Managing Employee Separations, Downsizing, and Outplacement By Muhammad Zohaib Sufyan SZABIST

Employee Separation The termination of employee’s membership in the organization And Turnover Rate is the rate at which employees leave the organization.

Cost of Employee Turnover Recruitment Cost Advertising, Campus Visits, Recruiter’s time, Head Hunter’s fee Selection Cost Interviewing, testing, reference checks and relocation Training Cost Orientation, Direct Training, Trainer’s time, Lost productivity during training Separation Cost Separation pay, benefits, exit interview, vacant position

Benefits of Separation Reduced labor cost Replacement of poor performers Increased innovation Opportunity for greater diversity

Types of Employee Separation Voluntary Separation Quits Retirements Involuntary Separation Discharges Layoffs, downsizing Rightsizing

Managing Early Retirement When company decides to Downsize Early Retirement is best option Package of financial incentives to senior employees opting early retirement An open window that restricts eligibility to fairly short period of time Problems Too many employees taking this option Wrong employees may leave Employees may perceive they are forced to leave

Managing Layoffs Alternatives to Layoffs Employment Policies Attrition Hiring Freeze Cut part time employees Give Subcontracted work to in-house emp. Voluntary unpaid time off Reduced work hours Change in job design Transfers & Relocation Job Sharing Demotions

Managing Layoffs Pay & Benefit Policies Training Pay freeze Cut overtime pay Pay cuts Profit sharing or variable pay Training Retraining

Implementing Layoffs The criteria for dismissal must be clear based on Seniority Employee Performance Communicating to laid-off employees Private face to face discussion by Supervisor Should be done most humanely and sensitively Supervisor should express appreciation of employees contribution Don't Break this news during, right before or after vacations or weekends

Implementing Layoffs Coordinating Media Relations Can be very dangerous for Workforce morale Customers, suppliers & surrounding community Careful communication to be done about layoffs to External Clients (via the media) Workforce (via internal communication)

Implementing Layoffs Maintaining security Lay off workers can threaten company property Employee Sabotage could result in substantial damage. (banking & software) Treatment of laid-off employees with dignity & respect generally reduces the potential for sabotage

Implementing layoffs Reassuring survivors of layoff Low morale and high stress could be made worse if not handled well Survivor’s Anxiety (Pg. 203) Keeping Up the Morale (Pg. 203)

Outplacement HR Assistance program to help separated employees deal with the emotional stress of job loss and provide assistance in finding new job Goals Reducing the morale problem Minimize the amount of litigation initiated Assisting separated employees in finding comparable jobs Usually a consulting company is engaged for outplacement services

I S S U E After eight years as marketing assistant for Karachi office of Allied Bank, Mr. Shah was told that his job, in a non-revenue-producing department, was being eliminated. His choices: He could either be laid off (with eight months’ severance pay) or stay on and train for the position of credit analyst, a career route he had turned down in the past. Nervous about making mortgage payments for his new Alto, Mr. Shah agreed to stay, but after six months of feeling miserable in his new position, he quit. Was his separation from bank Voluntary or Involuntary? Can you think of situations in which a voluntary separation is really an involuntary?

If off-the-job stress and dissatisfaction begin to create on-the-job problems, what are the rights and responsibilities of a Human Resource Manager in helping the employee to overcome these problems? Are intrusions into such areas an invasion of privacy, a benevolent and altruistic* employer practice, or simply prudent financial step taken to protect the firms investment? I S S UE *When one thinks for other’s benefit

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