Chapter 6

Managing Employee
Separations,
Downsizing, and
Outplacement

(c) 2007 by Prentice Hall 6-1

 Chapter 6 Overview
• Identify the costs and benefits associated
with employee separations
• Understand the differences between
voluntary and involuntary separations
• Avoid problems in the design of early
retirement policies
• Design HRM policies for downsizing that
are alternatives to layoffs and develop a
layoff program that is effective and fair
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 What Are Employee Separations?
• Employee separations – The termination
of an employee’s membership in an
organization.

• Turnover rate – The rate of employee

separations in an organization.

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 What Are Employee Separations?
• The costs of employee
separations
– Recruitment costs
– Selection costs
– Training costs
– Separation costs

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What Are Employee Separations?

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 What Are Employee Separations?
The benefits of employee separations

• Reduced labor costs

• Replacement of poor performers
• Increased innovation
• Opportunity for greater diversity

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Types of Employee Separations
• Voluntary separation – A separation that
occurs when an employee decides, for
personal or professional reasons, to end
the relationship with the employer.

– Quits
– Retirements

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Types of Employee Separations
• Involuntary separation – A separation that
occurs when an employer decides to
terminate its relationship with an
employee due to (1) economic necessity
or (2) a poor fit between the employee and
the organization.
– Discharges
– Layoffs, downsizing, and rightsizing

(c) 2007 by Prentice Hall 6-8

 Managing Early Retirements
• The features of early retirement policies
• Avoiding problems with early retirements
– A longtime employee who has performed satisfactorily
over many years suddenly receives an unsatisfactory
performance evaluation
– A manager indicates that senior employees who do
not take early retirement may lose their jobs anyway
because a layoff is likely in the near future
– Senior employees notice that their most recent pay
raises are quite a bit lower than those of other,
younger workers who are not eligible for early
retirement
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Managing Early Retirements

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 Managing Layoffs
Alternatives to Layoffs – Employment Policies
• Attrition – An employment policy designed to
reduce the company’s workforce by not
refilling job vacancies that are created by
turnover.
• Hiring freeze – An employment policy
designed to reduce the company’s workforce
by not hiring any new employees into the
company.
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 Managing Layoffs
• Implementing a
layoff
• Notifying
employees
• Worker Adjustment
and Retraining
Notification Act –
(WARN)
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 Managing Layoffs
Implementing a Layoff – continued
• Develop layoff criteria
• Communicating to laid-off employees
• Coordinating media relations
• Maintaining security
• Reassuring survivors of the layoffs

(c) 2007 by Prentice Hall 6-13

 Outplacement
• The Goals of Outplacement -
1. Reducing the morale problems of
employees who are about to be laid off
2. Minimizing the amount of litigation
initiated by separated employees
3. Assisting separated employees in
finding comparable jobs as quickly as
possible
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 Outplacement
Outplacement Services
• Emotional Support
• Job-search Assistance

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 Summary and Conclusions
• What are employee separations?
• Types of employee separations
• Managing early retirements
• Managing layoffs
• Outplacement

(c) 2007 by Prentice Hall 6-16