Managing Employee Separations, Downsizing,
and Outplacement
Chapter 6
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Chapter 6 Overview
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Costs and benefits associated with
employee separations.
Differences between voluntary and
involuntary separations.
Issues in the design of early
retirement policies.
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Chapter 6 Tactical Issues
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Alternatives to layoffs
Layoffs that are effective and fair to
all stakeholders.
Significance/value of outplacement
programs.
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What Are Employee Separations?
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Separation—termination of an
employee’s membership in an
organization for whatever reason

Turnover rate—rate of employee
separations/year in an organization
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Costs of Employee Separations
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Possible Benefits of Employee Separations
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Reduced labor costs
Replacement of poor performers
Increased innovation
Opportunity for greater diversity
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Types of Employee Separations
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Voluntary separation—the employee
ends the relationship with the employer
 Quits vs. Retirements
 Avoidable vs. Unavoidable
 Functional vs. Dysfunctional
 Replaceability issues
Involuntary separation—the employer
terminates the employment relationship
 Discharges [firing]
 Layoffs, downsizing, and rightsizing
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Managing Early Retirements
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Features of early retirement offers:
 Financial incentives package usually
based on org. level and/or time with org.
 S/b carefully restricted to target group

Must be managed carefully [e.g.,
w/ OWBPA releases drafted by
outside legal counsel!]
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Managing Layoffs
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Alternatives to Layoffs
Attrition
 Hiring freeze
 Not renewing contract workers
 Encourage voluntary time off
 Redesign jobs
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Transfers and Relocations
 Job sharing
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Freeze or cut pay
 Retrain/reassign workers
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Implementing a Layoff
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Notify employees
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Worker Adjustment and Retraining
Notification Act (WARN)—60 days
notice or pay in lieu of notice
Develop Layoff Criteria
 Seniority vs. Pay vs. Performance [hybrid?]
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Communicate to laid-off employees
 Face-to-face [but don’t argue]
 S/b scripted by HR and/or legal counsel
 Middle of the week [?!]
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Implementing a Layoff
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Coordinate media relations
Maintain security
Reassure survivors of the layoffs
 Listen to survivors’ concerns
 Show you appreciate their work
[consider retention bonuses to key staff]
 Reassign to new projects ASAP
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Outplacement
Program for separated employees:
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Provide job search/transitional assistance
S/b offsite for security and psychological
purposes
 Assist separated employees in finding
comparable jobs as quickly as possible
 Minimize litigation/workplace violence by
separated employees
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Concluding Comments:
Develop a written plan w/ layoff criteria
 Make sure PAs are valid and up-to-date
 Scrutinize policies, train supervisors to
avoid discriminatory terms or implications
 Screen interim results for adverse impact
 Exit interviews:
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 Explain
outplacement/COBRA benefits
 Remind re: NDAs & proprietary information
[ongoing duty not to disclose]
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