BACHELOR OF BUSINESS ADMINISTRATION WITH HONOURS (BBA)

SEPTEMBER/2019

BBPP1103

PRINCIPLES OF MANAGEMENT

NO. MATRIKULASI : 810919145286001

NO. KAD PENGENALAN : 810919145286

NO. TELEFON : 016-2639314

E-MEL : amydayal1909@oum.edu.my

PUSAT PEMBELAJARAN : PETALING JAYA

LEARNING CENTRE
Question 1a)

Voluntary Separation: A voluntary separation occurs when an employee resigns or retires on

their own will. Some reasons for voluntary separation includes:

● Retirement: Retirement is a separation from employment whereby an employee opts to

cease working once they have met the age and tenure stipulations laid out by the
employer.
● Better Opportunities: Many people leave jobs because there are plenty jobs available
elsewhere. Competent people will get multiple offers at any given time.

● A Family Move: A newly married employee has planned to move with her husband’s
family to a different state. It might be impossible to transfer her to another division of the
company that is closer to her new home.

● Illness or Disability: In some instances, illness or disability can force an employee to

resign. Sometimes, it is possible to accommodate an employee with a physical challenge
by making minor changes to the workplace or schedule. In other cases, however, the
problem is significant enough or affects productivity to such a degree that the employer
can’t accommodate the worker.

● Changing Circumstances: Very often, jobs that were perfect for a period of time are no
longer appropriate. For example, a strenuous job may have been ideal for a younger
employee but not for an employee getting older that wants to do something a little less
exhausting. A low-paying position may have been acceptable for a person just getting
started but may not be longer suitable when the employee wants to own a home.

Involuntary Separation: An involuntary separation occurs when management decides to

terminate its relationship with an employee due to poor fit between the employee and the
organization, or because of either economic necessity. Example of involuntary separation
includes:

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● Dismissal for breaching employment contract:

➔ The most obvious reason would be an employee’s failure to do their job properly.
Poor performance could be due to a number of causes, such as an inability to
reach a required level of skills or even a failure to get on well with colleagues and
managers.
➔ Another common reason for dismissal is misconduct. This could be something
like regularly turning up late for work or not following workplace procedures
properly. The exception to this is gross misconduct such as theft, violence or
illegal activities which could warrant summary dismissal.

● Retrenchment: Refers to the dismissal of employees who are regarded as surplus to

requirements. The company is not closing, however a chosen group of employees are
retrenched.

● Layoff: Laying off an employee is typically for reasons that are not their fault. The
reasons typically for external business factors, like changes to the company or needing to
downsize. Commonly accepted reasons for laying off employees often includes:

➔ Cutting costs: When a company’s finances take a turn for the worse, one way of
surviving is to layoff workers to save costs.

➔ Mergers and acquisitions: When bringing two companies together there are
typically overlaps in functionality. For example, does the resulting company
really need two accounting departments? Often, the answer is “no”. One of the
departments or some employees are laid off.

➔ Moving: When a company relocates, many employees cannot or are not willing
to move with the business. This often leads to the layoff of those employees.

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 ➔ Changes: Companies can undergo changes for many reasons such as leaving a
product market or modernizing a plant with more automation. In these cases,
redundant employees are often laid off as part of the change.

● Downsizing: Refers to reducing operating costs, making a company leaner. This involves
reducing the size of the workforce, plant closures and making the firm’s departments
more productive and efficient. The aim of downsizing is to restructure an organization in
order to make it more competitive. It is a natural progression in terms of the development
of an organization. Companies typically downsize in order to:

➔ Improve efficiency - by replacing employees with machinery.

➔ Reduce costs.
➔ Increase profits by reducing overhead costs.
➔ Respond to a decline in demand for the company’s products or services.

Question 1 b)

Employees are the pillars of a business, people who contribute significantly in building a
company’s reputation. Although finding the right members of the team can be a process that
needs to be done painstakingly, the end result can be rewarding. However, there will be
inevitable circumstances that call for a much more challenging and harder task, the job of
terminating an employee.

Deciding to end the employment of a team member, either for poor performance or the need of
the company to downsize, informing someone that his or her services are no longer needed can
be both as stressful for a manager as well as to the employee being fired.

This can also lessen if not totally erase the guilt most managers feel for letting go of a staff
member, especially one who has contributed much to the team and have worked for the company
for a long time.

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By having some alternatives choices and providing it in a right way will prevent
miscommunication or worse, impending lawsuit. It is important to remember that for most
people, losing a job does not only mean having to look for another one. It can affect an
individual’s self-esteem, personal life and finances.

● Provide Severance Package

Severance pay is regulated by the “Employment (Termination and Lay-off Benefits)

Regulation of 1980” which is based upon Section 60J of the EA. To be qualified for the
payment, the employee must have 12 months or more length of service (Section 3(1)).
The amount varies depending on the length of service (Section 6(1)).

Severance pay is money that an employer might want to provide for an employee who is
leaving their employment which includes job elimination, layoff and mutual agreement to
part ways.

In general, severance pay is usually based on length of employment. For example, it

could be a week’s pay for every year of service or any other amount determined by the
employer. For executives, the severance pay may even constitute up to a month’s pay for
each year of service or whatever was negotiated in the senior employee’s contract.

Example: An employee worked in a company for 10 years and 8 months. The employee
makes RM25 an hour and works 40 hours a week. A week’s wage would be RM1,000.
The amount of severance pay entitled by the employer would be:

RM1,000 x (10+8/12) = RM10,666.67

● Vacation Time

Employer can offer vacation and sick days to their employees. It is customary to pay out
the value of that time to employees as a part of their severance pay.

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 For example, if a company gives 14 days a year of Paid Time Off and an employee has
only used 6 at the time of the layoff, the company would need to pay the employer for the
8 days they didn’t use. The company can also consider unused sick leaves into severance
pay.

● Coverage on Health Insurance

A severance package may also include health insurance coverage for a certain period and
continuation. Employer might pay premium coverage on behalf of their employees. For
example like 6 to 18 months after termination, because such employer-paid continued
medical coverage may not be taxable and sets their employees free from paying
additional taxes.

The employer also can determine whether to simply convert to a cheaper plan and
consider additional benefits such as death and disabilities to continue for some period of
time.

● References

A key issue the employee will want to address will be how the company will respond to
any reference checks or recommendation requests, from new prospective employers. The
employer could add a section of the severance agreement to state: “Company
acknowledges and agrees that Employee has performed admirably in his/her work with
the Company and the Company will provide positive recommendations to any interested
new employers of Employee”.

Alternatively, the employer could provide positive recommendation letters to the

employee’s new employer inquiring about the employee’s past performance.

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In order to receive the severance package, employees will often need to sign some paperwork
saying they will not speak negatively about the company. They may also need to agree not to
pursue legal action or seek to work with a competitor.

● Outplacement

Employer could offer outplacement services to assist their departing employees with their
career transition through career coaching or counseling.

There are two very different types of outplacement services:

❏ Traditional outplacement
❏ Virtual outplacement

Traditional outplacement happens in a physical location (sometimes in an HR office,

other times in a location away from the main business place). It involves the following:

I. Learning about new career opportunities.

II. Receiving career coaching services that assist in job search activities.
III. Learning new skills that will help them find a job, such as resume writing and
answering interview questions.

Virtual outplacement involves all of the above, but employees can receive one to one
career coaching from the comfort of their own home through online chat, video
conferencing or phone.

By offering outplacement services, companies help employees depart on a more positive note,
which decreases the likelihood that the employees feels the need to criticize the organization
publicly. Plus, when departing employees leave under good circumstances, morale is preserved
for remaining employees.

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Question 2)

Many managements, gurus, institutes and schools preach the importance of teamwork in
business. This is not just any random management policy but the essence lies in the saying,
‘unity is strength’. The following commentary emphasizes the need and importance of teamwork
in business organization.

Teamwork can be simply defined, “as a state of unity achieved within a group of people working
together for a specific goal by accomplishing a task in the most effective and efficient way”.
The phenomenon of teamwork in business is basically used to define the coordination and
cooperation between the members of a partnership that forms a business, joint venture or a
private limited company. There are several genuine advantages of preserving a team spirit in
such organizations as to ensure optimized output. There are several firms and companies around
the world that operate as business groups and have a very well defined set of rules and
regulations, as to maintain the team spirit and ensure teamwork in their operations. Following are
some of the advantages that would help us to understand the importance of teamwork in
business.

● Work Efficiency: Teamwork enables to accomplish tasks faster and more efficiently,
than tackling projects individually. Cooperating together on various tasks reduces
workloads for all employees by enabling them to share responsibilities or ideas.
Teamwork also reduces the work pressure on every worker, which allows him/her to be
thorough in the completion of the assigned roles. In sharing ideas or responsibilities,
every employee should have a role that suits his/her specialization which positively
influences the efficiency or speed of their output in accomplishing the task.

● More Productivity: The increased productivity is only possible when there exists fullest
cooperation between employees and management. It has been found that poor employees
and management relations do not encourage employees to contribute anything more than
the minimum desirable result to retain their jobs. Thus, participation of employees in
management is essential to increase industrial productivity.

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● Increase Job Satisfaction: Participation increases job satisfaction when there is mutual
faith, understanding and cooperation. Team who participates in the company’s decisions
most unlikely argues with their managers because they feel they are a part of the team
with a common goal and accepts the decision process by working together to implement
it.
● Enhance Customers’ Satisfaction: When the employees receive good training support,
they recognize the importance of their work and respect the support given by the
management to them. When teams work well together, information delivered in a good
manner, feedback or complaints gets circulated and addressed to the concerned units.
Customers’ behavior is more effectively interpreted and put into action for problem
solving. In order to boost customer satisfaction the team usually holds weekly or monthly
meetings.

● Increases Creativity and Innovation: Thinking outside of the box generates excitement,
passion and creativity. Additionally, teamwork is oftentimes essential when coming up
with outstanding ideas and solutions, as two heads are better than one. By treating the
team members like the creative human beings, management should listen to their view
point and support them in developing their imaginations. They also can motivate them
with some form of rewards.

● Improved Employee Relations: Teamwork is important in an organization because it

provides employees with an opportunity to bond with one another, which improves
relations among them. Workers constitute a team working on a project often feel valued
upon the successful completion of such tasks. A situation in which all of them find a
chance to contribute towards the tasks improves relations within the team and enhances
their respect for each other.

● Increased Accountability: Teamwork increases the accountability of every member of

the team, especially when working under people who command a lot of respect within the

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 business. Team members do not want to let each other down and hence do their best to
contribute to the success of their team.

● Learning Opportunities: Cooperating in a project is an opportunity for new workers to

learn from more experienced employees. Working together is a great opportunity to
acquire skills that an employee never had beforehand. Unlike working alone on a project,
teamwork affords people the opportunity to challenge the ideas of each other and come
up with a compromised solution that contributes to the successful completion of the task.

● Built in Redundancy: In a team environment, team members often work closely enough
that they know and understand each other’s functions. Because team members work
closely, employees may be able to absorb each other’s work functions when an employee
goes on vacation, gets sick or leaves the organization. Redundancy of work functions
may also help managers get status updates and answers quickly, as team members may be
able to answer questions on behalf of the entire team rather than waiting for a specific
individual to become available.

● Leads to Cost Savings: Teamwork helps promote a flatter organizational structure that
reduces the demand of expensive leadership positions. In a teamwork environment, team
members often lead and manage themselves. A single manager may be able to lead
several teams more effectively than a handful of individuals. Because organization
leaders often command a higher salary than individual contributors. This structure can
equate to a considerable cost savings for an organization that relies on teamwork.

In today’s world, the importance of teamwork in business is always felt because of demand for
efficiency and timely execution of work. It is, thus, very important for any business organization
to work not as individuals with different motives and objectives but as a team with one motive,
objective and a soul that reflects the image of success to the business organization.

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