1. Managing Employee Separations, Downsizing, and Outplacement
Dr. Jeanne Michalski 1

2. What Are Employee Separations?
Employee separations—termination of an employee’s employment with an organization
Turnover rate—rate of employee separations in an organization
Annualized turnover rate = number of employees leaving * (12) _
average # of employees # months in period
during the period

3. Types of Employee Separations
Voluntary separation—the employee ends the relationship with the employer
Quits
Retirements
Involuntary separation—the employer terminates the employment relationship
Discharges
Layoffs, downsizing, and rightsizing

4. Costs of Employee Separations

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

6. Managing Early Retirements
Features of early retirement policies:
Financial incentives package
Open window
Can substantially reduce size of workforce
Must be managed

7. Managing Early Retirements
Possible problems with early retirements:
Too many employees accept retirement offer
Wrong employees may leave
Employees may feel they are being forced out
Management:
Can ask how employees would respond to early retirement offer
Should treat senior employees like all others

8. Managing Layoffs

9. Alternatives to Layoffs
Attrition
Hiring freeze
Not renewing contract workers
Encourage voluntary time off
Redesign jobs
Transfers and Relocations
Job sharing
Freeze or cut pay
Retrain workers

10. Implementing a Layoff Developing Layoff Criteria
Notifying employees
Developing Layoff Criteria
Seniority vs. Employee Performance
Communicating to laid-off employees
Face-to-face discussion
Middle of the week

11. Implementing a Layoff Coordinating media relations
Rumors can be very damaging
Maintaining security
Some employees need to be escorted out
Reassuring survivors of the layoffs
Minimize survivor anxiety
Listen to survivors’ concerns
Create upbeat, energetic climate
Show employees you appreciate their work

12. Outplacement Three goals: Program for separated employees
Emotional support
Job search assistance
Three goals:
Reducing the morale problems
Minimize litigation initiated by separated employees
Assist separated employees in finding comparable jobs as quickly as possible

13. Summary and Conclusions
Separations have both costs and benefits
Separations—voluntarily or involuntarily
Consider voluntary early retirement as alternative to layoffs
Layoffs should be a last resort
Use other cost cutting measures first
Outplacement services can help separated employees