stevenson operations management 3e - Chapter 13

EMPLOYEE SEPARATION AND RETENTION MANAGEMENT

Employee SeparationEmployee SeparationEmployee SeparationEmployee Separation

• Reasons for employee separationsReasons for employee separations– Pressures on firms to remain competitive & efficientPressures on firms to remain competitive & efficient– Decline in employee commitment to employersDecline in employee commitment to employers

• Importance of managing separationsImportance of managing separations– Transitions of employees out of firm go smoothlyTransitions of employees out of firm go smoothly– Continuing operations of firm not disruptedContinuing operations of firm not disrupted– Important professional relationships not damagedImportant professional relationships not damaged

• Types of separationsTypes of separations– Reductions-in-force, turnover, & retirementsReductions-in-force, turnover, & retirements

• Reasons for employee separationsReasons for employee separations– Pressures on firms to remain competitive & efficientPressures on firms to remain competitive & efficient– Decline in employee commitment to employersDecline in employee commitment to employers

• Importance of managing separationsImportance of managing separations– Transitions of employees out of firm go smoothlyTransitions of employees out of firm go smoothly– Continuing operations of firm not disruptedContinuing operations of firm not disrupted– Important professional relationships not damagedImportant professional relationships not damaged

• Types of separationsTypes of separations– Reductions-in-force, turnover, & retirementsReductions-in-force, turnover, & retirements

Reductions-in-Force (RIFs)Reductions-in-Force (RIFs)Reductions-in-Force (RIFs)Reductions-in-Force (RIFs)

• Causes of reductionsCauses of reductions– Restructuring as a result of mergers & acquisitionsRestructuring as a result of mergers & acquisitions– Attempts to make organization more cost competitiveAttempts to make organization more cost competitive– Adjustments to declining business environment conditionsAdjustments to declining business environment conditions

• Reasons for reductionsReasons for reductions– Inefficiency in operationsInefficiency in operations– Lack of adaptability in marketplaceLack of adaptability in marketplace– Weakened competitive position in industryWeakened competitive position in industry

• Methods for dealing with reductionsMethods for dealing with reductions– Continuance pay & outplacement programsContinuance pay & outplacement programs

• Causes of reductionsCauses of reductions– Restructuring as a result of mergers & acquisitionsRestructuring as a result of mergers & acquisitions– Attempts to make organization more cost competitiveAttempts to make organization more cost competitive– Adjustments to declining business environment conditionsAdjustments to declining business environment conditions

• Reasons for reductionsReasons for reductions– Inefficiency in operationsInefficiency in operations– Lack of adaptability in marketplaceLack of adaptability in marketplace– Weakened competitive position in industryWeakened competitive position in industry

• Methods for dealing with reductionsMethods for dealing with reductions– Continuance pay & outplacement programsContinuance pay & outplacement programs

Reductions-in-Force (RIFs)Reductions-in-Force (RIFs)Reductions-in-Force (RIFs)Reductions-in-Force (RIFs)

• Worker Adjustment Retraining & Notification Act Worker Adjustment Retraining & Notification Act (WARN) of 1989(WARN) of 1989

– Requires employers with more than 100 employees to Requires employers with more than 100 employees to provide sixty days written notice of any facility closings or provide sixty days written notice of any facility closings or large-scale layoffs of 50 or more employeeslarge-scale layoffs of 50 or more employees

– WARN does no apply to governmental agenciesWARN does no apply to governmental agencies– Exceptions to WARNExceptions to WARN

• ““Faltering company”Faltering company”

• ““Unforeseeable circumstance”Unforeseeable circumstance”

• Natural disasterNatural disaster

• ““Temporary facility”Temporary facility”

• Worker Adjustment Retraining & Notification Act Worker Adjustment Retraining & Notification Act (WARN) of 1989(WARN) of 1989

– Requires employers with more than 100 employees to Requires employers with more than 100 employees to provide sixty days written notice of any facility closings or provide sixty days written notice of any facility closings or large-scale layoffs of 50 or more employeeslarge-scale layoffs of 50 or more employees

– WARN does no apply to governmental agenciesWARN does no apply to governmental agencies– Exceptions to WARNExceptions to WARN

• ““Faltering company”Faltering company”

• ““Unforeseeable circumstance”Unforeseeable circumstance”

• Natural disasterNatural disaster

• ““Temporary facility”Temporary facility”

Workforce Management StrategiesWorkforce Management StrategiesWorkforce Management StrategiesWorkforce Management Strategies

TurnoverTurnoverTurnoverTurnover

• Involuntary turnoverInvoluntary turnover– Employees asked to leave organization for cause or Employees asked to leave organization for cause or

due to circumstances that cause reduction-in-forcedue to circumstances that cause reduction-in-force

• Voluntary turnoverVoluntary turnover– Employees who leave organization on own initiativeEmployees who leave organization on own initiative

• ““Beneficial” turnoverBeneficial” turnover– Low performing employees depart &/or new higher Low performing employees depart &/or new higher

performing employees promoted or hired as performing employees promoted or hired as replacementsreplacements

• Involuntary turnoverInvoluntary turnover– Employees asked to leave organization for cause or Employees asked to leave organization for cause or

due to circumstances that cause reduction-in-forcedue to circumstances that cause reduction-in-force

• Voluntary turnoverVoluntary turnover– Employees who leave organization on own initiativeEmployees who leave organization on own initiative

• ““Beneficial” turnoverBeneficial” turnover– Low performing employees depart &/or new higher Low performing employees depart &/or new higher

performing employees promoted or hired as performing employees promoted or hired as replacementsreplacements

Exhibit 13.2Exhibit 13.2

Performance-Replaceability Strategy Performance-Replaceability Strategy MatrixMatrix


Performance-Replaceability Strategy Performance-Replaceability Strategy MatrixMatrix


Strategic Management of Turnover & Strategic Management of Turnover & RetentionRetention


Strategic Management of Turnover & Strategic Management of Turnover & RetentionRetention

Retention of High PerformersRetention of High PerformersRetention of High PerformersRetention of High Performers

• Critical HR issueCritical HR issue– Development of policies & programs to retain Development of policies & programs to retain

high performers &/or those difficult to replacehigh performers &/or those difficult to replace

• Employers face competition from Employers face competition from – Other organizations Other organizations – From employees they are attempting to retain From employees they are attempting to retain

(to start-ups)(to start-ups)

• Critical HR issueCritical HR issue– Development of policies & programs to retain Development of policies & programs to retain

high performers &/or those difficult to replacehigh performers &/or those difficult to replace

• Employers face competition from Employers face competition from – Other organizations Other organizations – From employees they are attempting to retain From employees they are attempting to retain

(to start-ups)(to start-ups)

RetirementRetirementRetirementRetirement

• Age Discrimination Act of 1967Age Discrimination Act of 1967– Prohibits employer from setting mandatory retirement age Prohibits employer from setting mandatory retirement age

except in certain occupations (e.g. pilots)except in certain occupations (e.g. pilots)

• RetirementRetirement– Creates advancement opportunities for younger employees Creates advancement opportunities for younger employees

& reduces payroll costs& reduces payroll costs– Can cause loss of vital historical knowledge of organization, Can cause loss of vital historical knowledge of organization,

industry & marketplaceindustry & marketplace– Part-time & consulting work can ease transition of older Part-time & consulting work can ease transition of older

workers into retirementworkers into retirement

• Age Discrimination Act of 1967Age Discrimination Act of 1967– Prohibits employer from setting mandatory retirement age Prohibits employer from setting mandatory retirement age

except in certain occupations (e.g. pilots)except in certain occupations (e.g. pilots)

• RetirementRetirement– Creates advancement opportunities for younger employees Creates advancement opportunities for younger employees

& reduces payroll costs& reduces payroll costs– Can cause loss of vital historical knowledge of organization, Can cause loss of vital historical knowledge of organization,

industry & marketplaceindustry & marketplace– Part-time & consulting work can ease transition of older Part-time & consulting work can ease transition of older

workers into retirementworkers into retirement

Reading 13.1Reading 13.1

Cost Reductions, Downsizing-related Cost Reductions, Downsizing-related Layoffs, and HR Practices Layoffs, and HR Practices



• reduction-in-force (RIF) activities rarely return the anticipated economic and reduction-in-force (RIF) activities rarely return the anticipated economic and organizational gainsorganizational gains

• more so, there is increased understanding and awareness that downsized more so, there is increased understanding and awareness that downsized companies are forced to deal with the human and societal after-effects, also companies are forced to deal with the human and societal after-effects, also known as secondary effects, in a post-downsizing phaseknown as secondary effects, in a post-downsizing phase

• the human consequences of layoffs are costly and devastating for individuals, the human consequences of layoffs are costly and devastating for individuals, their families, and entire communities.their families, and entire communities.

• while workforce reductions cannot always be completely avoided, while workforce reductions cannot always be completely avoided, downsizing-related layoffs must be a managerial tool of absolute last rather downsizing-related layoffs must be a managerial tool of absolute last rather than first resortthan first resort

• during an economic downturn, a company must carefully consider its options during an economic downturn, a company must carefully consider its options and assess the feasibility and applicability of cost-reduction alternatives prior and assess the feasibility and applicability of cost-reduction alternatives prior to adopting RIF-related layoffsto adopting RIF-related layoffs

• reduction-in-force (RIF) activities rarely return the anticipated economic and reduction-in-force (RIF) activities rarely return the anticipated economic and organizational gainsorganizational gains

• more so, there is increased understanding and awareness that downsized more so, there is increased understanding and awareness that downsized companies are forced to deal with the human and societal after-effects, also companies are forced to deal with the human and societal after-effects, also known as secondary effects, in a post-downsizing phaseknown as secondary effects, in a post-downsizing phase

• the human consequences of layoffs are costly and devastating for individuals, the human consequences of layoffs are costly and devastating for individuals, their families, and entire communities.their families, and entire communities.

• while workforce reductions cannot always be completely avoided, while workforce reductions cannot always be completely avoided, downsizing-related layoffs must be a managerial tool of absolute last rather downsizing-related layoffs must be a managerial tool of absolute last rather than first resortthan first resort

• during an economic downturn, a company must carefully consider its options during an economic downturn, a company must carefully consider its options and assess the feasibility and applicability of cost-reduction alternatives prior and assess the feasibility and applicability of cost-reduction alternatives prior to adopting RIF-related layoffsto adopting RIF-related layoffs





• Organizations can minimize, defer or avoid Organizations can minimize, defer or avoid reductions-in-force, layoffs or downsizing through reductions-in-force, layoffs or downsizing through the implementation of strategic cost-reduction the implementation of strategic cost-reduction strategiesstrategies

• Options are available which relate to short, Options are available which relate to short, medium and long-range cost adjustmentsmedium and long-range cost adjustments

• Organizations can minimize, defer or avoid Organizations can minimize, defer or avoid reductions-in-force, layoffs or downsizing through reductions-in-force, layoffs or downsizing through the implementation of strategic cost-reduction the implementation of strategic cost-reduction strategiesstrategies

• Options are available which relate to short, Options are available which relate to short, medium and long-range cost adjustmentsmedium and long-range cost adjustments





Short-term adjustmentsShort-term adjustments• hiring freezehiring freeze• mandatory vacationmandatory vacation• reduced workweekreduced workweek• cut in overtimecut in overtime• salary reductionsalary reduction• temporary facility shutdowntemporary facility shutdown• soliciting cost reduction ideas from employeessoliciting cost reduction ideas from employees

Short-term adjustmentsShort-term adjustments• hiring freezehiring freeze• mandatory vacationmandatory vacation• reduced workweekreduced workweek• cut in overtimecut in overtime• salary reductionsalary reduction• temporary facility shutdowntemporary facility shutdown• soliciting cost reduction ideas from employeessoliciting cost reduction ideas from employees





Medium-tern adjustmentsMedium-tern adjustments

• • extended salary reductionextended salary reduction

• • voluntary sabbaticalsvoluntary sabbaticals

• • employee lendingemployee lending

• • exit incentivesexit incentives

Medium-tern adjustmentsMedium-tern adjustments

• • extended salary reductionextended salary reduction

• • voluntary sabbaticalsvoluntary sabbaticals

• • employee lendingemployee lending

• • exit incentivesexit incentives





Long-term adjustmentsLong-term adjustments

• • rehiring bonusesrehiring bonuses

• • maintaining communication with layoffsmaintaining communication with layoffs

• • internal job fairsinternal job fairs

• • hiring new talent (after economic bounce–back)hiring new talent (after economic bounce–back)

Long-term adjustmentsLong-term adjustments

• • rehiring bonusesrehiring bonuses

• • maintaining communication with layoffsmaintaining communication with layoffs

• • internal job fairsinternal job fairs

• • hiring new talent (after economic bounce–back)hiring new talent (after economic bounce–back)

Reading 13.2Reading 13.2 Knowledge Management Among the Older Knowledge Management Among the Older

WorkforceWorkforce


WorkforceWorkforce

organizations need to have a well-planned strategic means of transferring organizations need to have a well-planned strategic means of transferring knowledge from retiring baby boomers to members of younger knowledge from retiring baby boomers to members of younger generationsgenerations

assumptions that senior workers were problematic for organizations are assumptions that senior workers were problematic for organizations are not valid, as research shows that senior workersnot valid, as research shows that senior workers

• • have low turnover rateshave low turnover rates

• • are flexible and open to changeare flexible and open to change

• • possess up-to-date skillspossess up-to-date skills

• • are interested in learning new tasksare interested in learning new tasks

• • have low absentee rateshave low absentee rates

• • have few on-the-job accidentshave few on-the-job accidents

organizations need to have a well-planned strategic means of transferring organizations need to have a well-planned strategic means of transferring knowledge from retiring baby boomers to members of younger knowledge from retiring baby boomers to members of younger generationsgenerations

assumptions that senior workers were problematic for organizations are assumptions that senior workers were problematic for organizations are not valid, as research shows that senior workersnot valid, as research shows that senior workers

• • have low turnover rateshave low turnover rates

• • are flexible and open to changeare flexible and open to change

• • possess up-to-date skillspossess up-to-date skills

• • are interested in learning new tasksare interested in learning new tasks

• • have low absentee rateshave low absentee rates

• • have few on-the-job accidentshave few on-the-job accidents


WorkforceWorkforce


WorkforceWorkforce

senior workers also contribute responsibility and senior workers also contribute responsibility and maturity, commitment to their work, experience maturity, commitment to their work, experience and loyaltyand loyalty

senior workers should 1) be encouraged to remain senior workers should 1) be encouraged to remain in the workforce as their positive contributions in the workforce as their positive contributions continue and 2) work more closely with younger continue and 2) work more closely with younger workers to facilitate knowledge transferworkers to facilitate knowledge transfer

senior workers also contribute responsibility and senior workers also contribute responsibility and maturity, commitment to their work, experience maturity, commitment to their work, experience and loyaltyand loyalty

senior workers should 1) be encouraged to remain senior workers should 1) be encouraged to remain in the workforce as their positive contributions in the workforce as their positive contributions continue and 2) work more closely with younger continue and 2) work more closely with younger workers to facilitate knowledge transferworkers to facilitate knowledge transfer


WorkforceWorkforce


WorkforceWorkforce

Five critical success factors relate to knowledge Five critical success factors relate to knowledge transfertransfer

1. Coaching leadership style1. Coaching leadership style

2. Structure, roles, and responsibilities2. Structure, roles, and responsibilities

3. Emphasis on learning and education3. Emphasis on learning and education

4. Attention to motivation, trust, reward and 4. Attention to motivation, trust, reward and recognitionrecognition

5. Establishing the right culture5. Establishing the right culture

Five critical success factors relate to knowledge Five critical success factors relate to knowledge transfertransfer

1. Coaching leadership style1. Coaching leadership style

2. Structure, roles, and responsibilities2. Structure, roles, and responsibilities

3. Emphasis on learning and education3. Emphasis on learning and education

4. Attention to motivation, trust, reward and 4. Attention to motivation, trust, reward and recognitionrecognition

5. Establishing the right culture5. Establishing the right culture

Reading 13.3 Reading 13.3 Managing Older Worker Exit and Re-entry Practices: A “Revolving Managing Older Worker Exit and Re-entry Practices: A “Revolving

Door”?Door”?


Door”?Door”?

• older workers, in general, find it harder to get and keep jobs, suffer from age older workers, in general, find it harder to get and keep jobs, suffer from age discrimination while at work and are often the victims of workplace exclusiondiscrimination while at work and are often the victims of workplace exclusion

• many older workers have had children later in life and/or are taking care of many older workers have had children later in life and/or are taking care of their parents who are living longertheir parents who are living longer

• as a result, older workers still have significant financial responsibilities to and as a result, older workers still have significant financial responsibilities to and for others in their later yearsfor others in their later years

• at the same time, work provides many non-financial benefits including at the same time, work provides many non-financial benefits including enhanced self-esteem and self-worthenhanced self-esteem and self-worth

• once an older individual leaves the workforce, re-entry is exceedingly difficultonce an older individual leaves the workforce, re-entry is exceedingly difficult

• older workers, in general, find it harder to get and keep jobs, suffer from age older workers, in general, find it harder to get and keep jobs, suffer from age discrimination while at work and are often the victims of workplace exclusiondiscrimination while at work and are often the victims of workplace exclusion

• many older workers have had children later in life and/or are taking care of many older workers have had children later in life and/or are taking care of their parents who are living longertheir parents who are living longer

• as a result, older workers still have significant financial responsibilities to and as a result, older workers still have significant financial responsibilities to and for others in their later yearsfor others in their later years

• at the same time, work provides many non-financial benefits including at the same time, work provides many non-financial benefits including enhanced self-esteem and self-worthenhanced self-esteem and self-worth

• once an older individual leaves the workforce, re-entry is exceedingly difficultonce an older individual leaves the workforce, re-entry is exceedingly difficult


Door”?Door”?


Door”?Door”?

Interviews with the subjects of this study revealed that Interviews with the subjects of this study revealed that

• flexible working arrangements were considered very flexible working arrangements were considered very desirabledesirable

• age was reported as the most common cause of age was reported as the most common cause of participants leaving the workforceparticipants leaving the workforce

• age was reported as a barrier to re-entry to workage was reported as a barrier to re-entry to work

• working with a team and other social aspects of work were working with a team and other social aspects of work were seen as attractiveseen as attractive

• the qualified participants wanted to continue workingthe qualified participants wanted to continue working

• self-worth and job satisfaction were important to older self-worth and job satisfaction were important to older people people

Interviews with the subjects of this study revealed that Interviews with the subjects of this study revealed that

• flexible working arrangements were considered very flexible working arrangements were considered very desirabledesirable

• age was reported as the most common cause of age was reported as the most common cause of participants leaving the workforceparticipants leaving the workforce

• age was reported as a barrier to re-entry to workage was reported as a barrier to re-entry to work

• working with a team and other social aspects of work were working with a team and other social aspects of work were seen as attractiveseen as attractive

• the qualified participants wanted to continue workingthe qualified participants wanted to continue working

• self-worth and job satisfaction were important to older self-worth and job satisfaction were important to older people people


Door”?Door”?


Door”?Door”?

Organizations can consider re-entry of retired Organizations can consider re-entry of retired employees, including on part-time, employees, including on part-time, contract, project or seasonal bases, as a contract, project or seasonal bases, as a valuable source of knowledgeable, valuable source of knowledgeable, motivated employees motivated employees

Organizations can consider re-entry of retired Organizations can consider re-entry of retired employees, including on part-time, employees, including on part-time, contract, project or seasonal bases, as a contract, project or seasonal bases, as a valuable source of knowledgeable, valuable source of knowledgeable, motivated employees motivated employees

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stevenson operations management 3e - Chapter 13