Kamal Gupta Mohd Qasim Sunil Saini Varun Chugh

Establish the compulsion of manpower

reduction Manage downsizing without disrupting the organization Ensure that employees participate in the decision to downsize Match the focus of manpower reduction to corporate strategy Ensure a transparent system for choosing people to be eased out

Manage the psychological and social fallout on

exiting employees Maintain contact and relationships with former employees Prevent the company from being branded anti-people Motivate the employees who will stay with the organization Develop a post-downsizing manpower deployment plan

Intensifying Competition Recession in Business Changes in Technology Realignment of business Joint Venture Takeovers and Mergers Implementation of Reengineering Total Quality Movement

Benchmark your wage


Identify units

departments and plants manpower surplus

Asses your present

Try to redeploy

Stop hiring

Make Retirement Schemes Attractive Set Transparent Criteria Do not use Pressure Tactics Offer Voluntary and Early Retirement

Assign Outplacement agencies

Strategic way to trim the workforce Less Panic Mainly at Managerial Level Origin early 1900s in US Arvind Mills in India

• Boosting the Morale • Stress on useful roles that employee can play

Listing Strong and Weak Points Writing Resume Interview Skills

Finding the Best Suited Job Recruiting agencies Personal Contacts Maintaining the Databank Help in making the right choice

Dampen the shock Human Face of Organization Improvement in prospects of employee Influence on decision of people to be hired Links with Alumnus

Expensive Maintaining Database Can be turned down

Strictly Voluntary Company can choose
 Level  Units  Age Groups

Lucrative Package Tax exemption

Provident Fund, leave, salary for the notice

period Three months compensation for each completed year of service Monthly compensation * no. of months left

Only route to retrenchment Lucrative settlement prevents resentment No enforcement Specific divisons

Best Employee may leave High cost Bad reputation

Whether you treat your workforce as a ticket number or not , you cant reduce them under the law of land -S.N. PANDEY
Former Executive Director, TISCO

To Reduce unproductive workforce To bring down cost Technological Improvements Change in Age-Skill-Salary mix Shut down or Shift of a plant/product Rationalization demand by partners

Absence of viable exit policy Legal interference and inflexible policies Still-Powerful trade unions Developing Economy and no social security

Already existing huge backlog of



 Employers can’t layoff workers for whatsoever

reason they seem fit

 Half of Basic Pay and DA during layoff  No layoff without prior permission  Alternative Employment not a layoff  Penalty – Imprisonment for a period of upto one

month or a fine of upto Rs. 1000 or both

Public Sector Undertakings require permission Can only be offered to employees above 40

years of age or have served for 10 years
Companies retain the right to reject

Income Tax benefits for employees who have

accepted the scheme

 Financial Difficulties  Accumulation of stock  Expiry of License/Lease  Exhaustion of natural resources

Government permission 90 days prior Compensation

 No worker who has continuously served for more than

one year can be retrenched without permission 100 people

 Permission to retrench if company employs more than

 Notice explaining the reason mandatory  Compensation  Last In, First Out  Penalty

Who are middle managers ? Why retrenchment ? What are the alternative solutions if any ?

Associated Problems
Company’s image Feeling Hurt

No Soft Options

“The margins are too thin for us to carry passengers”Sujit Bakshi, Director(HRD), HCL.

 Constant scan for sub-optimal behavior  Reshape or knock-out

Fine Tuning System
 Forced Ranking System  Yesterday-Today-Tomorrow(YTT) technique Monthly performance review Breakthrough objectives- Measurement parameters

HCL Corporation

.Emerging Business


Identification of surplus skills Y-T-T exercise

Forced Ranking

Monthly performance reviews Today's People: Training Inputs

Assessments on Breakthrough objectives Tomorrows People Challenging Assignments


Yesterdays People Lay Off or outplacement

Talk to employees
 Organization’s aims, strategies and need to

restructure  Changing systems, Insecurity involved
Voluntary Retirement Scheme(VRS)
 No hard feelings(both side)  Sweet Coated Pill

Post VRS
 Build confidence among remaining employees  Morale boost  People Commitment Surveys(PCS)
Whirlpool Corporation/Kelvinator India

Man-Power Rationalization Identification of Redundant staff
 Contract to supply material  Official Vendors  Coach and Train

Special Grade Product Mangers
 Supervision by younger person  Benefits of knowledge and experience

 Fall in direct employment rates(70%)  Turnover improvement(200 % annual)

Plan in advance Communicate the

reasons Identify non-performers Transform redundant mangers Constantly reassure the remaining ones

Why Change the CEO?
 He is unable to live up to the new mandate of Restructuring Reengineering Relearning  That is he can no longer be the company’s

leader tomorrow

If the CEO has a health problem make it clear

to him that you are vying for a change
Fix a strict retirement age(Ex. Lever Group) Set stretch targets for the CEO and keep

reviewing them periodically

Temper the termination by ensuring that

CEO goes with dignity.

Use overseas transfers or non-executive

positions to cushion the blow.

Keep the decision secret until a successor

has been identified.

Deflect attention from firing by focusing on

the CEO being appointed.
Create a system of organizational exit by

settingan age limit for CEOs too.

The basic DON’TS to keep in mind
 Don’t Rush into Dismissal  As the CEO might allege company has been unfair  As he could divulge company secrets  Don’t Humiliate the man.  It reflects badly on the company  Makes it difficult to attract star performers later  Don’t let him pick his own successor.  As the company could be stuck with someone it doesn’t want  Have to go through the removal process again.


To identify the factors compelling employees to leave.
Human Resource Executive

Formal Interview - Departing manager and a Senior Uninhibited Feedback
Helps Identify  Employee Dissatisfaction  System weakness-Implement Correction in policy and working  Problem in Individual-Council the Individual 
 Evaluates company’s HR policies vis-à-vis those of competitors  Offers a glimpse of competitors’ recruitment strategies