1.1 Key concepts
“An employee may be separated as consequence of resignation, removal, death, permanent incapacity, discharge or retirement. The employee may also be separated due to the expiration of an employment contract or as part of downsizing of the workforce. Organizations should never harass the employees, especially in the case of resignation, just because they are quitting the organization. In fact, a quitting employee of the organization must be seen as a potential candidate of the future for the organization and also the brand ambassador of its HR policies and practices. However, many organizations are still treating their employees as “expendable resources” and discharging them in an unplanned manner whenever they choose to do so.” (Whatishumanresource n.k.)
“Employee separation have both costs and benefits. The costs include:
- Recruitment costs
- Selection costs
- Training costs
- Separation costs
The benefits are:
- Reduced labor costs
- Replacement of poor performers
- Increased innovation
- The opportunity for greater diversity” (Gomez-Mejia, Balkin & Cardy 2016)
“Employees may leave either voluntary or involuntarily. Voluntary separations include quits and retirements. Involuntary separations include discharge and layoffs. When an employee is forced to leave involuntarily, a much greater level of documentation is necessary to show that a manager’s decision to terminate the employee was fair.” (Gomez-Mejia, Balkin & Cardy 2016)
“Early retirement is also an offer made by employers who seek to cut costs and encourage highly paid employees to leave their employment by retiring early. Usually, the early retirement option is accompanied by financial incentives.” (Heathfield 2018) When thinking about early retirement as an option, it is essential to present the idea of it to the employees so that they don’t feel offended and forced to leave. It might be rather sensitive subject for someone.
“Some tips on how to handle layoffs are:
- Communicate widely and often
- Fill in information gasps for you employees
- Give the most pressing information first
- Never delegate pain
- Deliver the message personally and respectfully – and listen
- Provide outplacement support
- Support survivors, too
- CEOs: Be front and center” (Robbins 2009)
”Generally, outplacement involves a company hiring an outside service provider to assist departing employees with their career transitions. Among the typical services offered are personal career coaching, resume reviews, and interview practice. One major reason so many more companies have invested in outplacement services in recent years is better brand management. Just a couple decades ago, unhappy employees could do little to let anyone outside their immediate circle know about negative experiences with a company. This negative commentary from former employees can have major consequences for companies. In the ‘2017 CareerArc Employer Branding study’, 66 percent of candidates reported they had shared their negative thoughts about an employer that had laid them off, and 64 percent of consumers reported they had stopped purchasing products from a brand after hearing news of that company’s poor employee treatment. Furthermore, employees’ negative reviews can make it hard for the company to recruit and retain talent in the future. If job seekers consistently hear reports of poor treatment from an organization, few will want to take a job with said organization.” (Riemer 2019)
In a summary, a proper exit management is well-needed. It needs to be handled with respect towards everyone. It is essential to have specific plan in case of layoffs. Employees of the companies are considered as the best or worse PR you can have. If you treat everyone well, even in the case of layoffs, for sure they will be positive when talking about the company and don’t necessarily have negative feelings and won’t stop buying your products. There are several companies offering outplacement, which could be more beneficial since these companies focus on this very specific subject – and know how to do it well.
1.2 Cases
Considering the case of Nokia, it was not handled well, and it became a PR nightmare. This fiasco also cost loads of money for Nokia. “German government officials launched an investigation and demanded that Nokia pay back subsidies it had received for the plant. Unions called for a boycott of Nokia products. The news was filled with pictures of crying employees and protesters crushing Nokia phones. Ultimately, the shutdown cost Nokia €200 million—more than €80,000 per laid-off employee—not including the ripple effects of the boycott and bad press. The firm’s market share in Germany plunged; company managers estimate that from 2008 to 2010 Nokia lost €700 million in sales and €100 million in profits there.” (Gupta & Sucher 2018) In my opinion there was not enough information to be told to the employees and it was not communicated well with the employees. Considering how much anger there was, Nokia clearly didn’t think through their exit management – or if they even had one. As the result of lacking proper exit management, they lost lots of money, they lost consumers and respect.
1.3 References
Gomez-Mejia, L.R., Balkin, D.B. and Cardy, R.L. 2016. Managing Human Resources. Global Edition 8/E. Pearson. London.
Gupta, S. & Sucher, S. 2018. Layoffs that don’t break your company. URL: https://hbr.org/2018/05/layoffs-that-dont-break-your-company. Accessed: 19 April 2020
Heathfield, S. 2018. Early retirement is an option for some employees. URL: https://www.thebalancecareers.com/early-retirement-is-an-option-for-some-employees-1918105. Accessed: 19 April 2020
Riemer, Y. 2019. The Outplacement primer: where, why, and how companies are using outplacement. URL: https://www.recruiter.com/i/the-outplacement-primer-where-why-and-how-companies-are-using-outplacement/. Accessed: 19 April 2020
Robbins, S. 2009. How to handle layoffs. URL: https://hbr.org/2009/03/how-to-communicate-layoffs. Accessed: 19 April 2020
Whatishumanresource.com. N.k. Employee separations. URL: http://www.whatishumanresource.com/employee-separations. Accessed: 19 April 2020
Basics of Human Resource Management 