Retrenchment Strategies

What is Retrenchment?

Process of a company or organization to reduce the number of people in its employment in order to match or meet operational requirements.

Reasons of Retrenchment?

•Employment Redundancy

•Overstaffing

•Increased Labour Costs

•Technology

•Merger or Liquidation

Strategies for Redundancy

•Downsizing

•Voluntary Retirement

•HR Outsourcing

•Early Retirement Plans

•Project Based Employment

What is Downsizing ?

Make a company or an organization smaller by eliminating staff positions

What is Downsizing ?

A company's reduction in the number of employees, number of bureaucratic levels, and overall size in an attempt to increase efficiency and profitability.

What is Layoff ?

Layoff also called redundancy is the temporary suspension or permanent retrenchment of an employee or a group of employees for business reasons, such as when certain positions are no longer necessary or when a business slow-down occurs.

What is Pink slip ?

Pink Slip refers to a practice by personnel department, of including a discharge notice in an employee's pay envelope to notify the Employee of his or her retrenchment of employment or layoff

Why Downsizing ?

•Cost Reduction•Business Requirements•Merger•Reorganization•Unproductive Resources•Recession

Major Downsizing Companies

•HSBC-25000•G Motors-1 lac in 11 years•Boeing 55k in 5 years•GE-100k in 10 years•Citigroup-1200•Cisco 1300•Kraft food 1600•Pepsi 8700•IBM -9000•HP-27000

Strategy of Implementing Downsizing

•Communication•Preserving Dignity•Counseling to Employees•Legal Formalities•Appropriate Notice•Immediate or Staggered

Voluntary Retirement Scheme

Voluntary Retirement Schemes is form of early retirement that is initiated by employers. Comprehensive compensation packages may be offered to number of employees.

What is VRS?

•Excess Manpower

•Maintaining Profitability

•Unproductive Manpower

•Competition

•Takeover/Merger

What Could be the Reasons of offering VRS?

•Eligible Age

•Only Employees/Workers

•Compensation on VRS

•Restrict Service

•Income Tax Exemption

•VRS Acceptance

•Periodicity

General Application for VRS

HR Outsourcing

Today, over 70% of allBusinesses outsourceone or more elements of their business.

Outsourcing

Outsourcing means to delegate or authorize someone to act or perform on your behalf either at your place or outside

Outsourcing

1 Decreasing revenues and uneven cash flow

2. Increasing layoffs and rising lawsuits

3. Increasing operating Expenses

4. Reduced productivity and lower morale

5 Cost Effectiveness

6 Specialization

Why Outsourcing

• Necessitate Firing Employee

• Losing Jobs to Outsiders

• Losing Control Over Business

• Sharing Secrecy

Misconception about Outsourcing

• Overhead---52%

• Expertise----41%

• Core Competencies-33%

• Reduce Headcount—30

• Reduce Risk -22%

HR Outsourcing- Industry Drivers

• Payroll Processing• HR Administration/Compliance• Workers Compensation• Risk Management• Recruiting & Staffing

HR Outsourcing-variations

Early Retirement Plans

Early Retirement Plan

A retirement plan which allows an employee to retire before the company's official retirement age.

Early Retirement Plan-objectives

Reduction in Cost

Focus on Priorities

Early Retirement Plan- application

•Age Eligibility

•Compensation

•Withdrawal

Project Based Employment

Project Based Employment

Employing Manpower on a temporary basis or contract for a stipulated period or length of the Project may be called Project Based Employment

Project Based Employment-types

•Project Based Fixed term•Casual Employment•Probationary Employment•Regular Or Permanent

Contract-terms

•Fixed term•Open Ended•Project Based•Expert’s

Turnaround

A sharp, positive reversal in the performance of a company or the overall market.

Strategy for Turnaround

•SWOT Analysis•Re-engineering•HR Strategies•Production/Operation Strategies•Financial Strategies•Marketing Strategies•Corporate Strategies

Strategy for Retrenchment

•Legal Formalities•Counseling•Compensation•Communication•Appropriate Notice•Sabbaticals•Lowering Wages/Freezing•Alternative Employment•Evaluating Impact•Least Productive Manpower•Relieve with Dignity•Intellectual Capital

Summary