GB520 Discussion Unit 5
GB520 Discussion Unit 5 Chapter 13.1 Article: “Cost Reductions, Downsizing-related Layoffs, and HR Practices" by Franco Gandolfi.
1. Based on your reading of the article what short-run, long run, and policy options are available to managers in lieu of firing employees?
The article clearly explains how to keep employees on the job, and use the adoption of Reduction-in-Force (RIF), lay off as a last resort for any organization.
In time of financial difficulties, the organizations have to take tough decisions in firing the employees. The issue is how to manage the effect to the moral and motivation level of the employees. And avoid creating a bad name for the organization in the marketplace. So during the problem of an economic downturn it is important to set up plans to implement policies carefully for the short and long period.
1. Short Range Cost adjustment: Provide the organization the opportunity to deal with the business slowdown that, is temporary in nature for a time frame up to six months.
Short Run Policies: It includes reduction in working hours and payments, mandatory vacations, or unpaid holidays, transfer to a different department, and restriction on cost of perks for a short time of training and traveling expenses. Temporary facility shutdown, cut overtime, etc. These are tools to allow the organization to retain the high talent employees by balancing the financial difficulties. Nevertheless the implementation of these choices, sometimes discourage the employees, to stay in the organization because it increases their job insecurities and dissatisfaction due to changes in their environment.
2. Long Range cost Adjustment: This stage is when the slowdown in the organization due to economic downturn exceeds more than twelve months. Here the implementation of disagreeable policies as the adoption of reduction in force (RIF), lay off, downsizing. The organization is trying to keep up business in the marketplace, this choice is very difficult because it can create a negative image of the company, at that point the organization has to provide an offer of rehiring bonus, and continue communication with those employees that are good talent and do internal job fairs to motivate them to rejoin, or hire fresh talent.
3. Long Run Policies: This includes offering voluntary retirement, restructuring in pay, deduction in perks, no promotions, no increase in salary. It is also helpful by retaining people for the long run; sometimes employees retire early to have good benefits and compensation.
Because the implementation takes some time, the employees do not realize the situation of the company immediately, the organization retains their top employees and has time to come out of the financial crisis. The consequences it creates are a negative environment in the long run affecting the image of the organization on the marketplace.
2. Give the pros and cons of each option.
The Pro of Short Policies
• I think in the short run these measures could motivate employees more effectively and efficiently as the organization understands their employee’s job need and does not fire an employee.
• The employees can take that time off to be with their families, etc.
The cons of Short Policies
• This measure could bring confusion about the business scenario and why there is a decrease on salary structure and working time.
• Also this can create a lack of motivation on the employees as they start linking it for future lay offs.
• Human Resources have to communicate effectively in order to remove uncertainty and doubt and tell them about the pros of this strategy.
The pro of Long Run Policies
• Its helps the organization in balancing the business process within the changes of the environment and economic condition of a slowdown.
The cons of Long Run Policies
• The organization could earn a bad reputation in the marketplace due to the unmotivated and disgruntled employees; some could have connection with the press, talk and ruin the company’s reputation quickly.
• Employees could feel different about being loyal to such an organization and this will impact the business, for year to come.
Maribel: thanks...great work on your response...so...if we look at these suggestions...which ones get implemented the quickest and with the least amount of work and which ones save the most money for the company?