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Ch. 15 - Managing Employee Separations
Terms in this set (38)
Importance of managing employee separations
Who leaves, how they are treated during the exit, what the cause or nature of the exit is, and how remaining employees perceive this all
impacts the long-term sustainability of the organization
- cause loss of time, money, and resources invested in recruiting, training, and maintaining employees
- disrupt the organization's ability to produce/maintain the right quantity and quality of talent and derails the organization's focus on larger strategic issues
the termination of an individual's employment with an organization. Can be either permanent or temporary and can be a result of action taken by either the employee or employer
Top reasons for turnover
-downsizing or restructuring activity
-desire to find new challenges
Likelihood of turnover
-as an employee gains tenure in a company
-individuals who hold occupations in management and administration-related positions
-higher education reduces the likelihood that an employee will be laid off, but increases the probability that they will quit.
-employees in the goods industry more likely to experience a layoff
-employees in the service industry are more likely to quit
Cost of turnover (4)
are easier to estimate (eg. advertising, interviewing, moving expenses)
are overlooked but considerable (eg. lost productivity during gap, training curve productivity losses)
4 main Turnover Cost components:
1) Separation costs—the cost of exit interviews, administrative functions associated with the turnover, and separation or severance pay
2) Vacancy costs—the net savings or cost incurred of increased overtime, the use of temporary workers, and the loss of sales associated with the vacancy
3) Replacement costs—the cost of recruiting and hiring a replacement to fill the vacant position (including the cost of interviews, testing, administrative expenses, travel/moving expenses, and so on)
4) Training costs—formal and informal training (including the performance differential between employees exiting the organization and their replacements
Reasons for turnover
employee initiated, usually in the form of quits or retirement. The decision to discontinue employment with the firm is made by the employee, without management enticement.
employer initiated and is usually in the form of dismissals or layoffs.
-specific and immediate challenge to organizational stress; unanticipated HR challenges of replacing and retraining
-biggest challenge = lack of managerial control
Voluntary turnover can be:
= bad performers leave, good performers stay
= good performers leave, bad performers stay
Voluntary Turnover Predictors:
-low organizational commitment
-low overall job satisfaction
-low role clarity
-high role conflict
-low tenure (security of job)
-age & marital status negatively correlated w/voluntary turnover (old and married = less likely to quit)
-education positively correlated w/voluntary turnover
How to find out why voluntary turnover occurred:
Important to try & understand why:
-collect info in exit interviews, staff surveys, HR reviews
-info can lead to trends that companies can use to screen certain types of individuals in the selection process
-trends may lead organizations to develop methods of reducing turnover among current employees
Types of voluntary turnover
- Quitting or resignation
Quitting or Resignations
-Often in form of resignation letter
-Based on work-related or non-work-related factors
-caused by low job satisfaction
opportunities for employment in other organizations; perceived job opportunities & high labour demands considered; globalization, technological advancements, and market pressures
= decrease in job stability & tenure
Employment-related legislation says:
-<2 years employed = 1 weeks notice
->2 years employed = 2 weeks notice
-during skilled workforce, employers were forcing employees to take retirement at age 65 so they could replace older and often more expensive workers with younger and less costly labour
- government launched series of acts aimed at providing financial support for people reaching "retirement age" to prevent poverty among the oldest generation
- combination of legal advancements on anti-discriminatory employment policies, labour scarcity, and peoples' desires to choose their own lifestyle, circumstances, or priorities has resulted in
abolishment of mandatory retirement in Canada
- retirement = voluntary rather than involuntary
- avg age of retirement for public sector employees = 60 years, private sector = 62. However, there is a large range of possible retirement ages
Retirement - Difficulty in predicting when employees will retire... Solutions?
-Succession plans or replacement plans
Retirees on call:
program where retirees can continue to work on a part-time or as-needed basis post-retirement
potential retirees gradually reduce the number of hours worked per week over time
counselling provided to employees some months (or even years) before retirement, which covers such matters as benefits advice, second careers, and so on
1) Economic/financial pressures may result in a decision to
through mass layoffs
a) give reasonable notice
b) provide payment in lieu of reasonable notice (working time)
2) Organization may be engaging in a new strategic direction and has chosen to
close down or outsource
one or more business units
3) Job performance of employee may be below acceptable standards leading to
Employees most commonly perceive unfairness during: employee dismissal & downsizing
Involuntary Turnover - Dismissal for Just Cause
Dismissal for just cause:
employer-initiated termination based on an employee's poor behaviours
-no reasonable notice periods
-no or additional payments beyond what the employee has already earned are owed
-onus of proof lies on employer
No clear definition of "just cause" - depends whether or not the
employee has irreparably harmed the relationship
to the point that it would be unreasonable to expect the employer to continue the employment relationship
Just cause = disobedience, incompetence, dishonesty, insubordination, fighting, misconduct (theft, fraud, etc) and persistent absence or lateness. Depends on situation.
Involuntary Turnover - Dismissal for Just Cause - Insubordation
willful disregard or disobedience of the boss' authority or legitimate orders; criticizing the boss in public.
- Direct disregard of the boss' authority; refusal to obey the boss' reasonable instructions—particularly in front of others.
- Deliberate defiance of clearly stated company policies, rules, regulations, and procedures.
- Public criticism of the boss; contradicting or arguing with him or her.
- Contemptuous display of disrespect—making insolent comments and portraying these feelings in terms of the employee's attitude on the job.
- Disregard for the chain of command, shown by going around the immediate supervisor or manager with a complaint, suggestion, or political manoeuvre.
- Participation in (or leadership of) an effort to undermine and remove the boss from power.
Involuntary Turnover - Rules and Regulations
- Employees must be
informed, preferably in writing, of what behaviours or actions are not permitted
- Usually done during the employee's orientation (and included in the employee orientation handbook), or when rules or regulations in the workplace change
Examples of rules:
- Poor work performance is not acceptable. Each employee is expected to perform his or her work properly and efficiently, and to meet established standards of quality
- Liquor and drug use is not permitted on work premises. The use of either during working hours or working under the influence of drugs or alcohol is strictly prohibited.
- Safety rules must be followed at all times.
Involuntary Turnover - Progressive Discipline
2nd foundation of effective discipline.
- may range from verbal warnings, to written warnings, to suspension (paid or unpaid) from the job, and finally to dismissal
- severity of the penalty is usually a function of the type of offense and the number of times the offense has occurred
Involuntary Turnover - Downsizing via Layoff
reduction of the workforce to improve efficiency or effectiveness of the organization by affecting the work process
temporary withdrawal of employment to workers for economic or business reasons for (sometimes undefined) period of time.
3 conditions are present:
1) there is
no work available
for the employees
2) management expects the no-work situation to be
and probably short term
intends to recall
the employees when work is again available
Layoffs that involve unionized employees: based on seniority or conditions in collective bargaining agreement
Non-unionized: layoffs occur regularly, uninfluenced by 3rd party legislation
Involuntary Turnover - Downsizing via Layoff - Alternatives
(Layoffs are costly!!!)
-Voluntary reduction in pay: all employees agree to reductions in their pay to keep everyone working.
-Have all/most of employees accumulate their vacation time and concentrate their vacations during slow periods
-Agreed voluntary time off (effect of reducing the employer's payroll and avoiding the need for a layoff)
-Use contingent, temporary employees hired with the understanding that their work is temporary and they may be laid off at any time
-Work-sharing program, available through Service Canada, allows employers to reduce the workweek by one to three days, and employees can claim employment insurance for the time not worked
- employee makes unilateral changes to the fundamental terms of employment that are unacceptable to the employee (e.g. reductions in pay, location change)
- even though the employee has not been formally terminated
- employee resigns
- since the resignation was not voluntary, it is in effect a termination
- employees can ask for a payout
Considerations During Involuntary Turnover
instances of wrongful dismissal claims become stronger as negative treatment becomes more extreme
Reducing negative feelings toward company and favourable for company's reputation if:
- Providing clear, honest explanations of termination decisions
- Handling the termination in a way that treats people with dignity and respect
Considerations During Involuntary Turnover - Providing Reasonable Notice
If employee contract specifies length of time: employer cannot prematurely dismiss employee without cause
If employment is for an indefinite period of time: employee may be terminated by either party only when reasonable notice is given
Reasonable notice legislation
Reasonable notice legislation:
laws that require an employer to notify employees in the event that they decide to terminate employees through layoffs
-Minimum notice varies on size of the layoffs (smaller layoffs determining minimum notice based on employee tenure, mass layoffs determining minimum notice based on total layoff size)
In some jurisdictions, employers are allowed to
provide payment in lieu of reasonable notice (working time)
, allowing them to terminate employees without cause relatively quickly.
*Do not have to give if there is just cause
Considerations During Involuntary Turnover - Bad-Faith Damages
reserved for extreme circumstances in which the employers was untruthful, misleading, or unduly insensitive to the employee in the course of a dismissal.
Considerations During Involuntary Turnover - Punitive Damages
reserved for malicious or outrageous cases in which an employer engages in harsh and vindictive treatment of an employee, or if the employee suffered undue distress from not being given adequate notice of termination.
Considerations During Involuntary Turnover - Avoiding Wrongful Dismissal Suits
- have clear
written in the employment contracts.
document all disciplinary actions
, which should be based on a progressive discipline policy that is articulated clearly to all employees and consistently applied.
formal resignation letter
is another mandatory, but often overlooked, consideration when terminating employees.
should be private, have two members of management present, and include a procedure for allowing the employee to collect his or her belongings in the least disruptive manner
If wrongful dismissal claim made, company should
-Review the claim carefully before retaining an employment lawyer, and investigate for other improper conduct; ask for a legal opinion on the merits of the case; work with the lawyer and provide all relevant facts and documentation; and discuss any possible letter of reference with the lawyer.
-Never allege there actually was cause if none exists, and avoid defamatory statements.
-Consider mediation as an option, or offer to settle to save time and money.
Employee Engagement and Fairness in Employee Separations - Employee Engagement
emotional and intellectual involvement of employees in their work, such as intensity, focus, and involvement in his or her job and organization.
3 components of organizational justice
Fairness of a decision outcome.
fairness of the process used to make a decision
fairness in interpersonal interactions, treating others with dignity and respect
Employee Engagement and Fairness in Employee Separations - Suggestion Programs
Employees can often offer well-informed, thoughtful, and creative suggestions regarding issues ranging from malfunctioning vending machines to unlit parking lots to a manager spending too much of the department's money on travel.
- can receive cash awards
- let mgmt monitor employee feelings & concerns while making clear emloyees have communication channels
Employee Engagement and Fairness in Employee Separations - Employee Opinion Surveys
Employee opinion surveys:
communication devices that use questionnaires to ask for employees' opinions about the company, management, and work life.
is recommended by legal experts and should include directions to refrain from disclosing any confidential company information or embarrassing or demeaning information about the company and its employees
Employee Engagement and Fairness in Employee Separations - Communication from management
To increase employee engagement, many firms give employees extensive data on the performance of and prospects for their operations
- Traditionally: Newsletters & verbal presentations
- Recently: Videos, emails, intranet, blogs
Employee Engagement and Fairness in Employee Separations - The Termination Interview
Roles and goals
-support person/witness (usually HR)
-deliver the message
-get employee home quickly and safely
Employee Engagement and Fairness in Employee Separations - The Termination Interview & guidelines
interview in which an employee is informed of the fact that he or she has been dismissed.
PLAN THE INTERVIEW. Carefully schedule the meeting on a day early in the week, and try to avoid Fridays, pre-holidays, and vacation times. Have the employee agreement, human resources file, and release announcement (internal and external) prepared in advance. Be available at a time after the interview in case questions or problems arise, and have phone numbers ready for medical or security emergencies.
GET TO THE POINT. As soon as the employee arrives, give the person a moment to get comfortable and then inform him or her of the decision.
DESCRIBE THE SITUATION BRIEFLY. In three or four sentences, explain why the person is being let go. For instance, "Production in your area is down 4 percent, and we are continuing to have quality problems. We have talked about these problems several times in the past three months, and the solutions are not being followed through. We have to make a change." Remember to describe the situation rather than attacking the employee personally.
LISTEN. It is important to continue the interview until the person appears to be talking freely and seems reasonably calm about the reasons for his or her termination and the severance package that he or she is to receive. Behavioural indications can be used to help gauge the person's reaction and to decide how best to proceed. Five major reactions often occur:
REVIEW ALL ELEMENTS OF THE SEVERANCE PACKAGE. Describe severance payments, benefits, and the way in which references will be handled. However, under no conditions should any promises or benefits beyond those already in the severance package be implied. The termination should be complete when the person leaves.
IDENTIFY THE NEXT STEP. The terminated employee may be disoriented, so explain where he or she should go on leaving the interview. Remind the person whom to contact at the company regarding questions about the severance package or references.
Employee Engagement and Fairness in Employee Separations - The Termination Interview & guidelines
According to Karen...
DON'T describe the situation, listen, or identify next step...
Get them out immediately.
Employee Engagement and Fairness in Employee Separations - The Termination Interview: 5 major reactions
1) Hostile and angry; hurt and disappointment.
Management - remain objective while providing information on any outplacement or career counselling to be provided, being careful to avoid being defensive or confronting the person's anger.
2) Defensive, bargaining manner; fear and disbelief.
Management - acknowledge that this is a difficult time for the employee and then provide information regarding outplacement counselling without getting involved in any bargaining discussions.
3) Formal, controlled manner; suppressed, vengeful reaction and the potential for legal action.
Management - allow the employee to ask any questions pertaining to his or her case (avoiding side issues) in a formal tone while leading into information about the outplacement counselling to be provided.
4) Stoic façade, masking their shock, disbelief, and numbness.
Management - communicate to the employee that his or her shock is recognized and that the details can be handled later if the employee prefers. Answer any questions arising at that point and provide information on outplacement counselling.
5) Emotional, tears and sadness; grief and worry
Management - Allow the person to cry and provide tissues. When the person regains his or her composure, explain the outplacement counselling process.
Employee Engagement and Fairness in Employee Separations - The Termination Interview
It is stressful to do a termination!
Termination manager and support person discuss afterwards.
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