1. Managing Employee Separations, Downsizing and Outplacement
CHAPTER SIX
Managing Employee Separations, Downsizing and Outplacement

2. Chapter Objectives Review Key Terms
Identify the costs and benefits associated with employee separations
Understand the differences between voluntary and involuntary separations
Avoid problems in the design of early retirement policies
Design HRM policies for downsizing that are alternatives to layoffs and develop a layoff program that is effective and fair
Review Key Terms
Attrition
Employee separations
Exit interviews
Hiring freeze
Involuntary separation
Outplace assistance
Turnover rate
Voluntary separation

3. Key Terms Employee separations Turnover rate
The termination of an employee’s membership in an organization.
Turnover rate
The rate of employee separations in an organization.

4. Costs of Employee Separations
The costs of employee separations
Recruitment costs
Selection costs
Training costs
Separation costs
Severance pay
Exit interviews
Outplace assistance

5. Benefits of Employee Separations
The benefits of employee separations
Reduced labor costs
Replacement of poor performers
Increased innovation
Opportunity for greater diversity

6. Types of Employee Separation
Voluntary separation
A separation that occurs when an employee decides, for personal or professional reasons, to end the relationship with the employer.
Quits
Retirements

7. Types of Employee Separation
Involuntary separation
A separation that occurs when an employer decides to terminate its relationship with an employee due to a poor fit between the employee and the organization or economic necessity
Discharges
Occur when a firm decides there is a poor ‘fit’ between an employee and a the organization
Layoffs - downsizing and rightsizing
Downsizing
Strategy by a company to reduce scale and scope of its business to improve its financial performance
Rightsizing
Reorganization of a company’s employees to improve efficiency

8. Alternatives to Layoffs – Early Retirement
Features of early retirement policies
Package of financial incentives that make it attractive for senior employees to retire earlier than they had planed
‘Open window’ that restricts eligibility to a fairly short period of time
Avoiding problems with early retirements
A longtime employee who has performed satisfactorily over many years suddenly receives an unsatisfactory performance evaluation
A manager indicates that senior employees who do not take early retirement may lose their jobs anyway because a layoff is likely in the near future
Senior employees notice that their most recent pay raises are quite a bit lower than those of other, younger workers who are not eligible for early retirement

9. Alternatives to Layoffs – Employment Policies
Attrition
An employment policy designed to reduce the company’s workforce by not refilling job vacancies that are created by turnover.
Hiring freeze
An employment policy designed to reduce the company’s workforce by not hiring any new employees into the company.

10. Alternatives to Layoffs
Changes in Job Design
Reallocation and relocation
Bumping
Job Sharing
Pay and Benefit Policies
Pay freezes
Cut overtime
Use vacation time and leave days
Pay cuts
Retraining

11. Implementing a layoff Notifying employees Layoff
The elimination of jobs, often without regard to employee performance, usually when a company is experiencing financial difficulties. Also may occur if a company is changing its corporate strategies.
Notifying employees
Worker Adjustment and Retraining Notification Act of 1988 (WARN)

12. Worker Adjustment and Retraining Notification Act of 1988 (WARN)
Employment losses covered by the law:
Terminations other than discharges for cause, voluntary departures, or retirement
Layoffs exceeding six months
Reductions of more than 50% in employee’s work hours during each month of any six-month period.
Penalty for failing to give notice
One day’s pay and benefits to each employee for each day’s notice that should have been given, up to 60 days.

13. Worker Adjustment and Retraining Notification Act of 1988 (WARN)
Requires employers of 100 or more employees to give 60 days’ notice before closing a facility or starting a layoff of 50 people or more.
The law does not prevent the employer from closing down, nor does it require saving jobs.
The law is intended to give employees time to seek other work or retraining by giving them advance notice of the shutdown.

14. Implementing a Layoff Implementing a Layoff Develop layoff criteria
Seniority vs. Performance
Communicating to laid-off employees
Coordinating media relations
Maintaining security
Reassuring survivors of the layoffs
Survivor Anxiety
More work
Unsettling changes
Self assessment of contributions
Guilt

15. Outplacement The Goals of Outplacement -
Reducing the morale problems of employees who are about to be laid off
Minimizing the amount of litigation initiated by separated employees
Assisting separated employees in finding comparable jobs as quickly as possible

16. Outplacement Services
Emotional Support
Job-search Assistance