Managing Employee Managing Employee Separations, Downsizing, Separations, Downsizing,

and Outplacementand OutplacementMANA 3320 MANA 3320

Dr. Jeanne MichalskiDr. Jeanne Michalski

Employee separations—termination of an Employee separations—termination of an employee’s employment with an employee’s employment with an organizationorganization

Turnover rate—rate of employee Turnover rate—rate of employee separations in an organizationseparations in an organization

What Are Employee What Are Employee Separations?Separations?

Voluntary separation—the Voluntary separation—the employee employee ends ends the relationship with the employerthe relationship with the employer

QuitsQuits RetirementsRetirements

Types of Employee Types of Employee SeparationsSeparations

Involuntary separation—the employer terminates the employment relationship Discharges Layoffs, downsizing, and rightsizing

Costs of Employee Costs of Employee SeparationsSeparations

Reduced labor costsReduced labor costs Replacement of poor performersReplacement of poor performers Increased innovationIncreased innovation Opportunity for greater diversityOpportunity for greater diversity

Benefits of Employee Benefits of Employee SeparationsSeparations

Can substantially reduce size of workforceCan substantially reduce size of workforce Must be managedMust be managed

Managing Early RetirementsManaging Early Retirements

Features of early retirement policies: Financial incentives package Open window

Possible problems with early retirements:Possible problems with early retirements: Too many employees accept retirement offerToo many employees accept retirement offer Wrong employees may leaveWrong employees may leave Employees may feel they are being forced outEmployees may feel they are being forced out

Managing Early RetirementsManaging Early Retirements

Management: Can ask how employees would respond to

early retirement offer Should treat senior employees like all others

Managing LayoffsManaging Layoffs

Attrition Attrition Hiring freezeHiring freeze Not renewing contract workersNot renewing contract workers Encourage voluntary time offEncourage voluntary time off Redesign jobsRedesign jobs

Transfers and RelocationsTransfers and Relocations Job sharingJob sharing

Freeze or cut payFreeze or cut pay Retrain workers Retrain workers

Alternatives to LayoffsAlternatives to Layoffs

Implementing a LayoffImplementing a Layoff Notifying employeesNotifying employees Developing Layoff Criteria

Seniority vs. Employee Performance Communicating to laid-off employeesFace-to-face discussionMiddle of the week

Coordinating media relationsCoordinating media relations Rumors can be very damagingRumors can be very damaging

Implementing a LayoffImplementing a Layoff

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

Program for separated employeesProgram for separated employees Emotional supportEmotional support Job search assistanceJob search assistance

OutplacementOutplacement

Three goals: Reducing the morale problemsMinimize litigation initiated by separated employeesAssist separated employees in finding comparable jobs as quickly as possible

Separations have both costs and benefitsSeparations have both costs and benefits Separations—voluntarily or involuntarilySeparations—voluntarily or involuntarily Consider voluntary early retirement as Consider voluntary early retirement as

alternative to layoffsalternative to layoffs Layoffs should be a last resortLayoffs should be a last resort

Use other cost cutting measures firstUse other cost cutting measures first Outplacement services can help separated Outplacement services can help separated

employeesemployees

Summary and ConclusionsSummary and Conclusions