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Managing Human Resources: Letting someone go

To start with…

…refresh your knowledge of human resource management on pages 162-163 (particularly Tables 6.2 and 6.3), to get an idea on how organisations cut back on their numbers, as well as how organisations grow them.  Then read this article: The Manager's Guide to Firing People, and note all the aspects involved in letting an employee go.

So, to summarise…

Letting someone go is, and may always will be, a reality of workplaces.  When the economy slows down, it often affects whole industries: car manufacturing, infrastructure, journalism, gaming, and mining, for example.  There are many aspects leading to the cutting of jobs: China’s stock market crash has reduced Chinese industries and their purchases of coal and steel.  This leads to companies like Rio Tinto to cut down on their jobs, as well as other mining companies.  As you will notice, some of those cuts mean that employees go, and some mean that contractors will not be called to provide their services to the company. 

In some organisations, recent lay-offs have triggered strong reactions among those who are left behind, and even deeper discussions over the nature and the future of the entire industry.  After a constant stream of job cuts, Fairfax CEO Greg Hywood proposed to cut another 120 jobs.  This is part of a strategy to focus more on web-based services, and less on paper-based journalism.  Fairfax workers, and also members of the general public, are concerned that this risks the quality of journalism as a result of these continuous cuts.  This is particularly offensive when considering the recently declared half-year profit of $27.4 million, and the CEO’s remuneration of $2.5 million.  Fairfax workers and other union members went on strike in the battel for this side of the industry.

Other companies take the role of HR in managing job cuts very seriously.  For example, Peabody Energy, operating in an increasingly hostile sector, have recently decide to downsize, and HR’s role during that time is seen then as critical.  Geoffrey Woodcroft, vice president of HR at Peabody Energy Australia, notes that job-cuts creates more stress for employee because of the increasing demands on their roles, and because of the uncertainty they experience.  It is then HR’s role, says Woodcroft, to manage the lay-off process to build the organisation’s credibility.

On that optimistic note, let’s move on to the questions.

Some issues to notice and pay particular attention to here are…

  • The effects of downsizing and layoffs
  • Recruitment strategies
  • Workforce diversity

Consider the following questions for discussion…

  1. How do lay-offs affect the organisations described? Who are the likely affected parties?
  2. One strategy for reducing conflict over lay-offs is to offer redundancy packages: a large payout for leaving voluntarily.  What are the risks of offering people redundancy packages?  How would you, as a business manager, address them?
  3. Suppose you were told, as a manager, that you have to cut the staff numbers of your department by half.  How would you, as a manager, decide on which employees to let go?
  4. If it had to be done, which way would you like to be let go?  Which way do you think you would let people go?
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