CHAPTER 13
EMPLOYEE
SEPARATION
PowerPoint Presentation by Charlie Cook
Copyright © 2002 South-Western. All rights reserved
Employee Separation
• Reasons for employee separations:
– Pressures on firms to remain competitive and efficient
– Decline in employee commitment to individual employers
• The importance of managing separations:
– Transitions of employees out of the firm go smoothly.
– Continuing operations of the firm are not disrupted.
– Important professional relationships are not damaged.
• Types of separations
– Reductions-in-force, turnover, and retirements
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Reductions-in-Force (RIFs)
• Causes of reductions:
– Restructuring as a result of mergers and acquisitions
– Attempts to make the organization more cost competitive
– Adjustments to declining business environment conditions
• Reasons for reductions:
– Inefficiency in operations
– Lack of adaptability in the marketplace
– A weakened competitive position in the industry
• Methods for dealing with reductions:
– Continuance pay and outplacement programs
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Reductions-in-Force (RIFs)
• Worker Adjustment Retraining and Notification Act
(WARN) of 1989:
– Requires employers with more than 100 employees to provide
affected employees with a minimum of sixty days written notice
of any facility closings or large-scale layoffs of 50 or more
employees.
– WARN does no apply to governmental agencies.
– Exceptions to WARN:
•
•
•
•
“faltering company”
“unforeseeable circumstance”
natural disaster
“temporary facility”
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Workforce Management Strategies
EXHIBIT 13-1: STRATEGIES FOR MANAGING EMPLOYEE SURPLUSES AND AVOIDING LAYOFFS
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Turnover
• Involuntary turnover
– Employees who are asked to leave the organization for cause
(e.g., poor performance) or due to circumstances that cause a
reduction-in-force.
• Voluntary turnover
– Employees who leave an organization on their own initiative.
• “Beneficial” turnover
– When low performing employees depart and/or when new
higher performing employees are promoted or hired as
replacements.
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Outcomes of Managed Turnover and Retention
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Retirement
• Age Discrimination Act of 1967
– Prohibits an employer from setting a mandatory retirement age
except in certain occupations such as airline pilots.
• Retirement
– Creates advancement opportunities for younger employees and
reduces payroll costs.
– Can cause a loss of vital accumulated historical knowledge of
the organization, its industry and the marketplace.
– Employers can offer part-time and consulting work to older
workers to ease the transition to retirement.
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Reading 13.1: Holding on to High Performers:
A Strategic Approach to Retention
• Major turnover trends:
– Increasing turnover rates are having a significant impact on
organizational success.
– The costs associated with turnover, especially that of high
performers, continues to escalate.
• Why companies fail to address the turnover issue:
– A pervasive belief that high turnover is inevitable in a strong
economy.
– The failure of companies to develop effective strategies for
managing employee turnover.
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Reading 13.1: Holding on to High Performers:
A Strategic Approach to Retention
• Strategically managing retention involves:
– Selection and orientation of individuals who possess the skills
needed to succeed and also fit with the organization.
– Training and career management to provide employees with
growth and learning opportunities.
– Offering motivation and compensation packages that provide
customized non-financial performance incentives and financial
rewards for individual employees.
– Designing retention strategies that reflect the organization’s
particular situational factors and its goals.
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Reading 13.2: Retirement of Older Workers:
Issues and Policies
• Arguments for mandatory retirement
– Assumes that job performance and age become negatively
correlated after a worker reaches a certain age.
– Enables “retirement with dignity” and allows for dismissal
without a cause other than age.
– Minimizes need to monitor and assess older worker
performance.
– Justifies compensation sequencing schemes that underpay
younger workers and overpay older workers.
– Assumes older workers are less trainable or adaptable.
– Serves the need for organizational planning and renewal.
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Reading 13.2: Retirement of Older Workers:
Issues and Policies
• Implications for organizational retirement policy
development:
– Monitor retirement policies such that they meet the
requirements of relevant legislation.
– Undertake human resource planning to insure that levels of
required skills are maintained and not unduly depleted by
retirement programs and policies.
– Develop age-neutral policies to ensure effective access to and
utilization of older workers.
– Create flexible work and retirement arrangements that met the
needs of older workers and the organization.
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