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

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Human Resource Management Managing Employee
Separations, Downsizing, and Outplacement

• Thursday February 16, 2006

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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.

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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?

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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.

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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

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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

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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??

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The Layoff Decision and Its Alternatives
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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

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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?

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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?

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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

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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

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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?

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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

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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

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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

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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

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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

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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)

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• Good Advice?

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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