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Human Resource Management: Managing Employee Separations, Downsizing, and Outplacement

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Coping with downsizing and job loss: Lessons from the Shaughnessy ... Job Displacement: No longer stigma attached?? The Layoff Decision and Its Alternatives ... – PowerPoint PPT presentation

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Title: Human Resource Management: Managing Employee Separations, Downsizing, and Outplacement


1
Human Resource Management Managing Employee
Separations, Downsizing, and Outplacement
  • Thursday February 16, 2006

2
Agenda
  • Video Case Interviewing
  • Managing Separations, Downsizing, and
    Outplacement
  • Morris, J.R., Cascio, W.F., Young, C.E. (1999).
    Downsizing after all these years Questions and
    answers about who did it, how many did it, and
    who benefited from it. Organizational Dynamics,
    Winter, 78-87.
  • Wright et al (1998). The Executioners Song
    Listening to downsizers reflect on their
    experiences. Journal of Administrative Sciences,
    15, 339-355.
  • Havlovic et al. (1998). Coping with downsizing
    and job loss Lessons from the Shaughnessy
    Hospital closure. Canadian Journal of
    Administrative Sciences, 15, 322-332.

3
Video Case Managers Hot Seat
  • Evaluate the interviewers in terms of their
    interviewing techniques and follow-up.
  • Did the managers conduct the interview with
    unfair or discriminating practices?
  • Did they evaluate the best person for the job
    fairly and accurately?
  • What could or should they have done differently?
  • Imagine you were interviewing either of these
    candidates. How would you conduct your interview?
  • How would you conduct your interview?
  • Write 4 or 5 questions that you think should be
    asked to find the best applicant.
  • Which candidate do you think you would hire, and
    why?
  • Think of your own experience in job interviews.
    Based on what you know about interviewing, in
    what ways might you be able to improve your own
    techniques for participating in an interview as a
    job applicant?

4
Employee Separations
  • An employee separation occurs when an employee
    ceases to be a member of an organization.
  • The rate of employee separation in an
    organization, the turnover rate, is a measure of
    a rate at which employees leave the organization.

5
Readings
  • Three different perspectives on downsizing
  • Morris, J.R., Cascio, W.F., Young, C.E. (1999).
    Downsizing after all these years Questions and
    answers about who did it, how many did it, and
    who benefited from it. Organizational Dynamics,
    Winter, 78-87.
  • Wright et al (1998). The Executioners Song
    Listening to downsizers reflect on their
    experiences. Journal of Administrative Sciences,
    15, 339-355.
  • Havlovic et al. (1998). Coping with downsizing
    and job loss Lessons from the Shaughnessy
    Hospital closure. Canadian Journal of
    Administrative Sciences, 15, 322-332.
  • Brief summary and main messages
  • Strengths
  • Weaknesses
  • Key implications for HRM research and practice

6
Costs Benefits of Employee Separations
  • Costs depends on need for replacement
  • Recruitment Costs
  • Selection Costs
  • Training Costs
  • Separation Costs
  • Severance pay
  • Exit interview
  • Outplacement Assistance
  • Benefits
  • Reduced Labour Costs
  • Replacement of Poor Performers
  • Increased Innovation
  • Greater Diversity

7
Types of Employee Separations
  • Voluntary separation when employee decides, for
    personal or professional reasons, to end
    relationship with employer
  • Quit, retire, early retirement (challenges??)
  • What affects retention?
  • Involuntary separation when employer decides to
    terminate relationship with employee due to
    economic necessity or poor fit between employee
    and organization
  • Dismissal (after progressive discipline
    procedure), layoffs, downsizing, rightsizing
  • Job Displacement No longer stigma attached??

8
The Layoff Decision and Its Alternatives
9
Downsizing
  • Expected Outcomes?
  • From 1982-2000 downsizers generated lower
    returns on assets than either stable employers or
    upsizers in the year prior to layoff, during
    layoff, or two years after

10
Managerial Perspective
  • Who should be laid off?
  • How much notice?
  • How to provide security during layoffs?
  • How/when to communicate to those let go, media,
    survivors?
  • How to best manage survivors?
  • How can we help separated employees?

11
Downsizing
  • Why does downsizing tend not to work?
  • What are some key questions to ask before
    downsizing?
  • What would you recommend as guidelines for
    identifying who will be terminated, if
    termination is inevitable.
  • What are some characteristics of downsizing that
    have resulted in productivity gains?
  • What are some alternative strategies to
    downsizing?
  • What are some characteristics of an effective
    management of layoffs?

12
1. Why Downsizing does not work
  • Fail to anticipate HR problems (legal,
    retraining, redeployment, rightsizing)
  • No change in the way work is done
  • Survivor syndrome (low motivation, distrust, low
    morale, cynicism and mistrust)
  • Staff functions replaced with consultants
  • Lack of direction, risk avoidance, political
    behavior, withdrawal, reduced loyalty
  • Damages customer relationships
  • Hurts future ability to attract and retain
    talented employees
  • Stress health, relationships

13
2. Questions to ask before downsizing
  • Long-term strategy
  • What kind of company do we want to be?
  • How do we want to be viewed by stakeholders?
  • Who are our competitors?
  • Business reasons for downsizing
  • Leanness? New mix of skills? Which businesses,
    functions, jobs do we consider to be core?
  • Consider alternative workforce leveling
    strategies

14
3. Guidelines for identifying who will be
terminated
  • Eliminating a division, function, plant,
    worksite, job category
  • Seniority
  • Fairness
  • Across-the-board , upper mgt cuts
  • Performance
  • Potential
  • Rethinking the Workload
  • What work can no longer be done?
  • What functions can be consolidated?
  • How can processes be streamlined?
  • How can we make better use of technology?

15
4. Characteristics of downsizing resulting in
productivity gains
  • Short-term (workforce reductions) and long term
    (org redesign/culture) change
  • Attention paid to employees who lost jobs and
    survivors
  • Identification of redundancies, excess costs, and
    inefficiencies

16
5. Alternative Strategies for Workforce Leveling
  • Adjustment of work force - size, hours,
    hiring/firing
  • Work hour options (leaves, shut down, reduce
    hours, contingent ees)
  • Use of subcontractors or outsourcing
  • Early retirement, voluntary separation
  • Share services
  • Shift demand features
  • Wages
  • freeze, reduce of pay increase, pay cut, cut
    benefits, increase ee contribution to benefits

17
6. Effective Management of Layoffs
  • Before layoff
  • Consider workforce leveling strategies
  • Evaluate the relationship between layoff and
    corporate strategy and culture
  • Provide advanced notice
  • Id key people and solicit their commitment
  • Prepare to deliver the news
  • Work with union, community
  • During the layoff
  • Give full information
  • Over-communicate
  • Provide assistance
  • Increase mgt accessibility
  • Use ceremony to facilitate transition
  • After Layoff
  • Solicit survivors input
  • Rightsize (volume of work)
  • Enrich the job (quality of work)
  • Remind survivors of new opportunities

18
The Termination Session
  • Tell person they are being terminated
  • State business reason
  • State decision is irrevocable
  • Control emotions but show feeling
  • Discuss final paycheck
  • Discuss next steps (exit interview, job service
    workshops, meet with outplacement firm

19
Outplacement
  • Outplacement assistance is a program created to
    help departing employees with their health, and
    to find jobs more rapidly by providing the with
    training in job-search skills. Goals are
  • To reduce the morale problems of laid off and
    surviving employees
  • To minimize litigation by separated employees
  • To assist separated employees in finding
    comparable jobs ASAP
  • Offer Counseling, Assessment to discover
    marketable skills, Find job openings, How to
    present skills (interviewing), Job campaign
    (resume, contacts, networks), Choose new job

20
Downsizing, Rightsizing, Resizing
  • Try to avoid it through knowing business,
    markets, human resource planning (Prevention)
  • If unavoidable, consider strategic approach
    (Diagnosis and Prescription)
  • Get out of unprofitable businesses
  • From HR perspective view it as an opportunity
  • Reevaluate work and jobs (id core jobs)
  • Align compensation and performance systems
  • Training in new skills and how to deal with
    change
  • Treat employees with dignity and respect
  • Consider the stakeholders (employees, management,
    customers, community, shareholders)

21
  • Good Advice?

22
Next Few Classes
  • Tuesday Feb. 21 and Thursday Feb. 23
  • Winter Semester Break
  • Tuesday Feb. 28
  • Managing Organizational Withdrawal Absenteeism
    Turnover
  • Steel, Griffeth, Hom (2002)
  • Hemp (2004)
  • Thursday March 2
  • Managing Workplace Health and Safety
  • Tuesday March 7
  • Managing Workplace Health and Safety
  • Current Report Papers due
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