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As an HR manager in a service company facing a downturn, strategic decisions regarding excess personnel are crucial. Options include layoffs, re-training, or compensating employees. Each choice carries implications for legal compliance, ethical considerations, and shareholder responsibilities. It's essential to balance company needs with employee welfare, avoiding pitfalls such as unfair dismissal lawsuits and maintaining a positive company reputation. This scenario encourages exploration of alternative strategies like voluntary redundancies, pay cuts, and a focus on employee support to ensure fair treatment during turbulent times.
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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 • Shareholder responsibility • Ethical • Employee welfare • Financial remuneration • Fair treatment (repeated hiring/firing) • Other implications • Employee retaliation / sabotage • Company reputation effects
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
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
Proposal - Hierarchy of Options • Re-train Employees • Everyone Takes a Pay-cut • Voluntary Layoffs • Enforced Layoffs – Generous payout • Enforced Layoffs – Min. payout
Theoretical Situation #2 • You are HR manager in service company • Do you repeatedly hire and fire employees to meet demand? # of employees Time
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
Proposal – Hiring & Firing • HR manager should find ethically suitable middle ground considering all stakeholders Employees # of employees Stakeholder HR Manager - Compromise Time
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 ?
Implications • Ethical • Consideration needs to be given to individual circumstances • Legal • Shareholders want best performing employees
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
