CASE 7
CASE #7 HRM
Kerkko Jahnukainen
Study notes: Ch. 6
Managing Employee Seperations, Downsizing, and Outplacement
What are employee seperations?
When an employee ceases to be a member of the organzation. The turnover rate is a measure at which employees leave the firm. Well managed companies measure and monitor the turnover rate and try find the causes.
The cost of seperation
- Differs accross organizations, and costs can be hard to evaluate. e.g. geographical location
The Benefits of employee seperation
- Reduced labor costs
- Replacement of poor peformers
- Increased innovations
- The opportunity for greater diversity
Type of employee seperation
- Voluntary
- Retirments
- quits
Involuntary
- Discharge
- Layoffs
- Rightsizing
Managing early retirements
- Early reiteirment policies
- Financial incentives
- If managed badly => problesm eg. abusing the systems, wrong workers leaving etc.
Alternatives to layoffs
- Employement policies
- Changes in job design
- Pay and Benefit policies
- Training
Managing layoffs
- Notifying employees
- Developing layoff criteria
- Communication to laid-off employees
- Coordinating media relations
- Maintaining security
- Reassuring survivors of layoffs
Outplacement
- Emotional support
- Job-search assistance
Case 7a)
Sources: Early-Retirement Offers That Work Too Well, Patrick Kiger, 1.5.2004, www.workforce.com (http://www.workforce.com/2004/01/05/early-retirement-offers-that-work-too-well/) Accessed 12.4.2018
Massive layoffs loom over Microsoft
Reported by inside sources, Microsoft is looking to do some reorganization of the company, which includes letting some people go. When talking about a company the size of MS, actions like this can leave thousands of employees without a job.
This is case of rightsizing, more than downsizing. MS isn't laying people off for financial reason but rather due to the changing landscape of the business that they are in. Processes become more automated and efficient so less people are needed to achieve the same goals.
Managing layoffs
- Notifying employees
- Developing layoff criteria
- Communication to laid-off employees
- Coordinating media relations
- Maintaining security
- Reassuring survivors of layoffs
Kerkko Jahnukainen
Study notes: Ch. 6
Managing Employee Seperations, Downsizing, and Outplacement
What are employee seperations?
When an employee ceases to be a member of the organzation. The turnover rate is a measure at which employees leave the firm. Well managed companies measure and monitor the turnover rate and try find the causes.
The cost of seperation
- Differs accross organizations, and costs can be hard to evaluate. e.g. geographical location
The Benefits of employee seperation
- Reduced labor costs
- Replacement of poor peformers
- Increased innovations
- The opportunity for greater diversity
Type of employee seperation
- Voluntary
- Retirments
- quits
Involuntary
- Discharge
- Layoffs
- Rightsizing
Managing early retirements
- Early reiteirment policies
- Financial incentives
- If managed badly => problesm eg. abusing the systems, wrong workers leaving etc.
Alternatives to layoffs
- Employement policies
- Changes in job design
- Pay and Benefit policies
- Training
Managing layoffs
- Notifying employees
- Developing layoff criteria
- Communication to laid-off employees
- Coordinating media relations
- Maintaining security
- Reassuring survivors of layoffs
Outplacement
- Emotional support
- Job-search assistance
Sources: Luis R. Gomez-Mejia, David B. Balkin, Rober R. Cardy: Managing Human Resources, Ch.6
Nokia closes plant in Germany and relocates in Romania
"The German government urged Nokia to reconsider closing a plant in Germany, with many job losses and the facility’s relocation to Romania. According to the ETUC, the Finnish management of the world-leading mobile phone producer announced the abolition of 4,000 jobs without the slightest information or consultation.
Arguing the plant was not competitive enough, Nokia said on Tuesday it could cut up to 2,300 staff as it moves production to lower-cost areas, largely to EU newcomer Romania — a country which receives aid from the bloc partly supplied by Germany."
Nokia had to make these changes to save money in labor costs. Both the lower amount of employees, but also the move to a cheaper country
Changes in job design
- Transfers
- Relocating staff to another country
This case is pretty much only about reducing labor costs due to financial issues. As the layoff have nothing to do witht the employee competence.
Maybe in some cases this could be considered "rightsizing" as the firm's identity changed to smaller one.
"Without the slightest information or consultation, the Finnish management of the world-leading mobile phone producer Nokia announced the abolition of 4,000 jobs."
Shows how badly the situation was handled by the firm.
Ignoring all layoff management techniques
- Notifying employees
- Developing layoff criteria
- Communication to laid-off employees
- Coordinating media realations
- Maintaining security
- Reassuring survivors of layoffs
- Developing layoff criteria
- Communication to laid-off employees
- Coordinating media realations
- Maintaining security
- Reassuring survivors of layoffs
Also they could've considered other options, than just layoffs.
Source: Nokia closes plant in Germany and relocates in Romania, 17.1.2008, communicatinglabourrights.wordpress.com, (https://communicatinglabourrights.wordpress.com/2008/01/17/nokia-closes-plant-in-germany-and-relocates-in-romania/) Accessed 12.4.2018
Case 7b)
Nokia cuts 3500 jobs "to ensure profitability"
Nokia letting around 3500 employees go "to ensure profitability"
There isn't a whole lot this this particular news story. Other than Nokia, had run into financial troubles and needed to make cuts. Labor costs make up a majority of expenses, so the natural direction was to layoff employees.
Managing layoffs
- Notifying employees
- Developing layoff criteria
- Communication to laid-off employees
- Coordinating media relations
- Maintaining security
- Reassuring survivors of layoffs
Especially "maintaining security" is very important as the employees have access to a lot of files, information other things which could lead to even more losses.
Also, with a massive layoff like this (and for being one of the biggest companies in Finland) the way you communicate to the media is crucial.
With 3500 of your co-workers getting laid-off, reassuring that one whoa re left are save can be quite the task. And needs to be carefully coordinated, how for example management proceeds post layoff. Some employees, might even see the layoffs as the "beginning of the end" and leave the company if offered a better deal from a more "stable company".
Source: Nokia cuts 3500 jobs "to ensure profitability", YLE, 29.9.2011, www.yle.fi (nokia_cuts_3500_jobs_to_ensure_profitability) Accessed 14.2.2018
- Notifying employees
- Developing layoff criteria
- Communication to laid-off employees
- Coordinating media relations
- Maintaining security
- Reassuring survivors of layoffs
Especially "maintaining security" is very important as the employees have access to a lot of files, information other things which could lead to even more losses.
Also, with a massive layoff like this (and for being one of the biggest companies in Finland) the way you communicate to the media is crucial.
With 3500 of your co-workers getting laid-off, reassuring that one whoa re left are save can be quite the task. And needs to be carefully coordinated, how for example management proceeds post layoff. Some employees, might even see the layoffs as the "beginning of the end" and leave the company if offered a better deal from a more "stable company".
Source: Nokia cuts 3500 jobs "to ensure profitability", YLE, 29.9.2011, www.yle.fi (nokia_cuts_3500_jobs_to_ensure_profitability) Accessed 14.2.2018
Case 7c)
Hundreds of Nokia's outsourced Symbian developers leaving Accenture
"Hundreds of former Nokia employees at the consultancy firm Accenture are reportedly leaving the company and claiming severance packages. Accenture has offered the packages to workers who were only outsourced by Nokia last autumn. According to a shop steward’s survey, up to 400 former Nokia workers have accepted the packages."
"The severance packages are worth up to 15 months’ pay, according to Sallmén. The smallest payouts are a few months’ salary."
"Accenture management are keeping a low profile on the story."
Alternatives to layoffs
- Employment policies
- Changes in job design
-Relocation
- Transfers
- Job sharing
- (Outsourcing?)
- Pay and Benefit policies
Providing employees with better opportunities, while also benefiting themselves.
Managing early retirements
- Early retirement policies
- Financial incentives i.e making a good deal for the employees to persuade them to leave the company.
- Developing layoff criteria
- Communication to laid-off employees
- Coordinating media relations
Nokia, also had to have a plan as to how they were going handle media, but also try to cooperate what the laid off employees would share in the light of layoffs, as the media is always going to be interested in hearing from the perspective of the ex-employee when such a huge company goes through such a change.
Source: Hundreds of Nokia's outsourced Symbian developers leaving Accenture, YLE, 2.4.2012 (https://yle.fi/uutiset/osasto/news/hundreds_of_nokias_outsourced_symbian_developers_leaving_accenture/5252177) Accessed 12.4.2018
"Although Verizon had hoped to shave $1 billion a year from its personnel costs, the massive expense of the buyout–upwards of $3 billion–meant that it would be at least several years before the benefit showed up on the bottom line."- Employment policies
- Changes in job design
-Relocation
- Transfers
- Job sharing
- (Outsourcing?)
- Pay and Benefit policies
Providing employees with better opportunities, while also benefiting themselves.
Managing early retirements
- Early retirement policies
- Financial incentives i.e making a good deal for the employees to persuade them to leave the company.
- Developing layoff criteria
- Communication to laid-off employees
- Coordinating media relations
Nokia, also had to have a plan as to how they were going handle media, but also try to cooperate what the laid off employees would share in the light of layoffs, as the media is always going to be interested in hearing from the perspective of the ex-employee when such a huge company goes through such a change.
Source: Hundreds of Nokia's outsourced Symbian developers leaving Accenture, YLE, 2.4.2012 (https://yle.fi/uutiset/osasto/news/hundreds_of_nokias_outsourced_symbian_developers_leaving_accenture/5252177) Accessed 12.4.2018
Early-Retirement Offers That Work Too Well
"Verizon had a great idea to save money: Offer early retirement. It's retirement package was generous. In fact, it may have been a bit too generous. It expected about 12,000 workers to take the offer. Instead, 21,000 did."
Managing early retirements
- Early reiteirment policies
- Financial incentives
- If managed badly => problems eg. abusing the systems, wrong workers leaving etc.
Verizon wanted cut off about 1B. dollars from personal expenses by letting go some employees. As an incentive to leave they offered a package, but it was good that even people who probably wouldn't have quit or had any reason to, also quit. This a case of very bad management of retirement packages.
- Early reiteirment policies
- Financial incentives
- If managed badly => problems eg. abusing the systems, wrong workers leaving etc.
Verizon wanted cut off about 1B. dollars from personal expenses by letting go some employees. As an incentive to leave they offered a package, but it was good that even people who probably wouldn't have quit or had any reason to, also quit. This a case of very bad management of retirement packages.
Sources: Early-Retirement Offers That Work Too Well, Patrick Kiger, 1.5.2004, www.workforce.com (http://www.workforce.com/2004/01/05/early-retirement-offers-that-work-too-well/) Accessed 12.4.2018
Reported by inside sources, Microsoft is looking to do some reorganization of the company, which includes letting some people go. When talking about a company the size of MS, actions like this can leave thousands of employees without a job.
This is case of rightsizing, more than downsizing. MS isn't laying people off for financial reason but rather due to the changing landscape of the business that they are in. Processes become more automated and efficient so less people are needed to achieve the same goals.
Managing layoffs
- Notifying employees
- Developing layoff criteria
- Communication to laid-off employees
- Coordinating media relations
- Maintaining security
- Reassuring survivors of layoffs
Sources: Massive layoffs loom over Microsoft, Mike Wehner, 3.6.2017, www.bgr.com (http://bgr.com/2017/07/03/microsoft-layoffs-2017-cloud-software/)
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