Ebony Reed by o9S16v4


									Ebony Reed
Case study/Week 9

Louisville — The last year has been hell for Marie. She is a business managing editor at a
free publication in Kentucky that covers the tech industry. Her employees have low
morale and have gone through three years of cuts. The publication comes out once a
week and has a website to break daily news, so there is little newsprint costs. But ads
have been stagnant and the advertising/circulation department of three has few ideas on
how to revamp their offerings. Marie reports to the site’s general manager. She has a
department of 10 reporters and two editors. Their main focus is local Kentucky tech
businesses and jobs, but increasingly her employees say they should shift or add to their
focus personal finance news. She isn’t sure they should go that route. But other than the
daily paper in Louisville, there really isn’t a medium for people to get that info locally.
So the mission of the website/paper is shaky and so are the finances. The website/paper
has had buyouts twice in the last three years, reducing its staff both times by 10 percent.
Those reductions came from the reporting ranks.

TOTAL STAFFING (21 people): 10 reporters, 2 editors business editors, 1 business
managing department head. Two general news reporters and 1 general news editor. A
general manager; 1 tech person. One advertising/circulation manager who oversees three
sales people.

FINANCES: The website/weekly paper has a budget of about 1.5 million for salaries.
The reporters make on average $60,000; editors $75,000; sales people $75,000; GM
$100,000; Tech person $60,000; Cir/Ad manager $85,000 and Business ME $90,000.

The website spends about $500,000 on healthcare for the employees.

The site also spends about $250,000 on software and products, $80,000 on training and
$250,000 on rental space. The budget has another $250,000 for utilities, insurance,
supplies and small expenses.

Total budget: Roughly $2.75 million

So far the website/newspaper has brought in about $2.5 million this year and is expected
to bring in $2 million in ads next year.

The general manager has ordered more cuts. He told the business general manager to
come up with a plan, looking at what people can go, what business model they should
change. And to complicate matters, the GM had a story put online about the pending cuts
before the information was communicated to staffers. The website story that the GM
wrote was posted by the tech person. See the story below.

Short of quit because Marie needs her job, what should she do? She has to come up with
a plan and try to save this free website/weekly paper she loves. But she has so many
problems; she hardly knows where to start. She wants to solve the morale issue, but
without money they won't be in business. To print that weekly paper, it costs about
$60,000 -- roughly $1,000 a week. She's at a cross roads as to whether they should just go
totally online, try to charge readers and how will she make these new mandated 10
percent cuts and keep things moving. (Remember to cite your source; case study emailed
to you, but will also be posted on ebonyreed.com)

Use the readings on HR issues this week to help guide your comments on our posting
next week about this.

The article:

Website to cut 10 percent more of staff

General Manager Terry Egg has decided more cuts are needed at Web Techie
newspaper and website, blaming worse than expected advertising revenue and
hard times ahead.

"This is a tough decision," Egg said. "But the end result of what we're trying to do
is keep the newspaper strong and able to serve the community for a long time."

Traditional media like newspapers, television and radio have suffered revenue
declines in recent years because of a weakening economy and marketers'
decisions to spend more on Internet advertising.

Newspapers across the country, from San Diego to Akron to Newark, have been
trying to cut costs through buyouts and layoffs. The nation's biggest newspaper
chain, Gannett, recently announced plans to cut 1,000 jobs at its papers.

At The Web Techie, the target number represents about 10 percent of the

Employees will be given until Nov. 20 to decide to leave voluntarily. If 10 percent
don't volunteer, the paper will then move to layoffs, Egg said.

The severance package would include two weeks of pay for every year worked.
Health insurance is included for those who leave voluntarily. Those who are laid
off will not receive health insurance. The newspaper/website is a non union work

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