Separation and Retention Process

Part I : Procedure of Separation

Part II : Retention Process

• Discharge• Retirement• Layoff• Retrenchment• VRS• Promotion•Transfer• Exit Interview

Part I : Procedure of Separation

Employee Separation is the process of efficiently and fairly terminating workers.Separations : Final way in which an employee leaves a position.

Voluntary : Employee resigns. Involuntary : Employee is laid-off or terminated.

Discharge: It is the process of terminating the service of an employee due to any serious misconduct.

It is a permanent separation of an employee from the pay-roll for violation of company rules for inadequate performance.

Causes of Discharge:a) FREQUENT CAUSES:

Inefficiency, Dishonesty, Drunkenness, Carelessness. b) INFREQUENT CAUSES: Accidents, Insubordination, Personal Conduct, Un-cleanliness, Infraction of Rules, Negligence. c) OTHERS: Laziness, Lack of Co-operation.

Steps to Discharge an Employee:

Preliminary Disciplinary Action

Final Written Warning

Notice of Discharge

Discharging an Employee Discharging employees is one of the most

difficult tasks that a manager faces.

Many organizations offer outplacement to the employees laid off.

• Outplacement Services provide employees who have been dismissed from an organization with assistance in finding new jobs. Examples: Resume Writing, Practice Interviewing and Support Groups.

Retirement: It is the process of leaving the organization permanently by employees on the ground of attaining the age of superannuation or voluntarily.

Retirement has been characterized by some as a “role less role”.

Kinds of Retirement Compulsory Retirement

Employee must retire compulsorily on attaining a specific age. In Central Government Offices, the age is 60; in private firms, employees may be given extension up till they are suitable to do work.

If employee found guilty on either court of law or violated conditions of the organization. He may be force to retire from services without any benefit.

Forced Retirement

Premature RetirementIf an employee becomes disabled due to accident, or due to some disease, he may be given option of retiring by management.

Layoff: It is the act of suspending or dismissing an employee (especially temporarily), as for lack of work or because of corporate reorganization.

It is period of temporary inactivity or enforced unemployment.

The Legal aspect of Layoff Section 25C of Industrial Disputes Act (IDA) 1947, does not

confer the right on employers to layoff workers for whatever reasons they deem fit. According to Section 25M of IDA, unless the layoff is due to shortage of power or natural calamity, no working men can be laid off without the prior permission of the labor commissioner.

Maximum period of layoff is 45 days. If employer offers alternative employment, it will not be considered a layoff even if the worker does not opt for it. The penalty stipulated for not complying with the provisions of the IDA: Imprisonment for period of up to 1 month or a fine up to Rs. 1000 or both.

Retrenchment: It is something a kin to downsizing. When a company or government goes through retrenchment, it reduces outgoing money or expenditures or redirects focus in an attempt to become more financially solvent.

Although retrenchment is most often used in countries throughout the world to refer to layoffs, it can also label the more general tactic of cutting back and downsizing.

Ways to employ Retrenchment TacticCompanies can employ this tactic based on the following three factors:

HR Related Factors

Product Related Factors

Market Related Factors

Ways to employ Retrenchment Tactic HR Related Factors:

Slash expenditures by laying off employees

Closing superfluous offices or branches

Reducing benefits such as medical coverage or retirement plans

Freezing hiring or salaries

Cutting salaries

Ways to employ Retrenchment Tactic Product Related Factors:

Slash expenditures by reducing the quality of the materials used in a product

Streamlining the process in which a product is manufactured or produced

Ways to employ Retrenchment Tactic Market Related Factors:

Downsizing in one market that is proving unprofitable

Building up the company in a more profitable market

If one market has become obsolete due to modernization or technology, then a company may decide to change with the times to remain profitable

Retrenchment ( A Foot note )Retrenchment doesn’t always mean people losing jobs,

although it can seem that way. If a company shifts into concentrating on a different focus, that’s also called Retrenching. It might even end up with more people being hired, as the company needs the extra skill base.

For example, Apple once only dealt with computers. Technically, when they shifted their muscle behind the iPod, one could call that Retrenchment but did it result in any actual job loss?

To be continued…

Voluntary Retirement Scheme

Voluntary Retirement SchemeVRS is one of the employee separation strategies

introduced in the early 1980s in central public sector undertakings (PSUs)

The VRS is the most humane technique to provide overall reduction in the existing strength of the employees

VRS is a scheme whereby the employee is offered to voluntarily retire from his services before his retirement date.

Its eligibility varies from company to company

Technicalities of VRSThe VRS candidates must have worked for the organization for minimum of 10 years and also the age of the worker must be minimum of 40 years

Employees not complying with these conditions still can apply for the early separation but it would not be counted as the VRS legally. Thus these employees won’t be able to avail the benefit of Tax Exemption

Employees receiving VRS can get the Tax Exemption up to an extent of Rs. 5 lakhs

A Footnote … Employers refer to VRS as ‘Golden Handshake’, trade unions call it ‘Voluntary Retrenchment Scheme’, and for the government, it is ‘Unstated Exit Policy’ which means that an exit policy which may not exist no paper.

Promotion: According to Dale Yoder, PROMOTION may be described as:

“A movement to a position in which responsibilities and presumably, prestige are increased.”

Promotions have a positive impact on the employees. Besides pay hike it also satisfies the higher needs of employees.

Purpose / Objectives of Promotion

To recognize an individual’s performance and reward him for his work

To put the employee in a position where he will be of greater value to the company

To promote job satisfaction among the employees and give them an opportunity for unbroken continuous service

Purpose / Objectives of Promotion

To build up morale, loyalty and a sense of belonging on the part of the employees

To demonstrate effective career development plans

To attract suitable and competent employees for the organization

To create among employees a feeling of contentment with their present conditions and encourage them to succeed in the company

Types of PromotionOpen Promotions:

An organization or a company considers all individuals within it as a potential candidate and announces it to various aspirants internally.

Closed Promotions:An organization or company does not consider

all individuals within the organization but restricts the openings or vacancies for higher positions. Also the announcement is not done internally.

Frequently companies follow a combination of both the systems.

Types of Promotion (Contd…)Dry Promotions:

Dry Promotions are those that are given in lieu of increase in compensation.

Horizontal Promotions:Promotions that do not necessarily lead to the

change in the nature of work i.e. similar kind of work remains intact. For e.g.. Lower to higher grade without any change in the work content.

Vertical Promotions:Promotions that lead to the change in the nature of

the work. For e.g.. Supervisor to Manager.

Transfer: A transfer is a horizontal or lateral movement of an employee from one job, section, department, shift, plant or position to another at the same or another place where his salary, status and responsibility are the same.

Transfer may be initiated either by the company or the employee. It also can be temporary or permanent.

Purpose of TransferTo increase the effectiveness of the organization

To increase versatility and competence of key positions

To deal with fluctuations in work requirements

To correct incompatibilities in employee relations

To correct erroneous placement

To relieve monotony

Purpose of Transfer (Contd…)

To adjust workforce

To punish employees (Generally in Government organizations, employees who commit mistakes or malfeasance will be treated with transfer to other place where he cannot act according to his wish or misuse his job position)

Types of TransfersProduction Transfers:

Such transfers are made to meet the company requirements. The surplus employees in one department/section who are efficient might be absorbed in other place where there is a requirement. Such transfers help to stabilize employment.

Replacement Transfers:This takes place to replace an old employee who

has been in the organization for a long time by a new employee thereby giving some relief to the old employee from the heavy work pressure.

Types of Transfers (Contd…)Versatility Transfers:

It is also known as rotation. It is aimed at all round development of employees by moving them from one job to another. It also helps to reduce boredom and monotony.

Personal or Remedial Transfers:Such a transfer is made to rectify mistakes in

selection and placement. As a follow up, the wrongly placed employee is transferred to a more suitable job.

Shift Transfers:This is pretty common where there is more than one

shift and when there is regularized rotation.

Exit Interview: It is the final formal meeting between the management and an employee leaving the firm.

It is used as a learning opportunity for the executives concerned who seek candid views on work related problems.

Exit Interview – An Overview

In HR terms, an Exit Interview is a survey that is conducted with an employee when he or she leaves the company. The info available from each survey is used to provide feedback on why employees are leaving, what they liked about their employment and what areas of the company need improvement. Exit interviews are most effective when the data is compiled and tracked over time.

Types of Exit InterviewIn-Person Exit Interview:

With in-person exit interviews an HR representative meets individually with each terminating employee.

Telephone Exit Interview:It is conducted over the telephone by an HR

Representative or an outside third party consultant.

Paper and Pencil Exit Interview:It is usually conducted by means of a form that is

given to the employees on their last day or mailed to the employees’ home.

Part II : Employee Retention Process

Employee Retention is the process enacted towards keeping or retaining good employees within an organization. It’s about culture and how employees are treated.

It’s about presenting a consistent, effective employer proposition across the entire employee life cycle, thus ensuring that the employers source, hire, manage and develop employees who partner with them in achieving the organizational goals.

The 3 R’s of Employee Retention

Reward

Recognition

Respect

Significance of Employee RetentionHiring is not an easy process

An organization invests time and money in grooming an individual and make him ready to work and understand the corporate culture

When an individual resigns from his present organization, it is more likely that he would join the competitors

The employees working for a longer period of time are more familiar with the company’s policies, guidelines and thus they adjust better

Significance of Employee Retention

(Contd…)Every individual needs time to adjust with others

It has been observed that individuals sticking to an organization for a longer span are more loyal towards the management and the organization

It is essential for the organization to retain the valuable employees showing potential

Determinants of Employee RetentionCareer Development Opportunities

Supervisor Support

Work Environment

Rewards

Work – Life Policies

Employee Retention StrategiesEmployee Reward Program

Career Development Program

Performance Based Bonus

Employee Referral Plan

Loyalty Bonus

Employee Recreation

Accountability

Surveys