Managing Employee Separations, Downsizing, and Outplacement

1. Managing Employee Separations, Downsizing, and Outplacement Chapter 6

2. Chapter 6 Overview • Costs and benefits associated with employee separations. • Differences between voluntary and involuntary separations. • Issues in the design of early retirement policies.

3. Chapter 6 Tactical Issues • Alternatives to layoffs • Layoffs that are effective and fair to all stakeholders. • Significance/value of outplacement programs.

4. What Are Employee Separations? • Separation—termination of an employee’s membership in an organization for whatever reason • Turnover rate—rate of employee separations/year in an organization

5. Costs of Employee Separations

6. Possible Benefits of Employee Separations • Reduced labor costs • Replacement of poor performers • Increased innovation • Opportunity for greater diversity

7. Types of Employee Separations • Involuntary separation—the employer terminates the employment relationship • Discharges [firing] • Layoffs, downsizing, and rightsizing • Voluntary separation—the employee ends the relationship with the employer • Quits vs. Retirements • Avoidable vs. Unavoidable • Functional vs. Dysfunctional • Replaceability issues

8. Managing Early Retirements • Features of early retirement offers: • Financial incentives package usually based on org. level and/or time with org. • S/b carefully restricted to target group • Must be managed carefully [e.g., w/ OWBPA releases drafted by outside legal counsel!]

9. Managing Layoffs

10. Alternatives to Layoffs • Attrition • Hiring freeze • Not renewing contract workers • Encourage voluntary time off • Redesign jobs • Transfers and Relocations • Job sharing • Freeze or cut pay • Retrain/reassign workers

11. Implementing a Layoff • Notify employees • Worker Adjustment and Retraining Notification Act (WARN)—60 days notice or pay in lieu of notice • Develop Layoff Criteria • Seniority vs. Pay vs. Performance [hybrid?] • Communicate to laid-off employees • Face-to-face [but don’t argue] • S/b scripted by HR and/or legal counsel • Middle of the week [?!]

12. Implementing a Layoff • Maintain security • Reassure survivors of the layoffs • Listen to survivors’ concerns • Show you appreciate their work [consider retention bonuses to key staff] • Reassign to new projects ASAP • Coordinate media relations

13. Outplacement • Assist separated employees in finding comparable jobs as quickly as possible • Minimize litigation/workplace violence by separated employees • Program for separated employees: • Provide job search/transitional assistance • S/b offsite for security and psychological purposes

14. Concluding Comments: • Develop a written plan w/ layoff criteria • Make sure PAs are valid and up-to-date • Scrutinize policies, train supervisors to avoid discriminatory terms or implications • Screen interim results for adverse impact • Exit interviews: • Explain outplacement/COBRA benefits • Remind re: NDAs & proprietary information [ongoing duty not to disclose]