Rightsizing, Termination, and Retention

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• Rightsizing, Termination, and Retention

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Rightsizing the Organization

• Rightsizing
• The process of monitoring and adjusting the
  composition of the organizations workforce to
  its optimal size
• Organizations face a real challenge in managing
  the size of their workforces as a way to deal
  with their current needs and potential future
  economic realities.

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Rightsizing the Organization (contd)

• Some organizations rely on temporary workers or
  other contingent workers as a way of dealing with
  uncertainty.
• Contingent workers provide a buffer for the
  organization.
• When a more serious reduction in the workforce is
  needed, more extreme measures are necessary.

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Planning for Declines and Early Retirement

• When it is possible to plan systematically for a
  gradual decrease in the workforce, it may be
  possible to manage reduction through early
  retirements and natural attrition.
• Incentives may be offered for early retirement.
• Early retirement plans must be voluntary or the
  organization may face legal problems.

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Strategies for Layoffs

• Much of peoples reactions to layoffs are
  determined by perceptions of the justice involved
  in the layoff process.
• People often react badly when they are told they
  will no longer have a job.
• Some may decide to sue.

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Three Types of Justice

• Distributive justice
• Perceptions that the outcomes a person faces are
  fair when compared to the outcomes faced by
  others
• Procedural justice
• Perceptions that the process used to determine
  the outcomes was fair
• Interactional justice
• The quality of the interpersonal treatment people
  receive when a decision is implemented

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Legal Issues In Layoffs

• If a layoff strategy produces disparate impact,
  legal actions can become problematic.
• Decisions to lay off senior employees cannot be
  based on stereotypes about older workers and
  their ability to perform.
• Strategies based on performance can be difficult
  to defend.
• Large-scale layoffs must be announced in advance.

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Is Downsizing Effective?

• A recent study showed that employment downsizers
  had the lowest levels of return on assets over
  time and did poorly on stock price when compared
  with stable employers and asset downsizers.
• Asset downsizers produced the greatest
  performance.
• Other studies report negative effects on stock
  prices and other financial indexes as a result of
  downsizing.
• Survivor syndrome can contribute to the total
  costs of layoffs.

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Termination

• Managing involuntary turnover
• Despite recruiting, selection, training, and
  development activities, sometimes an employee
  does not perform up to acceptable standards or
  presents a disciplinary problem.
• Organizations use disciplinary action in an
  attempt to convince the employee to improve
  his/her performance.

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Progressive Discipline

• Punishment
• Following unacceptable behavior with some type of
  negative consequences
• Discipline
• The system of rules and procedures for how and
  when punishment is administered and how severe
  the punishment should be

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Progressive Disciplinary Plans

• Verbal warnings
• Cautions conveyed orally to the employee
• Written warnings
• More formal warnings that are given to the
  employee in writing and become part of the
  employees permanent record
• Suspension
• Temporary layoff
• Termination
• Employee is fired

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Employment-at-Will

• This view asserts that because an employee can
  terminate an employment relationship at anytime,
  the employer should have the same rights.
• Employment-at-will states that an employer can
  terminate any employee at any time, for any
  reason (good or bad), or for no reason at all.
• The key to successful termination of an employee
  is documentation.

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Employee Retention

• Job dissatisfaction is the feeling of being
  unhappy with ones job. It is a major cause of
  voluntary turnover.

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A Model of the Turnover Process
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Job Embeddedness

• Some people stay on their jobs, even when they
  are unhappy and should leave. Other ties in the
  community or obligations keep the employee on the
  job.

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Causes of Job Dissatisfaction
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The Effects of Job Dissatisfaction

• Organizational commitment
• The degree to which an employee identifies with
  an organization and is willing to exert effort on
  behalf of the organization
• Organizational citizenship behaviors (OCBs)
• Employee behaviors that are beneficial to the
  organization but are not formally required as
  part of an employees job

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Measuring and Monitoring Job Satisfaction

• Monitoring is done primarily through the use of
  attitude surveys that are distributed to
  employees
• The responses from these surveys are used to
  track changes in employees attitudes.
• Other methods include direct measures of job
  satisfaction, and some include questions about
  the levels desired versus what is experienced.

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Retention Strategies

• Job enrichment
• Realistic job previews (RJPs)
• Pre-employment previews that provide accurate and
  realistic information to the job applicant. They
  can also be used with new employees as a means of
  socializing them in their new job roles, and they
  are effective in reducing turnover.
• Stock options

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Evaluating the Rightsizing Process

• Continuous strategic planning should result in
  employment projections that allow the
  organization to address those projections in the
  most painless way.
• When an unanticipated downturn occurs, an
  organization should conduct layoffs in ways that
  are compassionate.
• Exit interviews with employees who leave
  voluntarily can provide insight into why
  employees quit.