Download - MGTO 231 Human Resources Management
MGTO 231Human Resources ManagementSeparations and downsizing
Dr. Kin Fai Ellick WONG
Prologue: 楚漢驕雄
史記 淮陰侯列傳 項 梁 敗 , 又 屬 項 羽 , 羽 以 為 郎 中 . 數 以 策 干
項 羽 , 羽 不 用 . This was not just a simple “separation”…
漢 王 (即劉邦)之 入 蜀 , 信 (即淮陰侯)亡 楚 歸 漢 …
The separation not only led 項羽 to lose one strong subordinate, but also…
led his competitor 劉邦 to have the strongest subordinate
History revealed that:十面埋伏 四面楚歌項羽 was defeated by 劉邦,韓信 was the
Highest Commander of the troop History might have changed if 項羽 did
not let 韓信 go…
OutlineOutline
Basic conceptsBasic concepts
Types of employee separationsTypes of employee separations
Managing layoffsManaging layoffs
Alternatives to layoffsAlternatives to layoffs
Basic concepts
Employee separation
The termination of an employee’s membership in an organization 天下無不散之筵席 (There is no everlasting meeting) 話說天下大勢,合久必分,分久必合 (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
Recruitment costs Advertising, campus visits, recruiter’s time, search firm
fees Selection costs
Interview, testing, reference checks, relocation Training costs
Orientation, assessment, direct training, evaluation, trainer’s time
Separation costs Separation pay, benefits, vacant positions
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?
Some benefits of employee separation
Reduces labor costs瘦身 (“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
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 Darwin’s theory of evolution?
OutlineOutline
Basic conceptsBasic concepts
Types of employee separationsTypes of employee separations
Managing layoffsManaging layoffs
Alternatives to layoffsAlternatives to layoffs
Types of employee separations
Two major types
Voluntary separations 自願離職 Employee decides, for personal or professional
reasons, to end the relationship with the employer Involuntary separations
解僱 Employer decides to terminate the relationship with
the employee due to economic reasons or a poor fit between the organization and the employee
Voluntary separations
QuitsCould be due to
Employee is not satisfied with the present job There are other attractive alternatives
RetirementsOccur at the end of an employee’s careerEarly retirement incentives
Involuntary separations
Discharges Management decides that there is a poor fit between
the organization and the employee 炒魷
Layoffs Employees lost their jobs because of a change in the
company’s environment or strategy 裁員
DownsizingA company strategy to reduce the scale and
scope of its business in order to improve the company’s financial performance
瘦身 (fat reduction) Rightsizing
The process of reorganizing a company’s employees to improve their efficiency
OutlineOutline
Basic conceptsBasic concepts
Types of employee separationsTypes of employee separations
Managing layoffsManaging layoffs
Alternatives to layoffsAlternatives to layoffs
Managing layoffs
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
Communicating to laid-off employeesThe Dos and Don’ts of terminating/laying off
employees
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
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
Don’ts
Don’t leave room for confusion. Tell the individual in the first sentence he or she is terminated
Don’t allow time for debate Don’t make personal comments; keep the
conversation professional Don’t rush the employee off-site unless
security is really an issue
Don’t fire or lay people off on significant dates, like the twenty-fifth anniversary of their employment or the day their mother died
Don’t fire employees when they are on vacation or have just returned
OutlineOutline
Basic conceptsBasic concepts
Types of employee separationsTypes of employee separations
Managing layoffsManaging layoffs
Alternatives to layoffsAlternatives to layoffs
Alternatives to layoffs
Employment policies
Reduction through attrition Attrition: an employment policy designed to reduce
the company’s workforce by not refilling job vacancies that are created by turnover 自然流失
Hiring freeze Cut part-time employees Internships Reducing working hours
Changes in job design
Transfers Relocation Job sharing Demotions
Pay and benefits policies
Pay freeze Cut overtime pay Use vacation and leave days Pay cuts Profit sharing or variable pay
Exercise
3M is a worldwide well-known hi-tech firm. McKnight's (an early 3M’s 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 McKnight’s principle, 3M did not follow this trend. 3M gave the following reason “Good minds are difficult to recruit and retain. They won’t
come back (after layoff) if they were not treated well”. Do you agree, and why?