1. © 2004 by Prentice Hall Terrie Nolinske, Ph.D. 6 - 1 6 Managing Employee Separations, Downsizing, and Outplacement

2. © 2004 by Prentice Hall Terrie Nolinske, Ph.D. 6 - 2 HR Challenges… What are voluntary and involuntary separations? What are fair and effective HR policies for separations, downsizing, and outplacement? How can legal issues be minimized in separations?

3. © 2004 by Prentice Hall Terrie Nolinske, Ph.D. 6 - 3 Human Resource Replacement Costs Recruitment costs Selection costs Training costs Separation costs

4. © 2004 by Prentice Hall Terrie Nolinske, Ph.D. 6 - 4 Benefits of Separation… Reduce labor costs Replace poor performers Increase innovation Opportunity for greater diversity

5. © 2004 by Prentice Hall Terrie Nolinske, Ph.D. 6 - 5 Voluntary Separation… Employee decides, for personal or professional reasons, to end the relationship with employer.

6. © 2004 by Prentice Hall Terrie Nolinske, Ph.D. 6 - 6 Involuntary Separation… Employer terminates relationship with employee due to economic necessity or poor fit between employee and organization.

7. © 2004 by Prentice Hall Terrie Nolinske, Ph.D. 6 - 7 Alternatives to Layoffs and Separations Voluntary Separations Involuntary Separations Early Retirement Voluntary Workforce Reduction Cut Labor Costs by… Outplacement Layoffs

8. © 2004 by Prentice Hall Terrie Nolinske, Ph.D. 6 - 8 Alternatives to Layoffs Change in Employment Policies Reduction through attrition Hiring freeze Cut part-time employees Cut internships or co-ops Subcontract work to in-house staff Voluntary time off Leave of absence Reduce work hours

9. © 2004 by Prentice Hall Terrie Nolinske, Ph.D. 6 - 9 Alternatives to Layoffs Change in Job Design Transfers Relocates Job sharing Job rotations Job enlargement Demotions

10. © 2004 by Prentice Hall Terrie Nolinske, Ph.D. 6 - 10 Alternative to Layoffs Changes in Benefits Pay freeze Cut overtime pay Use vacation / leave days Pay cuts Profit sharing or variable pay

11. © 2004 by Prentice Hall Terrie Nolinske, Ph.D. 6 - 11 Worker Adjustment and Retraining Notification Act of 1988 U.S. employers with 100 or more employees give 60 days’ advance notice to employees who will be laid off from plant closing or separation of 50 or more workers.

12. © 2004 by Prentice Hall Terrie Nolinske, Ph.D. 6 - 12 In the Process of Separation… Give as much warning as possible for layoffs Use a private office Be clear Allow no time for debate Maintain the integrity of all

13. © 2004 by Prentice Hall Terrie Nolinske, Ph.D. 6 - 13 In the Process of Separation… Don’t rush employee off-site unless security is an issue Put everything in writing Provide outplacement services away from company Express appreciation, as appropriate

14. © 2004 by Prentice Hall Terrie Nolinske, Ph.D. 6 - 14 Goals of Outplacement Reduce morale problems of employees about to be laid off Minimize litigation Assist separated employees in finding comparable jobs quickly

15. © 2004 by Prentice Hall Terrie Nolinske, Ph.D. 6 - 15 Exit Interviews Use skilled interviewers; assure confidentiality Ask open-ended questions; avoid interrogation Respond to employees’ comments Explain how HR will follow-up

16. © 2004 by Prentice Hall Terrie Nolinske, Ph.D. 6 - 16 Case As a member of the management team, you are involved in an upcoming layoff at “Storage Way”. This is the 4 th layoff and will reduce the number of staff another 40%, to 38. The layoff will hit sales and marketing hardest, along with engineering. How will you develop and implement the layoff plan?