EMPLOYEE SEPA-

RATION & RETEN-

TION

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 Employee Separation

• Reasons for employee separations

– Pressures on firms to remain competitive and efficient
– Decline in employee commitment to employers
• Importance of managing separations
– Transitions of employees out of firm go smoothly
– Continuing operations of firm not disrupted
– Important professional relationships not damaged
• Types of separations
– Reductions-in-force, turnover, and retirements

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 Reductions-in-Force (RIFs)

• Causes of reductions
– Restructuring as a result of mergers and acquisitions
– Attempts to make organization more cost competitive
– Reasons for reductions
– Lack of adaptability in marketplace
– Weakened competitive position in industry
• Methods for dealing with reductions
– Continuance pay

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 Turnover

• Involuntary turnover
– Employees asked to leave organization for cause, or due to
circumstances that cause reduction-in-force
• Voluntary turnover
– Employees who leave organization on own initiative
• “Beneficial” turnover?
– Low performing employees depart, and/or new higher perform-
ing employees promoted or hired as replacements

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 Exhibit 13-2
Performance-Replaceability Strategy Matrix

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 Exhibit 13-3
Strategic Management of Turnover & Retention

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 Retention of High Performers

• Critical HR issue
– Development of policies and programs to re-
tain high performers, and/or those difficult to
replace
• Employers face competition from
– Other organizations
– From employees they are attempting to retain
(e.g., to start-ups)

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 Retirement

• Age Discrimination in Employment Act of 1967

– Prohibits employer from setting mandatory retirement age, ex-
cept in certain occupations (e.g. pilots)
• Retirement
– Creates advancement opportunities for younger employees,
and often reduces payroll costs
– Can cause loss of vital historical knowledge of organization, in-
dustry, and marketplace
– Part-time and consulting work can ease transition of older
workers into retirement

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 Holding on to High Performers:
A Strategic Approach to Retention

• Well-planned and coordinated retention strategy

– Selection and orientation
– Training and career management
– Motivation and compensation
• Selection and orientation
– Recruitment practices that focus on cultural fit
– Define critical “success factors” for job
– Effective orientation

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 Reading 13.1
Holding on to High Performers:
A Strategic Approach to Retention

• Training and career management

– Create learning environment
– Adopt interactive approach to training & de-
velopment
– Establish development as line responsibility
– Offer variety of development opportunities

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 Reading 13.1
Holding on to High Performers:
A Strategic Approach to Retention
• Motivation and compensation
– May not be wise to focus primarily on money
– Incorporate nonfinancial rewards into compensation
programs
– Recognize employee efforts more informally, more
personally, and more frequently

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 Strategies for Responsible Restructuring

• What’s different about current layoffs?

– Healthy companies hoping to reduce costs and boost earn-

ings by reducing head count
– At same time firms are firing some people, are hiring others
– More managers are briefing employees regularly about eco-
nomic status of companies, which raises awareness and pre-
pares employees

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 Strategies for Responsible Restructuring

• Mistakes to avoid when restructuring:

1. Failure to be clear about long- and short-term goals
2. Use of downsizing as first resort, rather than as last
3. Failure to change ways work is done
4. Failure to involve workers in restructuring process
5. Failure to communicate openly and honestly
6. Failure to manage survivors effectively
7. Ignoring effects on other stakeholders

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 Reading 13.3 (Agarwal & DeGroote)
Retirement of Older Workers: Issues & Policies

• Mandatory retirement can cause great economic

and emotional hardship to many older workers
• Shock of compulsory retirement and resulting loss
of productive work and earning power may lead to
impaired health and mental well-being

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 Reading 13.3
Retirement of Older Workers: Issues & Policies

• Management of labor shortages in some

highly skilled trades in next decade will re-
quire
– Employment strategies that slow down withdrawal of
older workers from areas of highest productivity and
growth in economy,

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 Reading 13.3
Retirement of Older Workers: Issues & Policies

• Age-performance relationship
– Individual differences much more important
than age group differences
– Age and performance appears to be generally
unrelated

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 Reading 13.3
Retirement of Older Workers: Issues & Policies

• Implications for organizational retirement policy

development
– Undertake human resource planning to insure levels of required
skills are maintained and not unduly depleted by retirement
programs and policies
– Develop age-neutral policies to ensure effective access to and
utilization of older workers
– Create flexible work and retirement arrangements that meet
needs of older workers and organization

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