Peter Kafka

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AOL Begins Firing Employees Who Wouldn’t Leave

In November, AOL CEO Tim Armstrong said he needed 2,500 “volunteers” to give up their jobs, but not enough of them got the message–only 1,100 walked away on their own.

Now Armstrong is entering the second phase of his corporate slimdown and is firing some 1,000-plus employees.

AOL (AOL) officials say the company has begun notifying European employees of its plans to shut down many of its offices there and has started tapping some American workers as well. The bulk of the U.S. layoffs are slated for this Wednesday, the company says.

The goal is to cut payroll costs by a third.

The layoffs have been in motion for many months: Armstrong came onboard as CEO last spring and it has been clear since then that he would need to cut costs either before or after the company spun off from Time Warner (TWX).

AOL hasn’t released a breakdown of cuts by territory or by department. But I’m told that the company’s editorial/content production staff, which Armstrong and his lieutenants have been emphasizing as a priority in recent months, will not remain untouched.

Here is AOL’s statement explaining the cuts:

Since we’ve talked in the past about AOL’s restructuring effort, I want to update you. As you know, in November, we announced that the company would take a $200 million charge and that we planned to decrease the size of our global workforce by one-third. Late last year, we offered Voluntary Separation Program to enable employees to decide what was in their best personal and professional interest. We had approximately 1,100 employees opt to join the Voluntary program. At that time we announced the Voluntary program we noted that if we didn’t reach our target reduction of a third we would need to follow the voluntary program with an involuntary action. We did not reach that target.

The next phase of our restructuring plan will include an involuntary layoff. Our process internationally varies by country and is subject to local laws. We began meeting with employees throughout Europe today. For example meetings have already taken place in the UK, Germany and France, and we announced plans to shut down many of our offices in Europe, beginning with those in Spain and Sweden.  In addition, we will be beginning the consultative process with the Workers’ Councils in relevant countries this week.

In the United States, we will begin notifying a limited number of individuals impacted by the involuntary layoff today, with the majority of notifications taking place in the U.S. on Wednesday, January 13. As of this point, this layoff will not trigger the Worker Adjustment and Retraining Notification Act (WARN) in any of our locations. For many of the employees impacted in the U.S., Wednesday will be their last day in the office.

As you know from covering the company, since April, we have been moving through a process that started with strategy, then focused on structure, and has most recently been centered on aligning our costs with the company’s strategy and structure. As a part of this process, we’ve looked at every aspect of this business. We evaluated our competitive position and product portfolio in every market–and we asked the hard questions about areas that were no longer core to the strategy and our profit profiles in the businesses and countries where we operate.

We will be offering packages to impacted employees in the U.S. that will include severance, benefits and outplacement assistance, among other things.

All of our cost alignment work is about ensuring AOL’s sustainability and future success. Project Everest is the completion of phase one of AOL’s turnaround.