6 Managing Employee Separations Downsizing and Outplacement 2004

6 Managing Employee Separations, Downsizing, and Outplacement © 2004 by Prentice Hall Terrie Nolinske, Ph. D. 1

HR Challenges… • What are voluntary and involuntary separations? • What are fair and effective HR policies for separations, downsizing, and outplacement? • © 2004 by Prentice Hall Terrie Nolinske, Ph. D. How can legal issues be minimized in separations? 2

Human Resource Replacement Costs Recruitment costs Selection costs Training costs Separation costs © 2004 by Prentice Hall Terrie Nolinske, Ph. D. 3

Benefits of Separation… • Reduce labor costs • Replace poor performers • Increase innovation • Opportunity for greater diversity © 2004 by Prentice Hall Terrie Nolinske, Ph. D. 4

Voluntary Separation… Employee decides, for personal or professional reasons, to end the relationship with employer. © 2004 by Prentice Hall Terrie Nolinske, Ph. D. 5

Involuntary Separation… Employer terminates relationship with employee due to economic necessity or poor fit between employee and organization. © 2004 by Prentice Hall Terrie Nolinske, Ph. D. 6

Cut Labor Costs by… Alternatives to Layoffs and Separations Early Retirement © 2004 by Prentice Hall Terrie Nolinske, Ph. D. Voluntary Separations Voluntary Workforce Reduction Involuntary Separations Layoffs Outplacement 7

Alternatives to Layoffs Change 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 © 2004 by Prentice Hall Terrie Nolinske, Ph. D. 8

Alternatives to Layoffs Change in Job Design • • • © 2004 by Prentice Hall Terrie Nolinske, Ph. D. Transfers Relocates Job sharing Job rotations Job enlargement Demotions 9

Alternative to Layoffs Changes in Benefits • • • Pay freeze Cut overtime pay Use vacation / leave days Pay cuts Profit sharing or variable pay © 2004 by Prentice Hall Terrie Nolinske, Ph. D. 10

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. © 2004 by Prentice Hall Terrie Nolinske, Ph. D. 11

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 © 2004 by Prentice Hall Terrie Nolinske, Ph. D. 12

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 © 2004 by Prentice Hall Terrie Nolinske, Ph. D. 13

Goals of Outplacement • Reduce morale problems of employees about to be laid off • Minimize litigation • Assist separated employees in finding comparable jobs quickly © 2004 by Prentice Hall Terrie Nolinske, Ph. D. 14

Exit Interviews • Use skilled interviewers; assure confidentiality • Ask open-ended questions; avoid interrogation • Respond to employees’ comments • Explain how HR will follow-up © 2004 by Prentice Hall Terrie Nolinske, Ph. D. 15

Case As a member of the management team, you are involved in an upcoming layoff at “Storage Way”. This is the 4 th 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? © 2004 by Prentice Hall Terrie Nolinske, Ph. D. 16