MGTO 231 Human Resources Management

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MGTO 231Human Resources Management

• Separations and downsizing
• Dr. Kin Fai Ellick WONG

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Prologue ????

• ?? ?????
• ? ? ? , ? ? ? ? , ? ? ? ? ? . ? ? ? ? ? ? , ? ? ?
  .
• This was not just a simple separation
• ? ? (???)? ? ? , ? (????)? ? ? ?
• The separation not only led ?? to lose one strong
  subordinate, but also
• led his competitor ?? to have the strongest
  subordinate

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• History revealed that
• ???? ????
• ?? was defeated by ??,?? was the Highest
  Commander of the troop
• History might have changed if ?? did not let ??
  go

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Basic concepts
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Employee separation

• The termination of an employees membership in an
  organization
• ???????? (There is no everlasting meeting)
• ??????,????,???? (The natural trend is that
  merging is followed by separation and separation
  is followed by merging)
• Could be terminated by either side
• Separations need cost
• Recruitment, selection, training, and separation
  costs

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• Recruitment costs
• Advertising, campus visits, recruiters time,
  search firm fees
• Selection costs
• Interview, testing, reference checks, relocation
• Training costs
• Orientation, assessment, direct training,
  evaluation, trainers time
• Separation costs
• Separation pay, benefits, vacant positions

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• So, the higher the turnover rate, the more the
  cost of employee separations
• Turnover rate
• The rate of employee separations in an
  organization
• Some organizations may organize exit interview
  and outplacement assistance after employees
  separations
• Given that separations need costs, why are they
  so common?

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Some benefits of employee separation

• Reduces labor costs
• ?? (fat reduction)
• The salary savings may outweigh the separation
  costs
• Replaces poor performers
• The increase in productivity and performance
  after replacement may outweigh the separation
  costs

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• Increases innovation
• Opening a possibility of fresh mind joining
• Carrying new approaches to old systems or
  problems
• Increases diversity within a firm
• Employees within an organization may become more
  homogeneous as time goes by
• Remember Darwins theory of evolution?

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Types of employee separations
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Two major types

• Voluntary separations
• ????
• Employee decides, for personal or professional
  reasons, to end the relationship with the
  employer
• Involuntary separations
• ??
• Employer decides to terminate the relationship
  with the employee due to
• economic reasons or
• a poor fit between the organization and the
  employee

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Voluntary separations

• Quits
• Could be due to
• Employee is not satisfied with the present job
• There are other attractive alternatives
• Retirements
• Occur at the end of an employees career
• Early retirement incentives

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Involuntary separations

• Discharges
• Management decides that there is a poor fit
  between the organization and the employee
• ??
• Layoffs
• Employees lost their jobs because of a change in
  the companys environment or strategy
• ??

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• Downsizing
• A company strategy to reduce the scale and scope
  of its business in order to improve the companys
  financial performance
• ?? (fat reduction)
• Rightsizing
• The process of reorganizing a companys employees
  to improve their efficiency

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Managing layoffs
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Key issues in implementing a layoff

• Notifying employees
• 1 week, 1 month, or 3 months of notifying,
  depending on the employment status
• Give compensation if less than that period
• Developing layoff criteria
• Seniority (last in, first out)
• Employee performance
• To maintain perceived justice for the layoff
  decisions

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• Communicating to laid-off employees
• The Dos and Donts of terminating/laying off
  employees

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Dos

• Give as much warning as possible for mass layoffs
• Sit down one-on-one with the individual, in a
  private office
• Complete a firing session within 15 minutes
• Provide written explanations of severance
  benefits
• Provide outplacement services away from company
  headquarters

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• Be sure the employee hears about his or her
  termination from a manager, not a colleague
• Express appreciation for what the employee has
  contributed, if appropriate

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Donts

• Dont leave room for confusion. Tell the
  individual in the first sentence he or she is
  terminated
• Dont allow time for debate
• Dont make personal comments keep the
  conversation professional
• Dont rush the employee off-site unless security
  is really an issue

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• Dont fire or lay people off on significant
  dates, like the twenty-fifth anniversary of their
  employment or the day their mother died
• Dont fire employees when they are on vacation or
  have just returned

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Alternatives to layoffs
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Employment policies

• Reduction through attrition
• Attrition an employment policy designed to
  reduce the companys workforce by not refilling
  job vacancies that are created by turnover ????
• Hiring freeze
• Cut part-time employees
• Internships
• Reducing working hours

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Changes in job design

• Transfers
• Relocation
• Job sharing
• Demotions

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Pay and benefits policies

• Pay freeze
• Cut overtime pay
• Use vacation and leave days
• Pay cuts
• Profit sharing or variable pay

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Exercise

• 3M is a worldwide well-known hi-tech firm.
  McKnight's (an early 3Ms president) business
  philosophy is to create a culture that
  encourages employee initiative, innovation and
  provides secure employment
• In the past few years, because of the economic
  downturn, many organizations in this industry
  (e.g., HP, IBM, Cisco, etc.) chose layoff as one
  of the the major ways for cost reduction. Perhaps
  because of McKnights principle, 3M did not
  follow this trend. 3M gave the following reason
• Good minds are difficult to recruit and retain.
  They wont come back (after layoff) if they were
  not treated well.
• Do you agree, and why?