Retrenchment Strategies

What is Retrenchment?

Process of a company or organization to reduce the number of people in its employment in order to match or meet operational requirements.

Reasons of Retrenchment?

Employment Redundancy Overstaffing Increased Labour Costs Technology

Merger or Liquidation

Strategies for Redundancy

Downsizing Voluntary Retirement HR Outsourcing Early Retirement Plans Project Based Employment

What is Downsizing ?

Make a company or an organization smaller by eliminating staff positions

What is Downsizing ?

A company's reduction in the number of employees, number of bureaucratic levels, and overall size in an attempt to increase efficiency and profitability.

What is Layoff ?

Layoff also called redundancy is the temporary suspension or permanent retrenchment of an employee or a group of employees for business reasons, such as when certain positions are no longer necessary or when a business slow-down occurs.

What is Pink slip ?

Pink Slip refers to a practice by

personnel department, of including a discharge notice in an employee's pay envelope to notify the Employee of his or her retrenchment of employment or layoff

Why Downsizing ?

Cost Reduction Business Requirements Merger Reorganization Unproductive Resources Recession

Major Downsizing Companies

HSBC-25000 G Motors-1 lac in 11 years Boeing 55k in 5 years GE-100k in 10 years Citigroup-1200 Cisco 1300 Kraft food 1600 Pepsi 8700 IBM -9000 HP-27000

Strategy of Implementing Downsizing

Communication Preserving Dignity Counseling to Employees Legal Formalities Appropriate Notice Immediate or Staggered

Voluntary Retirement Scheme

What is VRS?

Voluntary Retirement Schemes is form of early retirement that is initiated by employers. Comprehensive compensation packages may be offered to number of employees.

What Could be the Reasons of offering VRS?

Excess Manpower Maintaining Profitability Unproductive Manpower Competition Takeover/Merger

General Application for VRS

Eligible Age Only Employees/Workers Compensation on VRS

Restrict Service
Income Tax Exemption VRS Acceptance Periodicity

HR Outsourcing

Outsourcing

Today, over 70% of all Businesses outsource one or more elements of their business.

Outsourcing

Outsourcing means to delegate or authorize someone to act or perform on your behalf either at your place or outside

Why Outsourcing

1 Decreasing revenues and uneven cash flow 2. Increasing layoffs and rising lawsuits 3. Increasing operating Expenses 4. Reduced productivity and lower morale

5 Cost Effectiveness
6 Specialization

Misconception about Outsourcing

Necessitate Firing Employee

Losing Jobs to Outsiders

Losing Control Over Business

Sharing Secrecy

HR Outsourcing- Industry Drivers

Overhead---52% Expertise----41% Core Competencies-33% Reduce Headcount30 Reduce Risk -22%

HR Outsourcing-variations

Payroll Processing HR Administration/Compliance Workers Compensation Risk Management Recruiting & Staffing

Early Retirement Plans

Early Retirement Plan

A retirement plan which allows an employee to retire before the company's official retirement age.

Early Retirement Plan-objectives

Reduction in Cost Focus on Priorities

Early Retirement Plan- application

Age Eligibility Compensation Withdrawal

Project Based Employment

Project Based Employment

Employing Manpower on a temporary basis or contract for a stipulated period or length of the Project may be called Project Based Employment

Project Based Employment-types

Project Based Fixed term Casual Employment Probationary Employment Regular Or Permanent

Contract-terms

Fixed term Open Ended Project Based Experts

Turnaround

A sharp, positive reversal in the

performance of a company or the overall market.

Strategy for Turnaround

SWOT Analysis Re-engineering HR Strategies Production/Operation Strategies Financial Strategies Marketing Strategies Corporate Strategies

Strategy for Retrenchment

Legal Formalities Counseling Compensation Communication Appropriate Notice Sabbaticals Lowering Wages/Freezing Alternative Employment Evaluating Impact Least Productive Manpower Relieve with Dignity Intellectual Capital

Summary