module 5 final

Amity School of Business

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SEMESTER V

HUMAN RESOURCE MANAGEMENT

(BBAHR-30501)


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• Module V: Separation Processes• Internal mobility (Promotion & Transfer)• Employee Turnover (Attrition) • Retirement, • Layoff, • Retrenchment and • Discharge, VRS.


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QUESTIONS TO ANSWER• What are the different manners an employee

can separate from his organisation?• How is promotion different from transfer? Give

the types of promotion and transfer.• What is attrition? Give the formula for its

calculation.• Give the significance of exit interview? In what

ways an employee can be retained in organisation.


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ASSIGNMENT

• Discuss the various methods of separation used by various( any 3) companies in past recessionary phase. Give your viewpoints on the same.


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Internal mobility

The lateral or vertical movement ( promotion, transfer, demotion, or separation) of an employee within an organization is called ‘internal mobility’.


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PROMOTION

• It results in an improvement in pay, prestige, designation and responsibilities of an employee within his or her organization.

• A mere shifting of employee to a different job which has better working hours, better location and more pleasant working conditions does not amount to promotion. It is referred to as DRY promotion.

• The new job is a promotion for the employee only when it carries increased responsibilities and enhanced pay.


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PURPOSES/OBJECTIVES1. To motivate employees to higher productivity.2. To attract and retain the services of qualified and

competent people.3. To recognise and reward the efficiency of an employee.4. To increase the effectiveness of the employee and the

organisation.5. To fill up higher vacancies from within the organisation.6. To build loyalty, morale and sense of belongingness in

the employee.7. To make realise other employees that opportunities of

growth are available in the organisation, if they perform better.


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BASIS OF PROMOTION• Merit-based: An employee whose

performance is the best, as revealed by performance appraisal, is promoted. It is won by extra effort and initiatives or may be additional qualification.

• Seniority-based: An employee with the longest period of service will get promoted, irrespective of whether he or she is competent to occupy a higher post or not.


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MERIT-BASED PROMOTION• Merits1. Efficiency is

encouraged, recognized and rewarded.

2. Competent people are retained as they foresee their career growth.

3. Increased commitment.

• Demerits1. Discontentment among

senior employees.2. Scope of favouritism.3. Loyalty and length of

service is not rewarded.4. Opposition from union

leaders.


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SENIORITY-BASED PROMOTION• Merits:1. Easy to administer.2. No conflict with unions.3. Seniority and experience

go hand in hand, therefore, it is right and proper decision.

4. Welcomed by subordinates also.

5. Loyalty is rewarded.

• Demerits:1. Seniority is no indication

of competence.2. Competent employees

get demotivated.


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TYPES OF PROMOTION• Horizontal :It involves an increase in responsibilities and pay, and a

change in designation. For eg. A lower division clerk is promoted as an upper division clerk, is referred to as upgrading the position of an employee in the same job profile

• Vertical :. This results in greater responsibility, prestige and pay, together with a change in the nature of the job. For eg. When a canteen employee is promoted to an semi-skilled job like that of an office boy with a different job profile

• Dry :designations are different but no change in responsibilities. The promote may be given one or two annual increments.


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Demotion

• Demotion is the downward movement of an employee in the organizational hierarchy with lower status and pay

• It is a downgrading process where the employee suffers considerable emotional and financial loss in the form of lower rank, power and status, lower pay and poor working conditions.


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Causes

• A promote is unable to meet the challenges posed by a new job

• Due to adverse business conditions, organizations may decide to lay off some and downgrade other jobs

• Demotions may be used as disciplinary tools


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TRANSFERS

• It involves a change in the job( along with it change in the place of job) without change in position, pay or responsibilities.


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Purpose of transfer

• To meet the organizational requirements• To satisfy the employee needs• To utilize employees better• To make the employee more versatile• To adjust the workforce• To provide relief• To reduce conflicts• To punish employees


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Types of transfers

• Production transfers• Replacement transfers• Rotation transfers• Shift transfers• Remedial transfers• Penal transfers


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Benefits of transfers

• Improve employee skills• Reduce monotony, boredom• Remedy faulty placements• Prepare the employee for challenging

assignments in future• Stabilise changing work requirements• Improve employee satisfaction and morale


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TYPES OF TRANSFERS• Transfers can be designed to enhance training

and development, to remedy the problem of poor placement or to adjust to varying volumes of work within the firm.

1. Production transfers: a shortage or surplus of the labor force is common in different departments in a plant or several plants in an organization. Surplus employees in a department have to be laid off, unless they are transferred to another department.


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2. Replacement transfers: intended to avoid imminent lay-offs particularly of senior employees. It is used when all the operations of the company are declining, and is designed to retain long-service employees as long as possible.

3. Versatility transfers : these are effected to make employees versatile and competent in more than one skill. Versatile operations are valuable assets during rush periods and periods when work is dull.


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4. Shift transfers: it refers to transfers between the shifts, generally made on a rotation basis. It may also be effected on special requests from employees.

5. Remedial transfers: are effected on employee’s request and thus are also called personal transfers. They are the result of some faulty or wrong initial placement. Sometimes the worker may not get along with his or her supervisor or with other workers in the department.


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6. Penal transfers: this are initiated against an employee as a disciplinary measure and are a form of punishment. Employees are shifted to remote or far-flung areas who indulge in undesirable activities.


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Problems of transfers

• Inconvenient• Employees may not fit in the new

location/environment• Shifting of experienced hands may affect

productivity• Discriminatory transfers may affect

employee morale


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SEPARATION

• Separation means cessation of service or agreement with the organization for one or other reason. The employee may be separated from the payroll of the company as a result of– Resignation– Discharge & Dismissal– Suspension & Retrenchment– Layoff– VRS


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Types of employee separations

Types of employee separations

Voluntary Involuntary

Quits

Retirements

Layoffs

Discharges

Retrenchment


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• Involuntary separationsIt occurs when an employer decides to terminate its

relationship with an employee due to • Economic necessity or • A poor fit between the employee and the organization.

• Voluntary separationsA separation that occurs when an employee decides,

for personal or professional reasons to end the relationship with the employer.


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Types Of Voluntary Separations

• There are two types of voluntary separations:– Quits/Resignations– Retirement(VRS)– DeathThe normal separation of employees from an organisation owing to

resignation, retirement or death is known as “ attrition”. It is initiated by the individual employee, not by the company.

– Turnover/Attrition rate– Number of employees leaving/

average number of employees x 100


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• Resignation : an employee may decide to quit the organisation voluntarily on personal or professional grounds such as:

a. Getting a better job,b. Shift of career,c. Sabbatical leave,d. Job dissatisfaction. it results in disruption of work as replacing an experienced

and talented person may not be easy in a short span of time. Whenever possible, exit interviews must be conducted to find out the reason of quitting the job.


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Exit Interview

• An exit interview is typically a meeting between at least one representative from a company's human resources (HR) department and a departing employee. (The departing employee usually has voluntarily resigned vs. getting laid off or fired.) The HR rep might ask the employee questions while taking notes, ask the employee to complete a questionnaire, or both


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• Interviewer should be a neutral person who hasbeen trained in how to conduct exit interviews.

• Training issues– How to put employee at ease and explain purpose– How to follow structured interview format and take notes– How to end interview on positive note.

• Structured interview format should contain questions about unavoidable and avoidable reasons for leaving.

• Interviewer should prepare by reviewing interview format and interviewee’s personnel file.

• Interview should be conducted in private, before employee’s last day.

• Interviewee should be told interview is confidential.

Conducting Exit Interviews


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• Human resources departments conduct exit interviews (also called exit surveys) to gather data for improving working conditions and retaining employees.


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Questions asked in exit interviews

• What is your primary reason for leaving? • Did anything trigger your decision to leave? • What was most satisfying about your job? • What was least satisfying about your job? • What would you change about your job? • Did your job duties turn out to be as you

expected? • Did you receive enough training to do your job

effectively? • Did you receive adequate support to do your

job?


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• Were you satisfied with this company's merit review process?

• Did this company help you to fulfill your career goals? • Do you have any tips to help us find your replacement? • What would you improve to make our workplace better? • Were you happy with your pay, benefits and other

incentives? • What was the quality of the supervision you received?


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• What did you like most about this company?

• What did you like least about this company?

• What does your new company offer that this company doesn't?

• Can this company do anything to encourage you to stay?


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Causes of Voluntary

Turnover

Quit

AlternativesInternal: New job possibilitiesExternal: Job offers

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Desirability of LeavingLow job satisfactionShocks to employeePersonal (nonjob) reasons

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Ease of LeavingFavorable labor market conditionsLow cost of living

+ Intentionto Quit

+


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• Retirement: it usually occurs at the end of an employee’s career. It results in receiving certain benefits like provident fund, pension, gratuity, encashment of earned leave. Organisations normally plans retirements in advance. HR staff can groom current employees or recruit new ones during the intervening period in a methodical way. Employees retire from service on account of two reasons:

a. Compulsory retirement: Govt. employees compulsorily retire after attaining the age of superannuation( either 58 or 60). In private sector, the retirement age may go beyond 60, depending on person’s ability to perform well in competitive scenario.


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b. Voluntary retirement: the normal retirement benefits are calculated and paid to all such employees who put in a minimum quallifying service. Also used when there is surplus staff. Also referred to as golden handshake plan. Some companies organise counselling sessions and offer investment related services( eg. Citibank). Some offer medical and insurance benefits( Indian Oil Corporation).

• Death: some employees may die in service. When the death is caused by occupational hazard, compensation is paid. Sometimes dependants of deceased employee are given employment.


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INVOLUATRY SEPARATIONS1) DISCHARGES:• A discharge occurs when the employer feel that it is

no more desirable to keep an employee any longer.• Discharge, also called terminations, is a reflection of

company’s HR system, and reflects a negative image of the company.

• Reasons like excessive absenteeism, serious misconduct, false statement of qualification at the time of employment, theft of company’s property etc. can lead to discharge/ dismissal of an employee.

• dlrvr


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2) LAYOFFS:• A layoff is a temporary separation of the employee at the

instance of the employer.• According to ID Act, 1947, layoff is the failure, refusal or

inability of an employer to give employment to a worker whose name is present on the rolls.

• A layoff is usually for a definite period, after which the employee will be recalled for duty.

• A layoff employee is entitle to the compensation equal to half the normal wages of the employee, till the time he/she is laid off.

• A layoff may occur because of several reasons like shortage of coal, power or raw material, accumulation of stocks, breakdown of machinery, economic recession etc.


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3) RETRENCHMENT:• It refers to the termination of the services of employees

because of the replacement of labor by machines or the closure of a department due to loss or any other reason.

• Like layoff, in case of retrenchment also employee is entitled to compensation which is equivalent to 15days’ average pay for every completed year of continuous service.

• However in case retrenchment, employee is not recalled by the company, and his/her connections with the company are severed immediately.

• Retrenchment is forced on both the employer and his employees.


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4) VOLUNTARY RETIREMENT SCHEME:• Also called as GOLDEN HAND SHAKE PLAN.• In case of VRS, companies resort to reduce surplus

labor, not strictly, but by a scheme called VRS, wherein a handsome compensation are paid to those who opt to leave.

• Management prefer to pay hefty sums and reduce staff strength than retaining surplus labor and continuing to pay them idle wages.

• VRS is perceived as a painless and time-saving method of trimming staff strength, easing out unproductive older workers.

• Practiced in many big companies like HUL, TISCO, BHEL, NTC, etc.


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5) RIGHTSIZING:• It refers to reducing the size of workforce or increasing

it to maintain the employee strength at the most desired level.

• Rightsizing more appropriately means downsizing the employee strength through planned elimination of jobs.

• Downsizing can be because of reasons like threat to company’s bottom line, technological advancements, organizational restructuring etc.


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• Suspension means prohibiting an employee from attending work and performing normal duties assigned to him. It is a sort of punishment for a specified period and is generally resorted to only after a proper inquiry has been conducted. During suspension, the employee receives a subsistence allowance. If the charges against the suspended employee are serious and are proved, suspension may lead to termination also.


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Steps for Progressive Discipline.


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Dismissing an Employee• Dismissing employees is one of the most

difficult tasks that a manager faces. • Many organizations offer outplacement to

the employees laid off.– Outplacement services provide employees

who have been dismissed from an organization with assistance in finding new jobs. Such as resume writing, practice interviewing and support groups.


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Organizational Practices That Reduce Turnover

• Frequently measure job satisfaction through surveys such as the Job Descriptive Index.– One problem with job satisfaction surveys is

that the least satisfied employees are not likely to respond to the survey.

– Because they have already started to withdraw from the organization, so they see little personal benefit in completing the survey.


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Practices That Reduce Turnover• Another method for retaining employees is through

socialization, this is the process of acquiring the knowledge and behaviors needed to be a member of an organization.

• Effective socialization occurs when employees are given critical information that helps them understand the organization. Such as the new employee orientation session.

• As employees acquire information during the socialization process, their feelings of fit with the organization increase, and employees who perceive that they fit are more likely to stay with an organization.


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Practices That Reduce Turnover• Perceived organizational support is another

factor that influences employee turnover.

• This is the beliefs, by the employees, that the organization values their contribution and cares about their well-being.

• Employees who perceive greater support are more committed to sticking with the organization and feel a stronger desire to help the organization succeed.


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SocializationSocializationPerceived org supportPerceived org support


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Attrition

• Defining Attrition rate: "the rate of shrinkage in size or number".


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Employee Retention

Employee Retention involves taking measures to encourage employees to remain in the organization for the maximum period of time. Corporate is facing a lot of problems in employee retention these days. Hiring knowledgeable people for the job is essential for an employer. But retention is even more important than hiring. There is no dearth of opportunities for a talented person.


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Employees stay and leave organizations for some reasons.

The reason may be personal or professional. These reasons should be understood by the employer and should be taken care of. The organizations are becoming aware of these reasons and adopting many strategies for employee retention.


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• The reason may be personal or professional. These reasons should be understood by the employer and should be taken care of. The organizations are becoming aware of these reasons and adopting many strategies for employee retention.


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Retention tools

• Employee reward program• Career Development Program• Performance based Bonus• Employee Referral Plan• Loyalty Bonus• Giving a voice to the Knowledge Banks• Employee Recreation

Pelcege egidPelcege egid


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• Gifts at some Occasions• Making the managers effective and

easily accessible• Increasing the organizations’ level of

professionalism• Ensuring a match between authority

and accountability• Designing a competitive compensation

package


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Flexible Work Arrangements

Employee referral program Appraisal

objective

Loyalty bonus

Accountability

Employee recreation

Performance based bonus

Career development

program

Employee reward

programs

Succession Planning

Planning

Diversity Training

Training

Flexible

Work Arrangements

Retention strategy


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Various Retention strategies followed by MNC’s

• Procter and Gamble India -Early responsibilities in career Flexible and transparent organizational culture Global opportunities through a variety of exposure and diverse experiences Performance Recognition

• American Express (India)- Strong global brand Value-based environment Pioneer in many people practices

• NTPC Learning and growth opportunities Competitive rewards Opportunity to grow, learn and implement Strong social security and employee welfare performance- oriented culture


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• Johnson & Johnson -Strong values of trust, caring fairness, and respect within the organization Freedom to operate at work Early responsibility in career Training and learning opportunities Visible, transparent and accessible leaders Competitive rewards Innovative Human Resource programs and practices

• Glaxo Smith Kline Consumer Healthcare -Performance-driven Rewards Its belief in “Growing our own timber” Comprehensive development and learning programs Flat organization, where performance could lead to very quick progression Challenging work context Competitive rewards Exhaustive induction and orientation program

module 5 final

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