PEOPLE RESOURCING

1
PEOPLE RESOURCING

• Organisation exit
• Norma Heaton October 2006

2
Objectives

• To examine aspects of employee turnover
• To consider redundancy as a particular form of
  organisation exit
• To review alternatives for organisation
  downsizing
• To outline a range of good practices in managing
  redundancy

3
Why do employees leave organisations?

• Turnover
• To take up a new job
• To take a permanent or temporary break
• To start a new business
• Redundancy
• Voluntary or compulsory
• Retirement
• Early or at retirement age
• Dismissal

4
Employee-initiated termination of employment
employer deficiency (Walsh and Bott, 2005)

• Disengagement (blame)
• Examples
• Employers behaviour by
• Omission or commission including constructive
  dismissal
• Outcome is parting company with ill-feeling

• Moving on (no blame)
• Examples
• Change of career
• Promotion outside the organisation
• Outcome is parting company on good terms

5
Employee-initiated termination of employment
employee deficiency (Walsh and Bott, 2005)

• Disengagement (blame)
• Examples
• Employer unable to grant employees request for
• Part-time working
• Reduced workload
• Outcome is parting company with ill-feeling

• Moving on(no blame)
• Examples
• Retirement
• Family requirements
• Outcome is parting company on good terms

6
Turnover trends

• CIPD survey shows
• UK turnover rate 18.3 (2005)
• Vast majority of turnover is voluntary
• Highest levels of turnover in private sector with
  rates exceptionally high in hotels, catering and
  leisure (42.5)
• Lowest levels of turnover are in public sector
  (13.3)

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Does turnover matter?

• Positive consequences
• Supply of fresh blood
• High turnover gives the opportunity to develop
  valued staff
• High turnover may reduce the need for
  redundancies
• High turnover is least worrying in relatively
  low-skilled occupations

8
Does turnover matter?

• Negative consequences
• Valuable employees may join a competitor
• Productivity may fall
• Remaining employees may become demoralised
• Costs of turnover include recruitment and
  selection, training new employees, interim
  overtime costs

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Measuring turnover

• Wastage index
• No. of leavers in a specified period
• ---------------------------------------------- x
  100
• Average no. employed in same period
• Stability index
• No. of employees with x years service at given
  date
• --------------------------------------------------
  -------------x 100
• No. employed x years ago

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Why analyse turnover?

• Measure overall effectiveness of people
  management
• Measure effectiveness of recruitment and
  selection
• Assess overall organisational performance
• Assess effectiveness of other HR policies and
  procedures
• Source CIPD Recruitment, retention and turnover
  survey, 2004

11
Explaining turnover

• Exit interviews
• Used by 91 of organisations in CIPD survey
• When should they be undertaken?
• Who should conduct them?
• How reliable is the information?
• Exit surveys
• Surveys of ex-employees
• Attitude surveys

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Reducing turnover (Taylor)

• Realistic job previews
• Job enrichment
• Workspace characteristics
• Induction practices
• Leader-member exchange
• Employee selection
• Reward practices
• Demographic diversity
• Managing inter-role conflict

13
Sanitising dismissal

• Delayering
• Downsizing
• Letting go
• Outplacing
• Rationalising
• Releasing
• Rightsizing
• Re-engineering

14
Management-initiated termination of employment
employee deficiency (Walsh and Bott, 2005)

• Exclusion (blame)
• Examples
• Discipline
• Gross misconduct
• Persistent complaints
• Outcome parting compnay with ill-feeling

• Release (no blame)
• Examples
• Capability
• Long-term sickness
• Outcome parting company on good terms

15
Management-initiated termination of employment
redundancy (Walsh and Bott, 2005

• Exclusion (blame)
• Examples
• Selection criteria
• Attendance record
• Disciplinary record
• Job performance
• Outcome parting company with ill-feeling

• Release (no blame)
• Examples
• Short service
• Voluntary
• Outcome parting company on good terms

16
Scale of redundancies

• 34 of UK organisations had 10 or more
  redundancies in 2003 (CIPD data)
• Younger workers tend to be more at risk
• Male and skilled manual workers are high risk
• NI 2005, 2517 confirmed redundancies
• NI 2006 to date, 2087 confirmed redundancies
• Main reasons reduction in budgets, improved
  competitiveness, lack of demand

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Defining redundancy

• Employment Rights Act 1996 definition (Employment
  Rights (NI) Order 1996)
• Where the employer has ceased, or intends to
  cease, carrying on the business in which the
  employee is or was employed
• Where the employer ceases, or intends to cease,
  carrying out this business at the place where the
  employee is or was employed
• Where the requirements for work of a particular
  kind ceases or diminishes
• Where the requirements for work of a particular
  kind cease or diminish at the place where the
  employee is employed

18
Managing redundancy good practice elements

• Examining ways to avoid redundancy
• Consultation
• Selection decisions
• Pre and post redundancy support for leavers and
  survivors

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Alternatives to compulsory redundancy

• Long-term approaches
• Effective human resource planning
• Maximisation of flexibility
• Early retirement
• Short-term approaches
• Voluntary redundancy
• Recruitment freezes
• Wage reductions
• Redeployment of staff
• Defer start date for new recruits

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Notification and consultation

• Companies are legally required to notify the
  Department of Enterprise, Trade and Investment if
  they are proposing to make 20 or more employees
  redundant
• Consultation with recognised trade unions or
  elected representatives, at least 90 days in
  advance if 100 redundancies
• Consultation period 30 days if 20-99 redundancies
• Since 1999, specific requirement to elect
  employee representatives for consultation in
  non-union organisations

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Consultation employers must disclose the
following

• Reasons for proposed redundancies
• Numbers and types of employees to be redundant
• Selection method
• Method of implementing the procedure
• Proposed method of calculating redundancy payments

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Individual consultation

• An employer should meet with potentially
  redundant employees individually
• No statutory requirement for individual
  consultation to last a particular period of time
• Employer must act reasonably and be able to
  demonstrate that the employee has had an
  opportunity to discuss reasons, pool for
  selection, criteria and any alternative employment

23
Selection for redundancy

• Fair selection criteria may include
• Length of service
• Attendance records
• Disciplinary records
• Skills, competences and qualifications
• Work experience
• Performance records
• Consideration needs to be given to a scoring
  mechanism

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Selection for redundancy ctd

• Moves away from seniority and LIFO towards
  assessment of skills, performance and attendance
• LIFO indirectly discriminatory from 1 October
  2006
• Interviews and assessment centres may be used
• Increased use of psychometric tests
• Dangers of unfair/unlawful selection if
  disproportionate to one sex or religion

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Employee support

• Counselling
• Outplacement programmes
• Analysis of skills
• CV and application form preparation
• Interview skills
• Advice about retraining
• Time off to look for work
• Financial advice
• Financial support for training

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Redundancy pay from 1 October 2006

• Based on age, length of service and weekly pay
• Maximum weekly salary to be used 290 (from Feb
  2006)
• Age
• For every completed year after age 41 1.5 weeks
  pay
• For every completed year between 22 and 41 1
  weeks pay
• For every completed year before age 22 0.5
  weeks pay
• Maximum number of years service is 20

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Enhancing compensation

• Financial support above the minimum offered by
  most employers (CIPD survey)
• Enhancements include
• Increasing the number of weeks pay used
• Disregarding the statutory earnings limit
• Additional payments made to those staying on
  beyond specified period

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Managing the survivors

• Survivors may experience
• shock
• guilt
• jealousy
• decline in morale
• fear of further redundancies

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Managing remaining employees

• Develop honest, two-way communication
• Provide a full explanation to all workers
• Demonstrate the necessity for change
• Give an appraisal of future employment prospects
• Demonstrate fairness in selection for redundancy

30
Managing remaining employees ctd

• Provide support for those losing their jobs
• Provide a forward looking, postitive attitude to
  survivors
• Conduct individual discussions with remaining
  employees
• Provide managers with the necessary skills to
  operate effectively

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Importance of good practice in managing redundancy

• Hire and fire image will affect attractiveness
  for recruitment and selection
• Concerns regarding continuity and quality
• Industrial conflict and workforce resistance
• Possibility of increased turnover amongst
  remaining employees

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Future developments

• Employment Equality (Age) Regulations (NI) 2006
• Information and Consultation Regulations (NI)
  2005 apply to
• Undertakings with 100 employees from April 2007
• Undertakings with 50 employees from April 2008
• Collective Redundancies the Junk case

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Questions to consider

• How can redundancies be avoided or minimised?
• What are the advantages and disadvantages of the
  various selection criteria?
• What forms of help and support do employees
  value?

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References and further reading

• CIPD (2002) Redundancy Survey Report. CIPD
• CIPD (2006) Recruitment, retention and turnover.
  Survey Report. CIPD
• Fowler,A. (1999) Managing redundancy. IPD
• Labour Relations Agency (2002) Code of Practice
  Redundancy Consultation and Procedures. LRA
• Pickard,J. (2001) When push comes to shove
  People Management, vol 7, no 23

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References and further reading

• Redman,T. and Wilkinson,A. (2006) Contemporary
  Human Resource Management (ch 14) FT/Prentice
  Hall
• Sahdev,K. (2003) Survivors reactions to
  downsizing the importance of contextual
  factors, Human Resource Management Journal, Vol
  13 No 4
• Taylor,S. (2005) People Resourcing (chs 17 and
  18) CIPD
• Walsh,D. and Bott,D. Parting company in
  Leopold,J., Harris,L. and Watson,T. (2005) The
  Strategic Managing of Human Resources.
  FT/Prentice Hall