Chap 06

Chapter 6Managing Employee Separations, Downsizing, and Outplacement

OBJECTIVE QUESTIONS

1. During the late 1990s and the early 2000s, which of the following was true of the business and employment environment?a) Involuntary separations increased by 30%.b) Global competition created a need for larger workforces.c) The labor market became tighter as employees quit jobs voluntarily to find

better jobs.d) The labor market weakened as new technologies replaced many workers in

large corporations.e) Voluntary separations decreased as most employees were reluctant to leave

stable jobs in such an uncertain market.

Answer: c M--Recall Page: 194

2. A company wants to know the rate at which employees voluntarily leave the firm. The company needs to:a) measure its turnover rate.b) conduct an HR audit.c) conduct a diversity audit.d) track reasons for discharges and separations.e) none of the above

Answer: a E--Recall Page: 195

3. Companies strive to manage their turnover rates because:a) of the potential impact on their public relations image.b) of the legal requirements regarding warnings of layoffs.c) of the need to plan for replacement workers.d) turnover provides an opportunity for greater diversity and a positive affirmative

action image.e) they want to monitor and control employee replacement costs.

Answer: e M--Recall Page: 195

4. The costs of employee separations depends upon which of the following?a) Whether the employee was a member of a protected class or not.b) Whether the employee had a voluntary separation.c) Whether the employee will be replaced or not.d) Whether the employee was a new hire.e) All of the above

Answer: c C--Integration Page: 195

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5. According to your text, the median cost of replacing information technology professionals is:a) $10,000 per hire.b) $15,000 per hire.c) $29,000 per hire.d) $33,000 per hire.e) $38,000 per hire.

Answer: d E--Recall Page: 195

6. Recruiting costs include which of the following?a) Testing costs.b) Reference check costs.c) Orientation costs.d) Advertising costs.e) All of the above


7. A middle manager wants you to contact a search firm to find a key technological manager. You advise him that the search firm will probably charge him about ____ of the candidate’s first year salary for the search.a) 10% b) 20% c) 30% d) 40% e) 50%

Answer: c E--Application Page: 196

8. A business may accrue considerable interviewing costs because of:a) the cost of travel to the interview site.b) the time lost by other workers in the business who are to conduct the

interviews.c) training costs involved with orienting the candidate.d) the added costs of search firm fees.e) a and b

Answer: e E--Recall Page: 196

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Chapter 6 – Managing Employee Separations, Downsizing, and Outplacement

9. Which of the following expenses is a selection cost?a) Advertising.b) Benefits.c) Outplacement.d) Search firm fees.e) Reference checks.


10. Martin is reviewing HR’s costs for interviewing, testing, and checking references for new hires. Martin is reviewing the _____ of employee replacement costs.a) training costsb) selection costsc) separation costsd) outplacement costse) media costs

Answer: b M--Application Page: 196

11. An important element of new-employee training costs is:a) employment testing.b) the attrition rate.c) tracking turnover.d) lost productivity.e) the replacement of poor performers.

Answer: d M--Integration Page: 196

12. Which of the following is a common loss associated with new hires?a) Loss of innovation.b) Loss of diversity.c) Loss of community within the business.d) Loss of productivity by inexperienced hires.e) Loss of market share.

Answer: d M--Recall Page: 196

13. Which of the following is a cost of training new employees?a) Recruiter time.b) Orientation.c) Interviewing.d) Relocation.e) Search firm fees.

Answer: b E--Recall Page: 196

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14. A company incurs a variety of separation costs, such as:a) severance pay. b) exit interviewing.c) outplacement assistance.d) continuing health care costs.e) all of the above


15. The time and cost of exit interviews are part of the _____ costs of an employee separation.a) recruitment b) selectionc) trainingd) hiddene) separation


16. Your company is planning a layoff. As you explain the process to the management team, you tell them that outplacement assistance will be part of the process. Outplacement assistance is when:a) an employee is given a final interview following separation.b) the number of employees is reduced by not refilling job vacancies.c) the company helps departing employees find jobs by training them in job-

search skills.d) the company measures the rate of employee separations.e) the company terminates the relationship with the employee for any reason.

Answer: c M--Application Page: 197

17. Karlie has recently resigned from her job as retail manager at a chain store. She comes to you, concerned about an interview that the store manager wishes to have with her before her last day of work. You tell her that:a) at this interview, the store manager will try to convince her to stay, offering

increased financial benefits.b) this is probably an exit interview and that the store manager will want to

understand the reasons why she is leaving.c) it is a legal interview to make sure that all proper paperwork is signed and that

neither she nor the company will have any further obligations to the other.d) the store manager will help her to find new employment at this interview.e) the interview is generally a scare tactic to keep good employees involved with

the business.


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18. When conducting an exit interview, a manager:a) should expect employees to be honest as they are leaving the company.b) does not need to be as skilled an interviewer as in employment interviews.c) needs to use closed-ended questions to control and direct the interview.d) starts with routine departure basics, then moves on to why the employee is

leaving.e) should do nothing with the information. The interview is only for the

employee’s feelings.


19. Which of the following is a benefit of employee separations?a) Lower unemployment insurance tax.b) Being able to redistribute the cultural and gender composition of the workforce.c) Having “surviving” employees work much harder to avoid being caught in later

separations.d) Creating unexpected promotional opportunities for employees under the

separated employee.e) Having poor performers quit rather than face layoff or dismissal.

Answer: b C--Integration Page: 198

20. Which of the following is true about employee separations?a) Salary savings can often outweigh other separation costs.b) It usually reduces diversity in an organization.c) Innovation declines as people take their ideas with them.d) Your best people tend to quit, so the quality of the workforce declines over

time.e) 80% is due to unfair employment practices by the employer.

Answer: a M--Recall Page: 198

21. A benefit of employee separations is:a) new employees are apt to be better educated that older workers.b) the workforce becomes more homogenous.c) the surviving employees will work more diligently and conscientiously.d) it opens doors for promotion within the company.e) all of the above


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22. Layoffs and other employee separations are not generally thought of as positive experiences. However, the affected employee may reap the benefit of:a) a sizable severance package.b) being able to continue his/her health benefits package.c) being able to voluntarily separate from the company.d) an early retirement.e) finding a more satisfying, less stressful job.


23. The primary benefit a company seeks when it initiates large-scale workforce reductions is:a) greater diversity in the workforce through new replacement workers.b) innovation through new ideas from new workers.c) reduction in labor costs.d) wholesale replacement of poor performers.e) avoidance of litigation over terminations.

Answer: c M--Integration Page: 198

24. Which of the following is an example of a voluntary separation?a) A layoff.b) A retirement.c) A quit.d) A discharge.e) b and c


25. Employers can offer early retirement plans to encourage certain workers to retire earlier than they had originally planned:a) but these are generally of questionable legal standing.b) but rarely enough workers are interested in such a plan to make it worth a

company’s time.c) and these are considered involuntary separations.d) and some companies use a similar strategy to encourage employee quits.e) and these are counted as unavoidable voluntary separations.

Answer: d C--Integration Page: 199

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26. According to your text, studies show that _____ of voluntary employee separations are avoidable.a) 30%b) 50%c) 80%d) 85%e) 90%

Answer: c E--Recall Page: 199

27. Voluntary separations may include:a) early retirements.b) hiring freezes.c) discharges.d) rightsizing.e) job redesigns.


28. Similar to a quit, a ______ is initiated by the employee, but in this case the employee is unlikely to search for another job.a) layoffb) retirementc) discharged) buyoute) rightsizing


29. Sara is 57 years old and she has been a division manager for Elf Cookies for 32 years. Recently, the business has seen an increase in efficiency and has found itself with a surplus of labor. Elf Cookies is offering employees who are 55 and older, and who have worked for the company for over 30 years, specific benefits and financial incentives to retire within the next 60 days. Sara does so. She has:a) quit.b) been bought out.c) copped out.d) taken early retirement.e) been discharged.

Answer: d E--Application Page: 199

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30. The decision to terminate is management’s employment role. HR’s role is to:a) implement the decision.b) be the employee’s advocate by trying to change management’s mind.c) make certain the employee receives due process.d) side with management in enforcing the company’s employment policy.e) document poor performance so the termination can be justified.


31. Alex is a first-line supervisor with an employee who has a performance problem. After much coaching of the employee with little apparent improvement, Alex decides to terminate the employment relationship. This type of separation is called:a) a layoff.b) a voluntary separation.c) a discharge. d) rightsizing.e) a retirement.


32. Bertha wishes to discharge one of her poorly performing employees. She has tried progressive discipline with no effect. She asks you, the HR manager, what she must do to discharge the employee. You tell her the policy and procedures, and then ask her if she has ____ in order to protect the company from a wrongful discharge suit.a) documented the inappropriate behavior and her efforts to correct itb) cooperated with the HR department and followed their instructionsc) given 60 days notice as required by lawd) used non-progressive disciplinee) considered department morale and how it will be affected by the discharge

Answer: a C--Application Page: 200

33. Delmus performance reports have been increasingly poor, and he seems to have negative relationships with other workers in his department. His line manager has taken him aside twice to discuss his behavior and work and has offered him time to improve, but there has been very little positive progress. Management decides to end the employment relationship with Delmus. This is an example of a:a) voluntary separation.b) layoff.c) quit.d) discharge.e) buyout.

Answer: d M--Application Page: 200

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34. The primary difference between a layoff and a discharge is:a) a layoff is an involuntary separation and a discharge is a voluntary separation.b) a layoff is a voluntary separation and a discharge is an involuntary separation.c) a discharge occurs when the company’s strategy forces it to reduce its

workforce and a layoff occurs when there is a poor fit between the employee and the organization.

d) a layoff occurs when the company’s strategy forces it to reduce its workforce and a discharge occurs when there is a poor fit between the employee and the organization.

e) a layoff does not affect the morale of surviving employees as much as an employee discharge does.

Answer: d M--Integration Page: 200-201

35. Layoffs are one way to reduce the workforce. Layoffs happen because:a) there is no direct cause.b) the company offers incentives or buyouts to reduce the workforce.c) adequate documentation has been kept of the poor performance.d) there is a poor fit between the employee and the company or job.e) the company’s environment or strategy force a reduction in its workforce.


36. Which of the following people may be affected by a company’s decision to perform a layoff?a) Surviving employees.b) Company stockholders.c) Members of the community where the company exists.d) Laid-off employees.e) All of the above

Answer: e E--Recall Page: 201-202

37. A company needs to reduce its long-term workforce. It aims to remove layers of bureaucracy and services that do not add value to the product. The company is:a) conducting a layoff.b) downsizing.c) buying out the workforce.d) rightsizing.e) changing its internal employment policies to reduce the workforce.

Answer: b C--Integration Page: 202

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38. If a business is downsizing, it is necessarily doing which of the following?a) Reconfiguring the front-line employees.b) Performing a layoff.c) Rightsizing the company.d) Reducing the size and scope of the business.e) Offering early retirements.

Answer: d C--Recall Page: 202

39. The major difference between downsizing and rightsizing is:a) rightsizing involves reducing the size and scope of a business, while

downsizing is a reorganization of the business.b) more workers are likely to be fired during rightsizing than during downsizing.c) downsizing involves reducing the size and scope of a business, while

rightsizing is a reorganization of the business.d) the purpose of rightsizing is to improve financial performance, while the

purpose of downsizing is to increase efficiency.e) a and d

Answer: c M--Integration Page: 202-203

40. One of the more popular alternatives to layoffs for reducing the size of a company’s workforce is:a) large scale discharges.b) inducing quits.c) early retirement programs.d) providing outplacement services.e) transferring workers to other plants.


41. Early retirement programs consist of two main features: financial incentives and:a) generous severance packages.b) open windows during which employees can choose the program.c) outplacement services.d) other jobs with another non-competing company.e) health-care benefits.

Answer: b M--Recall Page: 204

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42. Elizabeth is a 59-year-old account representative at a large bank. Due to the increasing popularity of online banking, the bank has more employees than it needs. Recently, the bank has offered early retirement to account representatives between the ages of 55 and 65 who have been with the company for a minimum of 15 years. 4 employees meet these requirements, and Elizabeth is one of them. It is likely that:a) the bank is pinpointing Elizabeth and encouraging her specifically to take early

retirement.b) Elizabeth will receive full retirement benefits, including medical coverage, if

she takes early retirement.c) the bank is violating the Age Discrimination Act because they are forcing her to

retire.d) Elizabeth is incapable of performing her job as well as the younger employees.e) the package won’t be as substantial as it might have been five years ago.

Answer: e M--Application Page: 204

43. Early retirement programs:a) can substantially reduce the size of a company’s workforce.b) often drive stock prices up because of the reduced overhead.c) generally have fewer people than projected take advantage of the programs.d) has very little effect on reducing the size of a company’s workforce.e) require very little effort for very large returns.


44. While a popular way to reduce the workforce, early retirement programs are not without problems, including:a) insufficient participation to do the company any good.b) making a company’s cash flow problems worse over the short run.c) excessive unplanned health-care costs.d) too short a “participation window” which limits the program’s effectiveness.e) too many people — often the wrong ones in a strategic sense — take advantage

of it.


45. A firm can manage participation in an early retirement program by:a) restricting the program to areas of the business with a redundancy of

employees.b) making it available only to female employees.c) offering it only to protected-class individuals.d) offering the program only to employees who can quickly find other jobs.e) having participating employees sign a “no-compete” agreement.

Answer: a M--Integration Page: 205

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46. A manager comes to you, the HR manager, to ask you about helping some employees make decisions about early retirement. You caution the manager that certain behaviors on his part will appear coercive and he must avoid them. These behaviors include:a) suddenly lowering performance appraisals which have been good over past

years.b) discussing the particulars of the early retirement program with the employees.c) treating older employees better than younger employees.d) offering older employees the opportunity to bump younger, less senior

employees.e) implementing an across-the-board pay cut.

Answer: a C--Application Page: 205

47. The key to avoiding lawsuits over early retirement programs is to:a) give preferential treatment to protected-class individuals.b) treat all employees the same regardless of age.c) take potential retirees aside and “counsel” them to take the offer, “or else.”d) study the probable impact on the local community.e) not offer early retirement and use some other alternative to reducing the

workforce.


48. A layoff is typically implemented by an organization when:a) it has no other means to reduce its labor costs.b) HR doubts whether offering early retirement will achieve the needed results.c) a majority of employees have been working for the organization for less than 15

years.d) there are less than 100 employees.e) the organization has excellent outplacement services.


49. Once a firm has decided to reduce its workforce through voluntary means, its next choice is:a) whether to lay off or discharge excess employees.b) if it should downsize or rightsize.c) what outplacement services to offer.d) to determine what alternative strategies to layoffs are available.e) none of the above


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50. Compared with the United States, Japan’s employment policies:a) are relatively short term.b) are more likely to be “life-long.”c) are much more permissive.d) are very confusing.e) tend to discourage a strong corporate culture.


51. Which of the following would be considered the first alternative to a layoff?a) An early retirement option.b) Changes in job design.c) A discharge.d) Downsizing.e) A buyout.


52. Which of the following is an employment policy that could be used as an alternative to layoffs?a) Job sharing.b) Leaves of absence.c) Demotions.d) Pay cuts.e) Relocation.


53. Transferring and relocating employees are both ways to reduce employee costs in what area?a) Employment policies.b) Pay and benefits.c) Job design.d) Training.e) None of the above


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54. Cuts in overtime pay, profit sharing, and encouraging employees to take leave days are all ways to reduce employee costs in what area?a) Employment policies.b) Pay and benefits.c) Job design.d) Training.e) None of the above


55. Marion’s water bottling company has recently lost a handful of employees through quits and retirement. The company has decided not to hire workers to replace these employees. Marion is reducing its workforce by:a) layoffs.b) voluntary separations.c) attrition.d) job redesign.e) a hiring freeze.

Answer: c E--Application Page: 207

56. A number of policies provide alternatives to layoffs. One of the least intrusive alternatives to the day-to-day management of the business is:a) the use of job redesign.b) implementing bumping policies.c) changing pay and benefits policies.d) changing employment policies.e) conducting extra training to retool workers for new jobs.


57. A “rings of defense” strategy in terms of employment security and workforce reductions is when:a) a union has workers at other plants supplying the firm.b) a firm freezes wages to avoid laying off workers.c) a company uses contingency workers to be able to add or subtract workers from

its workforce as it needs to.d) a company goes to job sharing in order to keep workers.e) a firm provides job security for its core employees.


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58. An example of a change in employment policy that will help reduce the size of a company’s workforce is:a) reducing the number of work hours or instituting job sharing.b) implementing training.c) instituting an across-the-board pay cut.d) profit sharing.e) an attrition strategy or hiring freeze.


59. If a manager offers a senior employee whose job has been eliminated a different job that will be taken from another employee who is less senior, this manager is using ____ to reduce his/her workforce.a) attrition b) a hiring freezec) bumpingd) job redesigne) training


60. A company doesn’t want to lay workers off, but instead it is willing to implement a fairly radical and intrusive alternative. Frankly, it will probably still be fairly demoralizing, but people will keep their jobs. Their best alternative within their pay and benefits policy would be to ______.a) offer a pay freezeb) initiate a hiring freezec) start a profit-sharing programd) implement a pay cute) start a new skills training program

Answer: d M--Application Page: 208

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61. You are the head of an HR department for a large department store. The general manager, Frank, comes to you claiming that a pay freeze is needed in order to reduce costs to the store. Frank wants to freeze pay for the retail staff but not for department line managers. What is your response?a) That this is a good strategy and that retail staff will be encouraged to advance to

higher positions to take responsibility as line manager in order to receive pay increases.

b) That it would be better to freeze pay for the line managers than retail workers because retail staff would sooner become demoralized by a pay freeze than line managers.

c) That the pay freeze should be the same across the board in order to avoid potential discrimination accusations.

d) That a layoff would be a much better solution.e) That the company should institute a “ring of defense” approach instead.

Answer: c C--Integration Page: 208

62. A company that institutes profit sharing can save up to ___ of its payroll costs during downturns in the business cycle.a) 50%b) 35%c) 20%d) 15%e) 5%


63. A long-term pay policy that may protect jobs and help companies to control labor costs by tying them more closely to production is called:a) a pay freeze.b) a pay cut.c) profit sharing.d) early retirement.e) a hiring freeze.


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64. Goodwill, Incorporated has recently proposed a plan to base 15% of employees’ salaries upon their meeting set goals and work requirements. Goodwill, Inc. is proposing what type of pay policy?a) Profit sharing.b) Variable pay.c) Pay freezing.d) Bumping.e) Demotions.


65. ____ is the legislation that requires employers to inform employees of impending layoffs.a) The Employment Security Actb) Title VII of the 1991 Civil Rights Actc) Executive Order 11426d) The Worker Adjustment and Retraining Notification Acte) None of the above


66. According to the law, which of the following must provide warning of an impending layoff?a) All federal contractors.b) All employers regardless of size.c) Any employer laying off more than 25 workers or 10% of the workforce.d) Any employer that employs more than 3% of a community’s labor pool.e) Any employer with more than 100 employees.


67. Workers of companies with over 100 employees are entitled to _____ if they are not given 60 days advance warning in cases of a mass separation.a) 30 days incomeb) 60 days income c) 90 days incomed) continuing health benefitse) c and d


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68. When it comes to notification-of-layoff requirements, the United States:a) has less stringent requirements than those of any European country.b) is far more stringent than Sweden.c) is less stringent than France.d) is more stringent than France.e) is similar to those in Great Britain.

Answer: a C--Integration Page: 209

69. Though WARN requires that employees be given 60 days notification prior to a mass separation, some arguments support giving no notification, including:a) surviving employees’ job performance will not suffer to the extent that it would

have in the case of a 60-day notice.b) employees who are given no notification are not entitled to any compensation. c) the likelihood of theft and sabotage decreases.d) the decrease in productivity that often accompanies mass separations is unlikely

to occur when no notification is given.e) all of the above


70. Layoff criteria are important for the proper layoff implementation. One of the most important criteria is:a) the employee’s age.b) employee ethnic origins.c) the gender of the employee.d) the employee’s seniority with the company.e) the salary level of the employee.


71. The use of seniority as a layoff criterion:a) is not common among most companies.b) tends to impact women and minorities more than other groups.c) is the most difficult layoff criterion to implement.d) is to guarantee a union fight, as unions prefer performance or quota criteria.e) is the only safe legal option in today’s HRM legal environment.

Answer: b M--Integration Page: 210

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72. The use of seniority as a layoff criterion:a) is more difficult to document than other criteria.b) is less commonly used as a layoff criterion than performance.c) is most likely to rid the company of incompetent employees.d) prevents managers from playing favorites with employees.e) prevents businesses from losing top performers.


73. The use of seniority as a layoff criterion has some drawbacks, including:a) adversely impacting white males.b) the fact that it is often contested by unions.c) the loss of top performers.d) the difficulty in documenting it, compared to other criteria.e) having to consider the entire employment period.


74. The use of performance as a layoff criterion:a) is a common practice among large companies.b) disproportionately affects women and minorities.c) tends to eliminate older workers rather than younger workers.d) is harder to defend than seniority because of uneven documentation of work

performance by management.e) is easier to implement than seniority.

Answer: d C--Integration Page: 210

75. Glenda has been an employee at your curtain manufacturing company for over 6 years. During the past three months, her performance has been a concern as her productivity has decreased by almost 15 percent. In addition, you need to reduce the workforce in order to trim employee costs. Your best option is to:a) lay Glenda off on the basis of her performance.b) lay Glenda off on the basis of her performance, but use seniority as the rationale

when explaining to her the reason for her termination.c) only use her performance as the reason for laying her off if there is long-term

documentation of the decline in her productivity and performance.d) encourage her to take early retirement.e) offer Glenda incentives to quit.

Answer: c C--Application Page: 210

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76. When implementing a layoff, employees should first be informed:a) by the HR department in a large meeting.b) in writing through the mail.c) by their supervisor in writing.d) in a work unit meeting with HR present.e) by their supervisor in face-to-face meetings.


77. The information given in the initial meeting between a manager and an employee who is being laid off should include:a) the reasons why the employee is being laid off.b) a brief period of time for the employee to vent frustrations and debate the

layoff.c) appreciation for what the employee has contributed to the business, if

appropriate.d) how much severance pay will be provided.e) c and d

Answer: e C--Integration Page: 211

78. While no time is a good time for a termination, the best time seems to be:a) midweek.b) Friday afternoon, after 3 p.m.c) the beginning of the workweek so employees have time to plan.d) just after an employee comes back from vacation.e) on the weekend, so there is plenty of time for employees to ask questions.


79. As the head of the HR department for a large technology-production company, you have been notified that the company is preparing for a mass lay-off. Which of the following should be your greatest priority in preparing for the layoff?a) Maintaining privacy and delaying notification of the layoff to employees until

the latest possible moment.b) Limiting contact with the media.c) Coordinating communication and press releases to the media.d) Organizing outplacement services.e) None of the above


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80. When implementing a layoff, managers sometimes forget that:a) they may need to rehire these laid-off employees.b) it is usually appropriate to escort laid-off employees off the premises.c) they need to develop plans for the “survivors” of the layoff.d) there are hidden labor costs not reduced through layoffs.e) they need to plan for outplacement of the laid-off employees.


81. After a layoff, it is not uncommon to see ___ among the remaining workers.a) a sharp increase in innovationb) greater diversityc) gratituded) increased absenteeisme) little change in quality or productivity


82. Management can minimize problems with the remaining workforce after a layoff by:a) developing special programs for survivors providing emotional support.b) minimizing the “rumor mill” by keeping communication to a minimum.c) initiating close supervision of the remaining workers, watching for any

problems that may arise.d) getting the remaining workers involved in the transition process by getting their

ideas.e) documenting the reasons for release and aggressively preparing for litigation.

Answer: a M--Recall Page: 212

83. Companies provide outplacement to terminated workers for a number of reasons, such as:a) reducing problems with the remaining workforce.b) meeting federal requirements to do so if the company releases more than 100

workers.c) reducing their unemployment compensation tax by reducing the time people are

out of a job.d) reducing absenteeism among remaining workers.e) reducing morale problems for laid-off workers and helping them find another

job.


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84. The use of outplacement services among large corporations:a) is in significant decline due to the expense.b) has become a global management practice used by corporations around the

world.c) has caused several to take the process “in-house” and use their own HRM staff.d) is entirely a U.S. management practice.e) is not known among Japanese corporations.


85. Horrace has been asked to design a job-search assistance program as part of a company’s outplacement services. Which of the following might he include in the program?

a) Resume writing.b) Career planning.c) Job negotiation skills.d) Interviewing skills.e) All of the above

Answer: e E--Application Page: 214

CASE QUESTIONS

Case 6.1Your company, Painting Products, Inc., is reviewing employee turnover. The CEO and VP of Operations are arguing. The CEO doesn’t see what the big deal is: the company can capture savings from reduced salary/wages and benefits this quarter. Unemployment insurance is not impacted because people are quitting. The job market is tight so the company gets more walk-in applicants and mailed-in resumes than it needs.

The VP of Operations argues that he can’t keep absorbing the productivity losses due to employees’ need for orientation and learning time on the job. He admits that new hires are bringing fresh ideas and his better-performing people do tend to stay and move up as a consequence of this turnover, but he’s still frustrated with the loss of productivity.

86. Refer to Case 6.1. What category of employee replacement costs is the CEO not considering?a) Recruitment costs.b) Training costs.c) Separation costs.d) Damage to the corporate image.e) Selection costs.

Answer: e Moderate Page: 196

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87. Refer to Case 6.1. The VP of Operations is concerned about what category of employee separation costs?a) Recruitment costs.b) Training costs.c) Separation costs.d) Damage to the corporate image.e) Selection costs.

Answer: b Moderate Page: 196

88. Refer to Case 6.1. What benefit is the VP of Operations getting from the turnover problem?a) Reduced labor costs.b) Lower training costs.c) Increased innovation.d) Greater EEO-related diversity.e) Higher productivity.

Answer: c Challenging Page: 198

Case 6.2Your firm is suffering an economic downturn, and it appears you need to reduce your workforce. The managers are debating the costs and benefits of various employee separations. Some managers argue that the company needs to do it now and shorten the pain. They need to cut both management and labor. The cuts need to be made in such a way that the scope of the company and its markets are not affected; they just need to do more with fewer people.

Other managers want to take a long-term, less traumatic approach. They believe the company has time to think through the problems and reduce the workforce gradually, rather than with sudden cuts. They point out that 35% of the workforce is over age 62.

The VP of HR, LaTisha, wants the least disruptive reduction process possible. She’s just finished a major labor negotiation and fight with the union and is not ready for another. She points out that turnover has been fairly high. Along with looking at workforce reductions, she wants to know why people are leaving the company voluntarily.

89. Refer to Case 6.2. The managers who want to make the reduction now seem to be arguing for:a) a layoff.b) downsizing.c) rightsizing.d) discharges.e) early retirements.

Answer: c Moderate Page: 201-202

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90. Refer to Case 6.2. What relatively quick, but less traumatic, reduction strategy is suggested by the make-up of the workforce?a) Rightsizing.b) Retraining.c) Discharging low performers.d) An early retirement program.e) Job redesigns.

Answer: d Challenging Page: 199

91. Refer to Case 6.2. LaTisha’s observations open the door for what other reduction strategies?a) The use of employment policies like attrition and a hiring freeze.b) Instituting changes in pay and benefit policies.c) Job redesign.d) Additional training or cross-training.e) None of the above

Answer: a Challenging Page: 207

92. Refer to Case 6.2. To answer LaTisha’s question about why people are leaving, the company needs to institute:a) outplacement services for separated workers.b) new training.c) a calculation of the real costs of employee separations.d) exit interviews.e) a layoff.


Case 6.3Terra Alta, Inc., an employer of some 15,000 employees worldwide, wants to reduce its workforce through an early retirement program. They have hired you to put the program together and implement it.

This will be a one-time offer. They want employees over age 58 to be eligible, but they don’t want to lose key older employees. Terra Alta wants a fairly accurate estimate of how many employees will take part in the program.

Terra Alta wants a legal and humane program. They do not want to be caught up in any litigation. They want employees to have an accurate picture of their future if they take part in the early retirement program.

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93. Refer to Case 6.3. Given Terra Alta’s desire to get employees to take advantage of the program, what could you recommend they do, beyond the standard, to ensure maximum participation?a) Create a formula that accelerates eligibility for retirement.b) Open a “window” that restricts eligibility.c) Give potential layoff notices to those who might hesitate to participate but are

eligible.d) Offer a lump sum payment equal to 1-2 years of salary.e) Provide outplacement counseling.


94. Refer to Case 6.3. How could Terra Alta keep key older workers from leaving?a) Restrict eligibility to areas with redundant employees.b) Don’t give them potential layoff notices.c) Pull them aside and guarantee them their jobs.d) Fine tune the eligibility requirements by lowering the amount of seniority

required to participate.e) Put a hiring freeze into place.


95. Refer to Case 6.3. To avoid any legal problems, what would you recommend?a) Tell managers not to treat older workers any differently than they have in the

past.b) Offer minority and women employees larger severance packages.c) Give at least 60 days advance warning by placing potential layoff notices in

their pay voucher packets.d) Explain to these workers what it’s like out there if they retire or try to go into

business for themselves.e) Implement a hiring freeze at the same time as you offer the early retirement

program.


96. Refer to Case 6.3. How could Terra Alta manage the number of people who might participate in the early retirement program?a) Take key employees aside and guarantee them their jobs.b) Fine tune the incentives if a survey shows too many will participate.c) Hire retirees back as consultants.d) Offer protected class employees less generous retirement packages.e) Build an estimate on industry data and stop the program when they get to that

number.

Answer: b Challenging Page: 205

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Part III Staffing

Case 6.4MedEquip Inc., a medical services company with 500 employees, has experienced an extensive business downturn. They are planning to implement a layoff of about 20% of the hourly and managerial workforces. Because of time demands and financial pressure, they will implement the layoff in 30 days.

As an HR consultant brought in to help with the layoff, they turn to you for answers. This experience will be traumatic, since MedEquip has “verbally” committed to lifetime employment. They are planning to use work performance as the layoff criterion. Only about 3 areas of the business will be affected — MIS, facilities, and accounting. Management is concerned about security in these areas, and there are minimal backup files available.

While it is a large company, MedEquip has built a family atmosphere and everyone feels very close to everyone else. Corporate headquarters is in a fairly small community of about 10,000 people. They have hired a PR specialist to handle the press releases and public communications about the layoff.

When the layoffs begin, Olivia and Quincy, two middle managers who will not be laid off, will hold group meetings with the sections involved. They then plan to have professional associates inform others about the layoff. They want you to conduct large group briefings orally. They do not want to give employees anything in print so they won’t be drawn into litigation.

97. Refer to Case 6.4. Given the time frame and number of employees MedEquip will layoff, which of the following is true?a) They are not in violation of WARN because they are laying off less than 50%

of the workforce.b) They can offer laid-off employees 60 days of income instead of 60 days

warning.c) They are not subject to WARN because they are too small of an employer.d) They are not subject to WARN because they aren’t closing the business.e) They are in violation of WARN and must extend the layoff deadline by 30

days.

Answer: b Challenging Page: 209

98. Refer to Case 6.4. What is your evaluation of their layoff criterion?a) It is not legal.b) It will disproportionately impact women and minorities.c) It is the most common criterion used. They will have no trouble.d) It is more subject to legal challenge than other criteria, but it will help them

retain their top performers.e) It will result in the “last in” being the “first out.”

Answer: d Moderate Page: 209-210

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99. Refer to Case 6.4. Given the primary areas affected by the layoff, you should recommend:a) escorting affected employees off-site as soon as they are notified.b) not worrying about security.c) holding the large group termination session at the end of the week so employees

can blow off steam over the weekend.d) providing employees an opportunity to “let off steam” in the termination

meeting.e) having HR conduct the termination sessions one-on-one with the employees.


100. Refer to Case 6.4. The CEO asks your opinion on Olivia and Quincy’s plan for the termination process. You should tell her that:a) it is a solid and humane way to share the bad news.b) not providing written documents is good, an oral briefing is sufficient.c) having an outsider brief them in a large group is the best way to control any

hostile feelings.d) they should also coordinate media relations.e) it is a very poor strategy and violates almost every rule a manager should follow

in communicating a layoff.

Answer: e Challenging Page: 209

Case 6.5Organizers Company has been making the most of new business technologies and many of the jobs that previously required many people are taking much less effort. Paul, who is president of the company, sees the need to eliminate some middle managers and institute work teams to eliminate ineffective or unnecessary work processes. He believes that the changes he wishes to make won’t cost the business financially. Most of the middle managers have been with the company anywhere from 10-15 years, but are a long way from retirement.

One problem that Paul recognizes is that Zena, an upper-level manager, has been coming to work late, missing deadlines on assignments, and refusing to complete one important assignment, passing it to a line manager. Paul has warned her personally about the consequences for further actions and has even meted out several proscribed disciplinary actions against Zena. Her work habits have not improved and Paul feels he may have to take further action.

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Part III Staffing

101. Refer to Case 6.5. By Paul’s estimation, Organizers Company needs to do which of the following to improve efficiency?a) Downsize.b) Perform a large-scale layoff.c) Offer early retirement incentives.d) Rightsize.e) None of the above


102. Refer to Case 6.5. Paul believes strongly in trying to provide lifetime employment and will use a layoff only as a last resort. What would be the best strategy to reduce middle management?a) Offer early retirement to the employees in middle management.b) Discharge employees in middle management.c) Institute a pay freeze only for employees in middle management.d) Encourage employees in middle management to take voluntary time off.e) Use pay incentives to encourage the middle management employees to quit

voluntarily.


103. Refer to Case 6.5. In his plans for reducing the work force, Paul is primarily addressing cost issues relating to:a) creating rings of defense.b) recruiting.c) separation.d) designing job changes.e) c and d


104. Refer to Case 6.5. Paul’s actions towards Zena’s performance is an example of:a) discrimination.b) forcing her to retire.c) arbitrary discipline.d) progressive discipline procedure.e) a ring of defense.

Answer: d Easy Page: 200

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105. Refer to Case 6.5. If Anthony terminates Martha’s employment, this will be an example of a:a) layoff.b) discharge.c) retirement.d) buyout.e) quit.

Answer: b Moderate Page: 200

TRUE/FALSE QUESTIONS

106. Yao-Huan is reviewing the rate at which employees have been leaving his firm. He is reviewing the firm’s turnover rate.

Answer: True Easy Page: 195

107. It costs the U.S Navy over $1.5 million to replace a fighter pilot who leaves the military.

Answer: False Moderate Page: 195

108. The costs to replace a departing employee generally include: recruitment, selection, health care benefits until they find a new job, and unemployment compensation costs.


109. Selection costs may include relocation costs, training costs, and severance pay.


110. Marissa quit her current employer for a new job. She is talking with the director of HR about why she left. Marissa is going through outplacement assistance.


111. When conducting exit interviews, management should assume employees will be honest with them, since the employees have already decided to leave the company.


112. Comments made by exiting employees at an exit interview are confidential, except in cases where they may concern legal issues.

Answer: True Moderate Page: 197

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Part III Staffing

113. Interestingly enough, employee separations can actually stimulate innovation.


114. A quit and a retirement are similar types of employee separations since both are initiated by the employee.


115. Employers can force an employee to retire if the employee is 65 years of age or older.

Answer: False Easy Page: 199

116. Recent studies have shown that 80% of voluntary separations are unavoidable.

Answer: False Easy Page: 199

117. Involuntary separation results from one of two conditions: 1) economic necessity or 2) a poor fit between the employee and the organization.


118. Rightsizing is simply a euphemism for downsizing.

Answer: False Challenging Page: 202-203

119. Early retirement programs generally are offered by a business for only a short period of time and consist of financial incentives to encourage senior employees to retire earlier than they had planned.


120. Early retirement programs have proven to be almost flawless ways to make small reductions in a firm’s workforce.

Answer: False Challenging Page: 204

121. A firm that tells employees that if they don’t take early retirement they may still lose their jobs due to future layoffs, may be open to age discrimination charges.


122. A firm’s overall HR strategy influences its employee workforce reduction strategy.


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123. Generally, the first alternative to layoffs that companies use to reduce their labor costs is to redesign existing jobs.


124. Changes in job design may include: job sharing, rings of defense, bumping, and job relocation.


125. A company can save up to 20% of its payroll during lows in its business cycle by instituting a profit-sharing compensation program.

Answer: True Challenging Page: 208

126. WARN requires employers with 60 or more employees to give 100 days’ warning of layoffs of more than 10% of its employees.

Answer: False Challenging Page: 209

127. One of the most commonly used lay-off criterion is job seniority.


128. Basing a layoff on performance can be a legal hazard for an employer if the employee’s performance has not been well documented over a period of time.


129. In a termination meeting, a manager should interject personal remarks and talk about how valued the employee was in order to soften the blow of job loss.


130. Companies should communicate the reasons for a layoff and provide some emotional support to the survivors of a layoff in order to help them manage their layoff stress.

Answer: True Moderate Page: 212-213

131. In order to reassure surviving employees of recent layoff information, they should be informed of the reasons for the layoff and how it occurred.


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Part III Staffing

132. An important goal of outplacement services for laid-off workers is to help them remain productive, pending their layoff.


133. Job-search assistance and emotional support are often two functions of a business’ outplacement services.


SHORT ANSWER QUESTIONS

134. The termination of an employee’s membership in an organization is referred to as _______.

Answer: employee separation

Moderate Page: 195

135. The rate of employee separations in an organization is referred to as _______.

Answer: turnover rate

Easy Page: 195

136. The purpose of a(n) _______ is to find out the reasons why the employee is leaving or to provide counseling and/or assistance in finding a new job.

Answer: exit interview Easy Page: 197

137. A program in which companies help their departing employees find jobs more rapidly by providing them with training in job-search skills is called _______.

Answer: outplacement assistance

Moderate Page: 197

138. _______ is a separation that occurs when an employee decides, for personal or professional reasons, to end the relationship with the employer.

Answer: Voluntary separation

Moderate Page: 198

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139. A separation that occurs when an employer decides to terminate its relationship with an employee due to economic necessity or a poor fit between the employee and the organization is called _______.

Answer: involuntary separation

Moderate Page: 199

140. _______ is a company strategy to reduce the scale and scope of it business in order to improve the company’s financial performance.

Answer: Downsizing Moderate Page: 202

141. The process of reorganizing a company’s employees to improve their efficiency is referred to as _______.

Answer: rightsizing Moderate Page: 203

142. _______ is an employment policy designed to reduce the company’s workforce by not refilling job vacancies that are created by turnover.

Answer: Attrition Moderate Page: 207

143. _______ is an employment policy designed to reduce the company’s workforce by not hiring any new employees into the company.

Answer: Hiring freeze Moderate Page: 207

144. A federal law requiring U.S. employers with 100 or more employees to give 60 days’ advance notice to employees who will be laid off as a result of a plant closing or a mass separation of 50 or more workers is the _______.

Answer: Worker Adjustment and Retraining Notification Act (WARN) of 1988

Moderate Page: 209

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Part III Staffing

ESSAY QUESTIONS

145. Hernando is working with management to calculate the costs of employee turnover. What issues or costs should Hernando raise to management as they think about these costs?

Answer:Summary of suggested answer - The details of the answer will vary, but the costs should include: recruitment--ads, recruiter time, etc. selection--interviewing, testing, relocation, etc. training--orientation, lost productivity, trainer’s time, etc. separation--benefits, unemployment, exit interview, etc.

Moderate Page: 196-197

146. Discuss two categories of employee separations, including the specific types of each.

Answer:Summary of suggested answer – Voluntary separation – quit retirement

Quits depend on the employee’s level of dissatisfaction and the number of attractive alternatives available. Severance plans and buyouts have been used to induce quitting. Retirement occurs at the end of an employee’s career and results in the receiving of retirement benefits. Early retirement incentives have helped encourage retirements for some companies.

Involuntary separation – discharges layoffs downsizing/rightsizing

Involuntary separations occur due to economic necessity and when there is a bad fit. Employees must receive due process. A discharge results from poor performance or a failure to change unacceptable behavior. Managers need to follow their company’s progressive discipline process. Layoffs are large-scale discharges related to economic necessity and the individual does not necessarily have a direct cause for his/her discharge. These can affect the whole organization. Downsizing/rightsizing is the concept of getting the organization smaller in scope (downsizing) or getting it to a more efficient size (rightsizing). Don’t let students cynically make the two synonyms. While the results are similar for employees, there is a real difference for the company and the implementation of the reduction.


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147. Early retirements are one way to reduce a firm’s workforce. Describe the features and potential pitfalls of an early retirement program.

Answer:Summary of suggested answer – Features— financial incentives a formula to accelerate employees’ eligibility amount of lump-sum settlement health benefits an open window--the time period during which employees can take advantage

of the programProblems— too many participate employees leave who you want to keep leaving employees become competitors, some employees feel coerced into

participation by their managersSolutions— set criteria to restrict the total number eligible plan to hire back, as consultants, any good employees who got away. explain to managers what they can and cannot say. don’t start changing performance evaluations, lower raises, or hint at possible

layoffs to older employees


148. Your CEO asks you, as the director of HR, to lead a layoff planning session. Explain what alternatives to a layoff you could consider.

Answer:Summary of suggested answer – Alternatives— change employment policies using attrition and/or a hiring freeze redesign jobs using bumping job sharing, reducing hours, etc. change pay and benefits policies, such as pay freezes, pay cuts, profit sharing,

and training.


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Part III Staffing

149. As the director of HR, you have the responsibility of implementing a layoff for a medium-sized company. Review the key issues that must be settled in the implementation.

Answer: Summary of suggested answer – Key issues— notifying employees explaining WARN developing layoff criteria communicating to laid-off employees coordinating media relations maintaining security reassuring survivors whether or not to offer outplacement

Challenging Page: 209-213

150. Discuss some strategies you can take in order to reassure surviving employees after a layoff.

Answer:Summary of suggested answer – Jobs may be redesigned or enriched to keep the employees interested in their

jobs. Survivors should be given the reasons for the layoff and how the layoff process

occurred. Emotional support by small-group discussions, large-group pep talks, or even a

party can be held in order to bolster the confidence and camaraderie of the employees.

Easy Page: 212-213

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