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Theoretical Situation #1

Theoretical Situation #1. You are HR manager in service company The industry is facing a downturn You have excess personnel What do you do?. Fire people Re-train Compensate How much ?. Implications. Legal Avoiding Union issues Avoiding unfair dismissal law suits

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Theoretical Situation #1

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  1. Theoretical Situation #1 • You are HR manager in service company • The industry is facing a downturn • You have excess personnel • What do you do? • Fire people • Re-train • Compensate • How much ?

  2. Implications • Legal • Avoiding Union issues • Avoiding unfair dismissal law suits • Shareholder responsibility • Ethical • Employee welfare • Financial remuneration • Fair treatment (repeated hiring/firing) • Other implications • Employee retaliation / sabotage • Company reputation effects

  3. Bradford & Bingley (Banking) • Voluntary job losses & retraining • General Manufacturing Industry • Layoffs with minimum payoff and notice period • Marks & Spencer (Retail) • Close stores, job losses in UK • Look to sell stores and retain employees in EU • Corus (Steel Manufacturer) • Plant closures, Job losses • Banking (Merrill Lynch & Goldman Sachs) • Job freezes, job cuts, voluntary redundancies • Rover (Automotive) • Pay and pension cuts Summary of UK Case Facts

  4. Change in Policies and Employers’ Attitude to Redundancy • Changes in EU law for companies to find alternatives to closures & job losses • Increase in minimum redundancy package • Increase in number of unfair dismissal complaints • Increase in cost to businesses • Change in business redundancy behaviour

  5. Proposal - Hierarchy of Options • Re-train Employees • Everyone Takes a Pay-cut • Voluntary Layoffs • Enforced Layoffs – Generous payout • Enforced Layoffs – Min. payout

  6. Theoretical Situation #2 • You are HR manager in service company • Do you repeatedly hire and fire employees to meet demand? # of employees Time

  7. Implications • Shareholder perspective • Do whatever necessary to maximize profits • Hiring / firing / re-hiring if necessary • Employee perspective • Stable employment • Company should absorb inefficiency due to temporary excess staff

  8. Proposal – Hiring & Firing • HR manager should find ethically suitable middle ground considering all stakeholders Employees # of employees Stakeholder HR Manager - Compromise Time

  9. Theoretical Situation #3 • You are HR manager in a service company • You have to select an employee for redundancy. • Employee A • Good performer • Single white male • Employee B • Average performer • Single mother of five • Who do you choose ?

  10. Implications • Ethical • Consideration needs to be given to individual circumstances • Legal • Shareholders want best performing employees

  11. Proposal - HRM Attention to Ethical Issues • Emphasis on ethics varies • Some EU countries – Ethical approach to redundancy – profile considerations • US – Less ethical approach – performance based redundancy

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