(c) 2007 by Prentice Hall 6-1

Managing Employee Managing Employee Separations, Separations, Downsizing, and Downsizing, and OutplacementOutplacement

Chapter 6Chapter 6

(c) 2007 by Prentice Hall 6-2

• 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

Chapter 6 OverviewChapter 6 Overview

(c) 2007 by Prentice Hall 6-3

• Employee separations – The termination of an employee’s membership in an organization.

• Turnover rate – The rate of employee separations in an organization.

What Are Employee Separations?What Are Employee Separations?

(c) 2007 by Prentice Hall 6-4

• The costs of employee The costs of employee separationsseparations– Recruitment costsRecruitment costs– Selection costsSelection costs– Training costsTraining costs– Separation costsSeparation costs

What Are Employee Separations?What Are Employee Separations?

(c) 2007 by Prentice Hall 6-5

What Are Employee Separations?What Are Employee Separations?

(c) 2007 by Prentice Hall 6-6

The benefits of employee separationsThe benefits of employee separations

• Reduced labor costsReduced labor costs

• Replacement of poor performersReplacement of poor performers

• Increased innovationIncreased innovation

• Opportunity for greater diversityOpportunity for greater diversity

What Are Employee Separations?What Are Employee Separations?

(c) 2007 by Prentice Hall 6-7

• Voluntary separationVoluntary separation – A separation that – A separation that occurs when an employee decides, for occurs when an employee decides, for personal or professional reasons, to end personal or professional reasons, to end the relationship with the employer.the relationship with the employer.

– Quits– Retirements

Types of Employee SeparationsTypes of Employee Separations

(c) 2007 by Prentice Hall 6-8

• Involuntary separationInvoluntary separation – A separation that – A separation that occurs when an employer decides to occurs when an employer decides to terminate its relationship with an terminate its relationship with an employee due to (1) economic necessity employee due to (1) economic necessity or (2) a poor fit between the employee and or (2) a poor fit between the employee and the organization.the organization.– DischargesDischarges– Layoffs, downsizing, and rightsizingLayoffs, downsizing, and rightsizing

Types of Employee SeparationsTypes of Employee Separations

(c) 2007 by Prentice Hall 6-9

• The features of early retirement policiesThe features of early retirement policies• Avoiding problems with early retirementsAvoiding problems with early retirements

– A longtime employee who has performed satisfactorily A longtime employee who has performed satisfactorily over many years suddenly receives an unsatisfactory over many years suddenly receives an unsatisfactory performance evaluationperformance evaluation

– A manager indicates that senior employees who do A manager indicates that senior employees who do not take early retirement may lose their jobs anyway not take early retirement may lose their jobs anyway because a layoff is likely in the near futurebecause a layoff is likely in the near future

– Senior employees notice that their most recent pay Senior employees notice that their most recent pay raises are quite a bit lower than those of other, raises are quite a bit lower than those of other, younger workers who are not eligible for early younger workers who are not eligible for early retirement retirement

Managing Early RetirementsManaging Early Retirements

(c) 2007 by Prentice Hall 6-10

Managing Early RetirementsManaging Early Retirements

(c) 2007 by Prentice Hall 6-11

Alternatives to Layoffs – Employment PoliciesAlternatives to Layoffs – Employment Policies

• AttritionAttrition – An employment policy designed to – An employment policy designed to reduce the company’s workforce by not reduce the company’s workforce by not refilling job vacancies that are created by refilling job vacancies that are created by turnover.turnover.

• Hiring freezeHiring freeze – An employment policy – An employment policy designed to reduce the company’s workforce designed to reduce the company’s workforce by not hiring any new employees into the by not hiring any new employees into the company.company.

Managing LayoffsManaging Layoffs

(c) 2007 by Prentice Hall 6-12

Managing LayoffsManaging Layoffs

• Implementing a layoff

• Notifying employees

• Worker Adjustment and Retraining Notification Act – (WARN)

(c) 2007 by Prentice Hall 6-13

Implementing a Layoff – continued

• Develop layoff criteria

• Communicating to laid-off employees

• Coordinating media relations

• Maintaining security

• Reassuring survivors of the layoffs

Managing LayoffsManaging Layoffs

(c) 2007 by Prentice Hall 6-14

• The Goals of Outplacement - 1. Reducing the morale problems of

employees who are about to be laid off

2. Minimizing the amount of litigation initiated by separated employees

3. Assisting separated employees in finding comparable jobs as quickly as possible

OutplacementOutplacement

(c) 2007 by Prentice Hall 6-15

OutplacementOutplacement

Outplacement ServicesOutplacement Services• Emotional Support• Job-search Assistance

(c) 2007 by Prentice Hall 6-16

• What are employee separations?What are employee separations?

• Types of employee separationsTypes of employee separations

• Managing early retirementsManaging early retirements

• Managing layoffsManaging layoffs

• OutplacementOutplacement

Summary and ConclusionsSummary and Conclusions