6 Managing Employee Separations, Downsizing, and Outplacement

1. 6Managing Employee Separations, Downsizing, and Outplacement

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. Human Resource Replacement Costs Recruitment costs Selection costs Training costs Separation costs

4. Benefits of Separation… Reduce labor costs Replace poor performers Increase innovation Opportunity for greater diversity

5. Voluntary Separation… Employee decides, for personal or professional reasons, to end the relationship with employer.

6. Involuntary Separation… Employer terminates relationship with employee due to economic necessity or poor fit between employee and organization.

7. Cut Labor Costs by… Alternatives to Layoffs and Separations Voluntary Separations Involuntary Separations Voluntary Workforce Reduction Early Retirement Layoffs Outplacement

8. Alternatives to LayoffsChange 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. Alternatives to LayoffsChange in Job Design Transfers Relocates Job sharing Job rotations Job enlargement Demotions

10. Alternative to LayoffsChanges in Benefits Pay freeze Cut overtime pay Use vacation / leave days Pay cuts Profit sharing or variable pay

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. 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. 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. Goals of Outplacement Reduce morale problems of employees about to be laid off Minimize litigation Assist separated employees in finding comparable jobs quickly

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. As a member of the management team, you are involved in an upcoming layoff at “Storage Way”. This is the 4th 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? Case