Managing Employee Separations, Downsizing and Outplacement

An organization’s effort is to hire the best Human Resource talent available in the market. Sometimes, due to unavoidable reasons an organization has to part with its employees. Employee separations, downsizing and outplacement are some of the techniques followed by organizations for the above mentioned purpose. It is important to note here that the organization incurs significant costs both during the hiring and in the employee separation processes. The following costs could be mainly identified as Human Resource Replacement Costs,

Recruitment Cost

Selection Cost

Training and Development Cost

Separation Cost

Both organizations which are Commercial Bank and Standard Chartered Bank follow a range of techniques for employee separation, downsizing and outplacement. These various techniques would be discussed in detail and analyzed under the following section.

Employee Separations, Downsizing and Outplacement

Employee separation could be defined as the process by which an organization or an individual ends his or her employment with that organization. This process could either be voluntary or involuntary. Where, voluntary separation is when an employee decides for personal or professional reasons to end the relationship with the employer and involuntary separation takes place when an employer terminates the relationship with an employee due to economic necessity or poor fit between the employee and the organization. However, it should be noted that an organization may have certain benefits of separation such as,

Reduce Labor Cost

Replace Employees with Poor Performance

Increase Innovation

Opportunity for Greater Diversity

Downsizing or laying - off could be a very harmful solution for any organization if it has not been done sparingly and with careful planning. However, if it is done properly it can act as a support for the organization and result in the previously mentioned advantages. It could be said that how downsized or laid - off employees are treated directly affects the morale and retention of valuable and well performing employees. Hence, downsizing or laying - off should not be done repeatedly without a thoughtful strategy as it can affect an organizations overall performance. The following steps should be taken when laying off or downsizing employees,

As much warning as possible should be given for the lay - offs

A private office should be used

The reasons should be clearly stated for the lay - offs

No time should be allowed for debates

Integrity of all parties should be maintained

Employee should not be rushed off site unless there is an issue with security

Everything should be stated in writing

Outplacement services should be provided away from the company

The service of the employee should be appreciated in an appropriate manner

“Outplacement is a term used to describe efforts made by a downsizing company to help former employees through the transition to new jobs and help them re-orientate to the job market. A consultancy firm usually provides the outplacement services which are paid for by the former employer and are achieved through practical advice and psychological support.

Outplacement is either delivered through individual one-on-one sessions or in a group format. Topics include career guidance, career evaluation, resume writing and interview preparation, developing networks, job search skills and targeting the job market. Individuals may be offered other services such as the use of an office and online tools." (Wikipedia Contributors 2010)

Exit Interviews

An exit interview is an interview which is conducted by an employer when an employee separates from the organization. These interviews are usually conducted by the Human Resource Staff or some skilled interviewer. The confidentiality of these interviews should be assured while open ended questions should be asked without any interrogation and also, the employee who separates from the organization should be informed of how the Human Resource Department would follow up the associated problem.

Selection Criteria for Redundancy at the Selected Organizations

It should be understood that the termination of an employee based on redundancy takes place only when the job which the employee performs is no longer required to be performed. Any organization or employer should be mindful about their obligations towards their employees before initiating the redundancy process. When considering the selection criteria for redundancy, that criteria should be objective, non - discriminatory, consistently and fairly applied.

Standard Chartered Bank

When considering the two selected banks, which are Standard Chartered Bank and Commercial Bank respectively each bank follows nearly similar selection criteria for redundancy. Standard Chartered Bank considers the following aspects when selecting employees for redundancy,

Skills, Qualifications and Aptitude (The bank believes this will help the organization to maintain a well balanced work force)

Standard of work performance of individual employees (The bank would measure this by considering the information which was gathered through performance appraisal)

Adaptability (The bank considers this as a very important aspect as it is an internationally operating bank and also since the bank carries out employee exchange programs the employees should be able to adopt to changes in working environment and also should be able to undertake different types of work in similar fields)


Disciplinary Record

Commercial Bank

Commercial Bank would consider the following aspects when selecting an employee for redundancy. Some aspects of the following selection criteria would be given more emphasis.

The period of employment where the employees who were last recruited would be dismissed first, especially those who are on probation

The type of employee meaning if the employee is part time or a full time employee

The level of skills which the employee has, this would include experience in the relevant field, qualifications and training

The performance of individual employees

Commercial Bank, as it was mentioned previously follows similar selection criteria to that of Standard Chartered Bank when selecting employees for redundancy. However, it should be noted that even though Standard Chartered Bank would give more emphasis on aspects such as the individual performance and the level of skill of the employee, Commercial Bank has a tendency of giving more emphasis on areas such the time period which the employee has served the bank. Therefore, in case if the bank has decided to dismiss its employees the last recruited employees would be dismissed first where less consideration would be given to the performance and skill of the employee. This method, where the time period is concerned, could be criticized as the length of service is mostly unrelated to capacity of an employee or the conduct. When considering the selection criteria for redundancy of Standard Chartered Bank it could be identified as a very fair and a balanced selection criteria as the bank would even mostly disregard health conditions of employees such as disability and illnesses such as HIV/AIDS. It could also be identified that there may be a large influence of the culture within which Commercial Bank operates for its selection criteria.

Therefore, based on the above information it was possible to arrive at the conclusion that the selection criteria for redundancy at Standard Chartered Bank are better than that of Commercial Bank in many aspects. It is recommended, in order to develop better selection criteria for redundancy for Commercial Bank more emphasis should be given on aspects such as performance of individual employees and their skills and qualifications instead of the length of their service period for the bank. It should also be understood that younger staff would possibly posses knowledge which is more applicable for the current world.

Exit Strategies Followed by the Selected Organizations

Standard Chartered Bank

Standard Chartered Bank Employee Exit Leave Policy was revised at the end of year 2008. This policy is applicable for all employees, i.e. permanent or direct contract employees who have finished working for the bank voluntarily or involuntarily.

All permanent staff should notify their manager in writing that they intend to leave the employment of the bank, mentioning their desired last working day in accordance with their notice period, normally 1 month as stated in their contract of employment. The line manager should sign the resignation letter as well provide the employee confirmation in writing of either acceptance of resignation or the intention to terminate the contract of employment. The line managers are then expected to enter the details of the employee termination in to the database (ideally within 2 days) so that the payroll would stop in a timely manner.

Exiting employees should download and complete the exit checklist from the forms section of the bank. An exit interview should be completed with Human Resource Manager and the employee resignation letter should be given to the Human Resource Manager during this exit interview. The bank allows the staff extra time to finalize his/her affairs before cancelling the labor card and making the final payments. Upon exit all staff that has successfully completed the exit formalities are entitled to a service letter that simply states their dates of service together with the last position held.

If termination is a result of redundancy, the employee will receive a redundancy payment. From time to time the bank may be obliged to discontinue the employment of an employee immediately or on notice, in accordance with group policy, including the Disciplinary Procedure or Poor Performance Management procedure. In such instances, Human Resources will ensure that the matter is treated in accordance with the prevailing group and or local policy. In the event that an employee’s services are terminated due to gross misconduct, then the termination will be with immediate effect and without notice.

Commercial Bank

At Commercial Bank when an employee decides to resign (voluntary separation) the organization, his/her Manager and the Human Resource Manager would discuss the resignation before the final decision is taken. If the employee still decides to leave the bank it is required for them to give a two week written notice period.

In the situation of involuntary separation, the bank would first dismiss part time and introductory employees, especially in case of a redundancy situation. Here, the employees who were dismissed would be compensated accordingly. The bank also offers voluntary retirement schemes. Here, the employees would be compensated according to banks policies.

At the point when an employee leaves the organization an exit interview will be conducted by the Human Resource Manager of the organization before the employees leaves the bank. Here, the bank is very concerned regarding the reason for the separation and would inquire the employee's impression regarding the bank. The bank also ensures total confidentiality of this information gathered at the exit interviews.

At the point of termination of employment Commercial Bank expects all property belonging to the bank to be returned. Commercial Bank follows a verification policy where the bank provides no information regarding former employees but instead it would verify the accuracy or inaccuracy of information provided by a third party regarding an employee's position and dates of employment.

When analyzing the exit strategies followed by Standard Chartered Bank and Commercial Bank it is clear that the strategies followed by both organization are not perfect. Both organizations do not provide outplacement services to their employees. This could be seen as a major drawback of both organizations.

However, Standard Chartered Bank provides their employees a service letter which states particular such as the last position held and their dates of service whereas Commercial Bank would not provide any such details unless a verification is required regarding a former employee by a third party. When considering the above, the method followed by Standard Chartered Bank could be said to be better as it may be helpful in the process of finding new employment for the resigned employee.

Beyond this, the tactics followed by Commercial Bank in a situation of voluntary separation could be said to be better as the bank conducts a particular meeting before the employee makes his/her decision final regarding resigning the organization. This is a better technique as this would help the bank to retain maybe very valuable employees by considering their feedback regarding the organization.

Finally, it was possible to arrive at the conclusion that even though both banks, i.e. Standard Chartered Bank and Commercial Bank have drawbacks in their Employee Exit Strategies both banks have certain positive points as well. However, it could be recommended that both banks could improve their Employee Exit Strategies through the introduction of outplacement services. Commercial Bank could provide written evidence to former employees by giving description regarding the position held by the employee and also the service period.