or gives them a job. His theory if they are willing
to leave for a little bit of money they were never going to be a huge asset to the company (Hsieh,
2007). So while it might target the wrong employees it might be for the best to see what
employees has a true devotion to the company.
This approach also wont have a fast return on profit for KFP. The company will have a lot of
money out for people who take this approach and it might not even eliminate the employee who
are cost KFP the most money since our veteran employees have given us so much loyal years
this approach might not even interest them. So we might not save any money at all with it. It is a
very risky idea, with little chance of seeing a little profit.
Phase Out Approach:
This is an approach where KFP could offer employees with 300+ months of employment to
lessen their work week down to only 3 days a week. If an employee were to take this incentive
they would also be taking a cut in their benefits. They would still have health care, but with a
higher co-pays, they would also take a cut on extra bonus they were getting.
This approach would help KFP cut back on the bonus we pay out to our long-term employees.
Most employees like to stay working longer in order to keep a decent health care. (Byhann,
2008). So by offering this approach they can cut back on other benefits, but keep a health care,
but KFP will still save money on this benefit in the long run. Another perk of this one we can
slowly ease in new employee on our long term employees clients. They will also get in-house
training at a cheaper rate for KFP. We also wouldnt have to worry about offending our employee
to train them since their week is less. KFP will also get to keep their long-term employees for a
bit longer at a more affordable rate while leaving the employee happy. This will also benefit our
employees by saving them money on gas, lunch, and parking. This can also be seen as an
incentive for our newer employees. They will see that loyalty with KFP will pay off. This will
also give some of our other employee hopes of advancement into these desired positions in the
company.
While this approach has a lot of perks there is a chance that it might leave customer confused
who to contact on their account and cause dissatisfaction. This approach is also the longest to see
a noticeable return for KFP. KFP also risk having these employee staying longer than normally

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would since they have such a short week. Though there also the chance they might see how great
the idea of retirement might be and leave sooner.
Leaving Things As Is Approach:
KFP could take the stance and not do anything to address this issue. If KFP doesnt do anything
they wont spend any extra money. They wont have to spend labor on employees trying to get a
plan together and getting implemented. By not making any change can help keep employees
stress level down.
If KFP doesnt make a change there is still going to be the high cost of employee benefits. KFP
image doesnt advance either. If KFP only has our long term employees it ruins the chance of
have a diverse age group employees. Getting older employees out, lets us get young blood in and
give us new ideas. This also helps give us an edge with certain clients. Younger employees will
attract some clients while older employees will attract some clients.
Another major thing to consider if KFP doesnt make this change is that limits advancements for
certain employees. If some of our long term employees dont leave our employees below them
will never get to advance and we risk losing them to other competitors. Which can cost KFP even
more money.
The table below summarizes the advantages and disadvantages of each alternative:
Alternative
Force Retirement

Employee Buyout

Phase Out

Leaving Things As Is

Pros
Fast solution.
Immediate noticeable saving.
More positions opened.
Keep employee morale high.
Offers compensation for years
of loyal services.
Offer insight into employees
devotion.
Allows for in-house trainings.
Incentive for remaining with
KFP to employees.
Save money on wages and
benefits.
Cost no additional money.
Give employees security.
No loss of productivity for
transition phase.

Cons
Bad employee morale.
Bad PR for KFP.
Losing valuable assets.
Might target wrong personnel.
Not cost-efficient.
Might reduce workforce too
much.
Potential client dissatisfaction.
Longer time for noticeable
return.
Possibility remaining in this
status for long periods.
Cost still remains high.
Public image.
Makes advancement less
achievable.

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RECOMMENDED ALTERNATIVE
Of the options listed above, the best choice is the Phase Out Approach. This will give KFP and
our employees the best results. KFP doesnt want to lose employees that have shown loyalty to
us, and doesnt want to punish them for being loyal. Taking this approach KFP doesnt have to
worry about employees stressing they will never advance in the company, or that advancing will
leave them jobless. This solution will keep morale high and cost lower.
By taking an approach like this, KFP wont see a financial gain quickly. The benefits the
company will gain though, is keeping KFP one of the top company to work for because they treat
employee fair. As also mention KFP will get in house train without resentment, and our clients
will be transitioned into a new employee on their cases easier. Although it might leave to some
confuse at first, we can assure our clients it is the best for them too. They can see the new
member is learning all their needs, from the person they trust most. They have double support
from KFP now.
While it there a worry a person might keep on this approach for a longer period, even if they do
KFP will still save money. They dont get the extra benefits we previously paying for. They also
working half the days but will normally give the same amount of productivity they use to give in
a five-day work week since they know their job so well (Griffin, 2015).
If KFP doesnt look at making some sort of change, there is a risk of losing important employees,
the cost of certain employees high, and employee morale going down. KFP has worked very hard
on their image, and to keep being the best, KFP has to be willing to make changes and address
this challenge.

IMPLEMENTATION PLAN
Implementing this plan will take the company about 60 days to have it in full effect. The time
will be used to be setting up who all is going to be taking a part of our implemented plan. Once
we then know who is taking part of it, we then need to figure out an appropriate schedule that
works for both KFP and the employees taking part of this. Once we have that figured out we will
need to place our trainee employees with our veteran employees. After we get that figured out,
we will need to contact all clients that will be effect by this change and let them know who else
will be in charge of their accounts.
While this plan might take a little bit of time, the benefits that KFP will gain from it will be
worth it. We will have in-house training with a more positive attitude from the trainers. This will
also help ease customer into a new person taking over their accounts and make the transition less
shocking. KFP will keep the high employee morale that were proud of, and be saving more
money and opening new higher positions for our hard working employees.

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REFERENCES
Berk, B. A. (2015, March 27). Can you force retirement? Retrieved from
www.bevndenberk.com/small-business/can-you-force-retirement/
Byhann, W. C. (2008). Flexible phase-out. T+D, 34-37. Retrieved from
http://web.b.ebscohost.com.libproxy.boisestate.edu/ehost/pdfviewer/pdfviewer?
sid=65fa09ca-cbac-4268-a15e-9c84056b8d04%40sessionmgr198&vid=1&hid=110
Griffin, M, Train Master, Union Pacific Rail Road. (2015, March 26). Personal interview
Hsieh, T. (2007). Delivering happiness. New York, NY: Hachette book group.
Roberts, S. (2005). Aon Adds Buyout-Triggered Severance Benefits. Business Insurance, 31.
Retrieved from http://web.b.ebscohost.com.libproxy.boisestate.edu/ehost/detail/detail?
sid=1194295b-f354-4e06-b9cf1a4926ba9ac7%40sessionmgr198&vid=1&hid=110&bdata=JnNpdGU9ZWhvc3QtbGl2Z
Q%3d%3d#db=buh&AN=16005955

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