A CHAIN smoker devised a scheme to earn money, knowing that sooner or later, he may contract lung cancer or other tobacco-related illnesses. He bought several hundred packs of expensive cigars and had them insured against fire. After smoking them all, he filed a claim, pointing out that the cigars had, in fact, been destroyed by fire.
The insurance company refused to pay the ill-defined claim. In no time, the man filed for a case in court. The judge ruled that because the insurance company had agreed to insure the cigars against fire, it was legally responsible.
The company had no choice but to pay the claim. The sooner the man accepted the money, the company had him arrested for arson and sued him for a criminal offense. The company had the last laugh when the man failed to consider an exit strategy.
In business, an exit strategy is a withdrawal plan to help those who will be adversely affected to transition from one situation to another as a result of a buyout, merger or acquisition. It can also happen when an organization decides to downsize its operations, affecting many jobs in the process. In some cases, a “golden parachute” is offered to sweeten the offer to workers.
This includes giving a high rate of separation benefits, helping people manage their money, and even organizing company-sponsored programs on entrepreneurship.
In police and military operations, an exit strategy is similar to what we read from the recent news about an “extrication plan” to minimize the loss of “blood and treasures” representing the life of duty officers and their equipment, including guns, ammunition, night vision goggles, body armor, and uniforms.
We can’t overemphasize this in the light of the recent Mamasapano incident where 44 valiant officers of our Special Action Forces perished.
An exit strategy is imperative in any business or military operation. If you don’t have it, chances are the result would be disastrous. A private organization motivated by its social consciousness may focus on the welfare of its employees, so much so that they must be considered in any exit plan.
In the same manner, the police and military should not take an exit plan for granted. Otherwise, the repercussions can be disastrous, like what’s happening to Commander-in-Chief P-Noy who is now being hit by an all-time negative public outcry.
Not every business and military organization will care to formulate and execute an exit strategy at its highest form. But every organization can benefit from the abundance that comes from having a well-planned exit strategy.
In your organization, where does an exit strategy need to be applied aside from downsizing or buyout? The first thing that comes to our mind is in case of death or retirement of a high-paying executive or the sudden resignation of a key worker. If you have a periodically updated succession plan, then that would suffice as part of an exit strategy.
How about the application of an exit strategy of people in certain volunteer, professional organizations? What’s the best, honorable way for a volunteer-president to relinquish his post? If an elected president has completed his term of office, what kind of assignment do we give him after naming him an ex-officio or honoring him with such mundane titles as immediate past president or simply “past president” after several years?
In many cases, they are elevated as members of the esteemed Council of Presidents or similar noble status depending on what their constitution and by-laws may provide. But what if they decide to perpetuate themselves, even up to the extent of demoting themselves by occupying the post of an ordinary trustee, board member, or even a vice-president? Is that improper or simply pathetic, similar to what former President Erap has done when he campaigned for and won as mayor of the City of Manila? Do you smell rats here?
People who are motivated by power, connection, and money on the side may continue to hang on no matter what others feel and think about them. That’s kapalmuks (thick-skinned). Therefore, to what extent must people respect each other at both the politically correct and emotional levels? If you don’t know the answer because you’re coasting along with others, then better check your true condition as you may be going downhill.
Rey Elbo is a business consultant specializing in human resources and total quality management. Send feedback to firstname.lastname@example.org or follow him on Facebook, LinkedIn, Twitter or through his personal blog at www.elbonomics.com.