Theoretical Situation #1Theoretical Situation #1

• You are HR manager in service companyYou are HR manager in service company• The industry is facing a downturnThe industry is facing a downturn• You have excess personnelYou have excess personnel• What do you do?What do you do?

– Fire peopleFire people– Re-trainRe-train– CompensateCompensate

•How much ?How much ?

ImplicationsImplications• LegalLegal

– Avoiding Union issuesAvoiding Union issues– Avoiding unfair dismissal law suitsAvoiding unfair dismissal law suits– Shareholder responsibilityShareholder responsibility

• EthicalEthical– Employee welfareEmployee welfare

• Financial remunerationFinancial remuneration

• Fair treatment (repeated hiring/firing)Fair treatment (repeated hiring/firing)

• Other implicationsOther implications– Employee retaliation / sabotageEmployee retaliation / sabotage– Company reputation effects Company reputation effects

Summary of UK Case FactsSummary of UK Case Facts

• Bradford & Bingley (Banking)Bradford & Bingley (Banking)– Voluntary job losses & retrainingVoluntary job losses & retraining

• General Manufacturing IndustryGeneral Manufacturing Industry– Layoffs with minimum payoff and notice periodLayoffs with minimum payoff and notice period

• Marks & Spencer (Retail)Marks & Spencer (Retail)– Close stores, job losses in UKClose stores, job losses in UK– Look to sell stores and retain employees in EULook to sell stores and retain employees in EU

• Corus (Steel Manufacturer)Corus (Steel Manufacturer)– Plant closures, Job lossesPlant closures, Job losses

• Banking (Merrill Lynch & Goldman Sachs)Banking (Merrill Lynch & Goldman Sachs)– Job freezes, job cuts, voluntary redundanciesJob freezes, job cuts, voluntary redundancies

• Rover (Automotive)Rover (Automotive)– Pay and pension cutsPay and pension cuts

Change in Policies and Change in Policies and Employers’ Attitude to Employers’ Attitude to RedundancyRedundancy• Changes in EU law for companies to find Changes in EU law for companies to find

alternatives to closures & job lossesalternatives to closures & job losses

• Increase in minimum redundancy packageIncrease in minimum redundancy package

• Increase in number of unfair dismissal Increase in number of unfair dismissal complaintscomplaints

• Increase in cost to businessesIncrease in cost to businesses

• Change in business redundancy behaviourChange in business redundancy behaviour

Proposal - Hierarchy of Proposal - Hierarchy of OptionsOptions

1.1. Re-train EmployeesRe-train Employees

2.2. Everyone Takes a Pay-cutEveryone Takes a Pay-cut

3.3. Voluntary LayoffsVoluntary Layoffs

4.4. Enforced Layoffs – Generous Enforced Layoffs – Generous

payoutpayout

5.5. Enforced Layoffs – Min. payoutEnforced Layoffs – Min. payout

Theoretical Situation #2Theoretical Situation #2

• You are HR manager in service You are HR manager in service companycompany

• Do you repeatedly hire and fire Do you repeatedly hire and fire employees to meet demand?employees to meet demand?# of employees

Time

ImplicationsImplications

• Shareholder perspectiveShareholder perspective– Do whatever necessary to maximize Do whatever necessary to maximize

profitsprofits– Hiring / firing / re-hiring if necessaryHiring / firing / re-hiring if necessary

• Employee perspectiveEmployee perspective– Stable employmentStable employment– Company should absorb inefficiency due Company should absorb inefficiency due

to temporary excess staffto temporary excess staff

Proposal – Hiring & FiringProposal – Hiring & Firing

• HR manager should find ethically HR manager should find ethically suitable middle ground considering suitable middle ground considering all stakeholdersall stakeholders

# of employees

Time

Employees

HR Manager - Compromise

Stakeholder

Theoretical Situation #3Theoretical Situation #3

• You are HR manager in a service companyYou are HR manager in a service company

• You have to select an employee for redundancy.You have to select an employee for redundancy.

• Employee A Employee A – Good performerGood performer– Single white maleSingle white male

• Employee BEmployee B– Average performerAverage performer– Single mother of fiveSingle mother of five

• Who do you choose ?Who do you choose ?

ImplicationsImplications

• EthicalEthical– Consideration needs to be given to Consideration needs to be given to

individual circumstancesindividual circumstances

• LegalLegal– Shareholders want best performing Shareholders want best performing

employeesemployees

Proposal - HRM Attention to Proposal - HRM Attention to Ethical IssuesEthical Issues

• Emphasis on ethics variesEmphasis on ethics varies– Some EU countries – Ethical approach to Some EU countries – Ethical approach to

redundancy – profile considerationsredundancy – profile considerations– US – Less ethical approach – US – Less ethical approach –

performance based redundancyperformance based redundancy