© 2001 by Prentice Hall 6-1 The Layoff Decision and Its Alternatives Business Needs to Reduce Labor Costs Voluntary Separations Voluntary Work Force Reductions Outplacement Alternatives to Layoffs and Separations Early Retirements Involuntary Separations Layoffs

© 2001 by Prentice Hall 6-2 Worker Adjustment and Retraining Notification Act (WARN) of 1988 A federal law requiring U.S. employers with 100 or more employees to give 60 days’ advance notice to employees who will be laid off as a result of a plant closing or a mass separation of 50 or more workers.

© 2001 by Prentice Hall 6-3 Outplacement Services  Advance warning and explanation for layoff  Psychological, financial, and career counseling  Assessment of skills and interests  Job campaign services (resume writing, interviewing, training)  Job banks and resources for job leads

© 2001 by Prentice Hall 6-4 “To Keep Employees, Domino’s Decides It’s Not All About Pay”  Problem: store mngrs in region leaving every 3-6 months, turnover rate among non-managerial ees as high as 300%/yr u Average turnover for most large and midsize cos ~10-15%  For fast-food chains, rates as high as 200%/yr for hourly ees not unusual u Costs Domino’s ~$2,500 each time hourly ee leaves, ~$20,000 each time store mngr quits  Some cos addressing problem w/ higher starting wage u Starbucks pays more than minimum wage, turnover rate for hourly ees is 80-90%  Domino’s willing to try all sorts of tactics, except paying hourly ees significantly more u “You can’t overcome a bad culture by paying people a few bucks more.”  Applebee’s able to reduce turnover in co-owned restaurants from 146% in 2000 to 84% in 2004 –Source: Wall Street Journal, 2/17/05; Wall Street Journal, 11/21/05

© 2001 by Prentice Hall 6-5 “The Wegman’s Way”  Wegman’s labor costs run between 15% and 17% of sales, cf. 12% for most supermarkets Wegman’s  Annual turnover rate is 6%, cf. 19% for grocery chains w/ similar number of stores  Industry’s annual turnover costs can exceed entire profits by more than 40%  Gallup survey found that over one-month period, shoppers who were emotionally connected to supermarket spent 46% more than shoppers who were satisfied but lacked emotional bond w/ store –Source: Fortune, 1/24/05