I have heard rumors that there will be another wave of lay offs before Thanksgiving break. Can any one confirm? Will it hit sales again or will it focus on sales support, customer service, marketing, etc..?
11 replies (most recent on top)
The entire plan has always been to move to digital which will allow CL to gut its sales force and support infrastructure. Cengage's revenue will continue to decline. Notice there is no talk about growth in the slides, because their is no growth to be had in this business.
Its all about managing the business down but maintaining EBITDA.
Top line revenue doesnt matter. Its all about profit and cash. And if I read the slides correctly, Cengage EBITDA margin is just under 30%, which is pretty solid.
This is why they dont give a flip about their employees. Their goal is to take the human element completely out of the business.
Hansens Hail Mary is to cut to the bone and hope that the decline in EBITDA stabilizes. The merger cant happen fast enough for him because he will be able to hide lots of this in combined financials.
I was at Gale and cannot, for the life of me, figure out why people are so dedicated to company that continues to lay people off constantly. The above commenter is correct. All the layoffs and downsizing was addressed at the Townhalls. People just seem to miss it, or gloss over it.
@121Wd2LD-zwn No one is taking any "sides" here. We're just spelling out the reality that is Cengage. The company has treated its employees poorly for years. Those who survived cuts were rewarded with 1% merit increases and no bonus for the extra work they've taken on from colleagues who were cut. Meanwhile, execs were still cashing bonuses and the company borrowed money it didn't have to pay dividends to investors. Too many people were fooled by the company's mantra of having a "credo" and being a shinier happier place for employees. That was all fake....the only thing the company cares about is value for its private equity overlords. Everyone else is disposable. The best thing you can do is leave before the real horror show starts in 2020.
It bothers me that some here take the side of the company without acknowledging any responsibility a company has to its employees. It is not a one way street. Unless the company expects people to give the minimum effort they can get away with, the company owes people more than a kick in the pants when they are done with them. We the people need to shun companies that do that. We definitely shouldn’t leave jobs at any other company to join them.
How has no one on this site ever noticed it's Hansen... With an E?
What this last poster has said is true. The downsizing is already planned, in detail, and has been shared with the investor public - which means you, if you bother to pay attention to your own company's investor-side communications. Hanson has a four-year chart that he shares in his investor talks sometimes. It outlines the four-step/three-year downsizing plan for the merged McGraw.
The first major downsize will happen as soon as the approval goes through in the early part of 2020. This will likely involve internals: finance, marketing, product, communications, HR, support, etc. etc. The second major downsize is slated for the end of the school year/selling season, which is early-mid May. This one will involve sales forces and those who support them. Both of those waves will be huge, according to Hanson, involving a couple hundred million dollar's savings. Then there are annual downsizings planned for the following two years, 2021 and 2022. Each of these waves will involve the closure of entire office locations, though these are not called out by name.
The end result of all of this, at the end of 2022, will be a total 450-500 million dollars in savings. That amounts to about a quarter of the combined companies' size currently, meaning that roughly one out of every four current Cengage/McGraw employees will lose their job within the next three years.
There are 2 ways for a merger to be successful: 1) Use the new company's scale and market power to grow revenue 2) Cut the expenses of the new company in half to grow the bottom line. Since number 1 is not an option in this market, the new McGraw will be executing 2. The pain has just begun. Cuts will begin in earnest as soon as the merger closes, and won't end until the new entity feels that they have wrung every extra penny out of the balance sheet. It will be ruthless and it will be brutal. I say this not to be negative, but to point out that the time is NOW to begin looking for a new job. These layoffs were a shoulder tap compared to the train wreck that is coming. I know its a bitter pill for those who believed that Cengage was really the shiny happy employer that was different, but the reality is that private equity investors don't care about your feelings.
@121Wd2LD-qhl It's hardly against the law to lay people off. The value of Cengage stock has actually gone UP as the result of these layoffs. This happens because, from an investor standpoint, belt-tightening is a good thing, something to be rewarded.
The ugly truth about someone in Hanson's position is that it is not his job to save your job. That would be nice and all, but his job is to keep the company healthy and profitable. Hanson reports to the board, that is who he works for, and the expectation is that he will deliver profit to the investors. If he can't deliver profitability through sales and growth, then he has to deliver it through downsizing and savings.
That's just business. It's the way it works. The worker be ultimately does not figure into the equation. You hold no contract, no guarantee or promise of employment. And that IS the legal truth. There is a legal term for this, in fact: at-pleasure employment. You serve your company at the pleasure of leadership, and they may terminate that relationship whenever they feel like it.
I wonder if the DoJ can see what a cold blooded joke this company is. If this is the state of affairs before the merger actually going through, how many hard working folks will be out of livelihood post merger?
I feel for you buddy, but I also have to say "welcome to Cengage!" because that is what this company is all about.
I went through this for what feels like a thousand times, watching people around me disappear, but I remained a true believer and I was really successful as a sales rep for this company. Crazy successful, truth be told. But then it happened to me and once all of the anger, sadness and confusion began to fade, I started seeing things most clearly.
You know, there's lots of talk of great culture within Cengage, and there are a lot of feel-good slogans and claims of success. The Cengage leadership truly understands how to motivate and inspire people. You hear something like "we are changing the way the world learns!" and it's super-easy to take that to heart and to believe that you're really making a difference in people's lives. And then you get out on campus and faculty treat you dismissively, you go on twitter and read the most loathsome hate messages from students, and it kind of makes you wonder why those people don't see what you see - how different and good we are compared to those other publishing companies.
But then people around you begin to leave, and for no real reason at all other than that the company can no longer afford to keep them. It makes no sense, given the overall messaging you've been digesting for months and years. But wait – wasn't Cengage Unlimited an unqualified success? I mean, a million and a half units, that's huge – right?
Well no, it's not. Cengage Unlimited was an ill-considered gamble that failed. Sure, it brought in a lot of unit sales but each of those units only served to bleed revenue from the company and there were not enough takeaway units realized to make up the massive difference. Those 45 people let go today - and the people in the field and those let go last week and the entire San Francisco office - these losses were the direct result of Cengage Unlimited's failure.
Yeah, you still have to get up and go to work tomorrow. And yes, many of these Cengage positions represent some of the best employment opportunities that can be found in your area of the country. All of that is fine, do what you've gotta do. But at the very least, and for your own sake, do it with your eyes open. Realize that despite all of the feel-good messaging, you are working for some of the most cut-throat management people in this business. That was their reputation before joining Cengage, and in fact that is the very reason they were hired into Cengage.
It all starts at the top, and the chief example of what we are talking about is the Chief himself, the man at the top. Do not let the feel-good, town hall transparency fool you, that man will smile to your face and sign your dismissal orders an hour later. That is what he does, that is why he is the chief.
Finally, let me broad the super-painful fact that there is more of this coming and that it is probably going to involve you next time. Maybe not, if you're super lucky, but the bald truth is that most Cengage sales and service people reading these words will be looking for work in six months.
Yes, Hanson is slated to lead the merge but no, do not allow yourself to be lured into complacency because you enter the merge Cengage-branded. Please see above when considering Michael Hanson and loyalty. Doesn't exist. The hard truth is that McGraw dominates Cengage in terms of product installation. Their reps have been selling tech longer, and far more successfully, than their Cengage counterparts have been, and they enjoy far stronger faculty relationships. The service-side folks have been working with those software products longer, and they know them inside and out. Not every Cengage-side person will lose their job next May, plenty will survive. But McGraw is going to dominate and "own" that side of the merged company and Cengage is going to suffer a majority of the loss. There IS a reason they have not replaced the departed Director of Sales, you know.
I share all of this not to scare you but to suggest that, as awful as today was, it was really just a warm up for things to come. So get up, go to work – but also prepare yourself. Cross your fingers, say a prayer, hope for the best, that's all you really can do anyway, but also use these next six months to become job-search ready and even begin to put your feelers out there.
Who knows what might be waiting out there for you?
i really hope not. today was awful. I am in CS. what an awful way to start the holidays. I am following this post.