CASE 7
Managing employee separations, downsizing
and outplacement
Employee
separation means that the employees membership in
an organization is being terminated. Turnover
rate means the rate of employee separations in an organization.
The costs of employee separations may vary
by location and also the effect of lost talent on sales, productivity or on
research and development might be big but hard to estimate.
Recruitment
costs are advertising, campus visits, recruiter
time, search firm fees. It might be necessary to employ a search firm to locate
qualified individuals. Selection costs are interviewing,
testing, reference checks and relocation (moving the employee´s personal
property, travel costs and sometimes even housing costs). Training costs are orientation to companies values and culture,
direct training costs, trainers time and lost productivity during training
meaning that they cant fill their full potential at work in the beginning. Separation costs are separation pay,
benefits, unemployment insurance cost, exit interview, outplacement, vacant
position. Administration of separation often includes exit interview which can
provide counselling and/or assistance in finding a new job. Larger firms
provide outplacement assistance which helpe them to find job more rapidly.
Employer gets cost also if the position remains vacant and the work doesn’t get
done.
The benefits of employee separations
Reduced labor costs by reducing the size of
its workforce. Replacement of poor performers
if an employee isn’t responding to coaching or feedback it might be best
to terminate him/her. Increased innovation by new people hired from outside
from the firm. The opportunity for greater diversity .
Types of employee separations
Voluntary
separation when an employee decides to leave the
company for personal or professional reasons. These can be avoidable or
unavoidable. Unavoidables are when its about employees personal reasons that
the employer cant control. 80% are still avoidable and many of the separations
are due to staffing mistakes.
Quits depends on the employees level of
dissatisfaction with the job and the alternatives the employee has outside the
organization. Employee can be dissatisfied with the job itself the job
environment or both.
Employers have used pay incentives to
encourage employees to quit voluntarily. These voluntary servance plans or
buyouts are used to reduce the size of workforce while avoiding the negative
factors associated with layoff.
Retirements which usually occurs in the end
of one´s career whereas a quit can occur anytime. In these cases employer has
time to find someone to fill the position.
Involuntary
separations happen when management decides to terminate relationship with an employee due
to economic reasons or a poor fit between employee and the organization. HR
staff makes sure that the dismissal is performed according to company´s
employment policy.
Discharges is when the management decides
there is a poor fit between an employee and the organization. Its result from
poor performance or the employee´s failure to change unacceptable behaviour
that has repeatedly tried to be corrected.
Layoffs are means for organizations to cut
costs. Layoffs can have bad effects on the remaining workers and the investors
aswell. For investors it may seem that the company is struggling big time and
for the remaining employees morale may be affected and it can make fear of
losing their jobs too.
Rightsizing
means reorganizing a company´s employees to improve
their efficiency.
Managing early retirements. Retirement can
be hurried by a package of financial incentives and an open window that
restricts eligibility to a fairly short period of time. There might also be
shortfalls if people take the advantage of early retirements at the same time.
The matter must be put so that there are no misunderstandings and then law
suits in line for age racism for example.
Managing layoffs. Alternatives to layoffs
in employment policies are reduction through attrition which means that job
vacancies are not fulfilled, hiring freeze ( no pay raises), cut part-time
employees, cut internships or co-ops, give subcontracted work to in-house
employees, voluntary time off, leaves of absence, reducing work hours. In
changes of job design company can do transfers, relocation, job sharing and
demotions. In pay and benefit policies a company can freeze pay, cut overtime
pay, use vacation and leave days, pay cuts and profit sharing or variable pay.
In training company can do retraining.
Once layoff decision has been made managers
must tell about it carefully. It can be a traumatic event and can effect a big
amount of people. Key things to do is notifying employees, developing layoff
criteria, communicating to laid-off employees, coordinating media relations,
maintaining security and reassuring survivors of the layoff.
Outplacement
It is an HR programme created to help
separated employees deal with the emotional stress of job loss and to provide
assistance in finding a new one. Companies are usually willing to pay for
outplacement because it can reduce some risks related to layoffs. Outplacement
services are emotional support and job-search assistance.
Nokia´s case affected around the world.
Like the closing a factory in Germany to move it to Romania to get the cheaper
labor as in the article “Nokia closes plant in Germany and relocates in
Romania” Then the article “Hundreds of Nokia´s outsourced Symbian developers
leaving Accenture” where employees are unsatisfied and don’t have enough work
to do. And the article “Nokia cuts 3500 jobs ´to ensure profitability`” where
is told about their major cut downs.
I
have seen the Nokia case from close because I am form Oulu where Nokia was a
huge employer for many families and when they did the cut downs it was really
showing at my friend´s families and in the economy of Oulu. People had to move
to cheaper and smaller houses because of the cut downs and a lot of people were
unemployed. It was a big topic back then and a huge loss for Oulu as well.
Sources:
Managing Human Resources, Global Edition 2016 Gomez-Meja, Balkin, Cardy.
P.209-230
Nokia closes plant in Germany and relocates
in Romania. 17.1.2018
accessed 10.4.2018
Nokia cuts 3500 jobs “to ensure
profitability”. Yle news. 29.9.2011.
accessed 10.4.2018
Hundred of Nokia´s outsourced Symbian
developers leaving Accenture. Yle news. 2.4.2012
accessed 10.4.2018
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