Kamal Gupta

Mohd Qasim
Sunil Saini
Varun Chugh
Establish the compulsion of manpower
reduction
Manage downsizing without disrupting the
organization
Ensure that employees participate in the
decision to downsize
Match the focus of manpower reduction to
corporate strategy
Ensure a transparent system for choosing
people to be eased out
Manage the psychological and social fallout on
exiting employees
Maintain contact and relationships with former
employees
Prevent the company from being branded
anti-people
Motivate the employees who will stay with the
organization
Develop a post-downsizing manpower
deployment plan
Intensifying Competition
Recession in Business
Changes in Technology
Realignment of business
Joint Venture
Takeovers and Mergers
Implementation of Reengineering
Total Quality Movement
Benchmark your wage
bills

Identify units
departments and
plants

Asses your present

manpower

Try to redeploy
surplus

Stop hiring
Make Retirement Schemes Attractive

Set Transparent Criteria

Do not use Pressure Tactics

Offer Voluntary and Early Retirement

Schemes

Assign Outplacement agencies

Strategic way to trim the workforce
Less Panic
Mainly at Managerial Level
Origin early 1900s in US
Arvind Mills in India
• Boosting the Morale
• Stress on useful roles that employee can play
Listing Strong and Weak Points
Writing Resume
Interview Skills
Finding the Best Suited Job
Recruiting agencies
Personal Contacts
Maintaining the Databank
Help in making the right choice
Dampen the shock
Human Face of Organization
Improvement in prospects of employee
Influence on decision of people to be hired
Links with Alumnus
Expensive
Maintaining Database
Can be turned down
Strictly Voluntary
Company can choose
 Level
 Units
 Age Groups
Lucrative Package
Tax exemption
Provident Fund, leave, salary for the notice
period
Three months compensation for each
completed year of service
Monthly compensation * no. of months left
Only route to retrenchment
Lucrative settlement prevents resentment
No enforcement
Specific divisons
Best Employee may leave
High cost
Bad reputation
Whether you treat your workforce as a
ticket number or not , you cant reduce
them under the law of land

-S.N. PANDEY
Former Executive Director, TISCO
To Reduce unproductive workforce

To bring down cost

Technological Improvements

Change in Age-Skill-Salary mix

Shut down or Shift of a plant/product

Rationalization demand by partners

Absence of viable exit policy

Legal interference and inflexible policies

Still-Powerful trade unions

Developing Economy and no social security

network

Already existing huge backlog of

unemployment
LAYOFFS

RETRENCHMENT

CLOSURE

VOLUNTARY RETIREMENT
 Employers can’t layoff workers for whatsoever
reason they seem fit

 Half of Basic Pay and DA during layoff

 No layoff without prior permission

 Alternative Employment not a layoff

 Penalty – Imprisonment for a period of upto one

month or a fine of upto Rs. 1000 or both
Public Sector Undertakings require permission

Can only be offered to employees above 40

years of age or have served for 10 years

Companies retain the right to reject

applications

Income Tax benefits for employees who have

accepted the scheme
INVALID REASONS
 Financial Difficulties
 Accumulation of stock
 Expiry of License/Lease
 Exhaustion of natural resources

Government permission 90 days prior

Compensation
 No worker who has continuously served for more than
one year can be retrenched without permission

 Permission to retrench if company employs more than

100 people

 Notice explaining the reason mandatory

 Compensation

 Last In, First Out

 Penalty
Who are middle managers ?
Why retrenchment ?
What are the alternative solutions if any ?

Associated Problems
Company’s image
Feeling Hurt
 “The margins are too thin for us to carry
passengers”-
Sujit Bakshi, Director(HRD), HCL.
No Soft Options
 Constant scan for sub-optimal behavior
 Reshape or knock-out
Fine Tuning System
 Forced Ranking System
 Yesterday-Today-Tomorrow(YTT) technique
Monthly performance review
Breakthrough objectives- Measurement parameters

HCL Corporation
.Emerging Business
Re-engineering Identification of
priorities surplus skills

Forced Ranking Y-T-T exercise

Monthly performance Assessments on

Ranking
reviews Breakthrough objectives

Today's People: Tomorrows People Yesterdays People

Training Inputs Challenging Assignments Lay Off or outplacement
Talk to employees
 Organization’s aims, strategies and need to
restructure
 Changing systems, Insecurity involved

Voluntary Retirement Scheme(VRS)

 No hard feelings(both side)
 Sweet Coated Pill
Post VRS
 Build confidence among remaining employees
 Morale boost
 People Commitment Surveys(PCS)

Whirlpool Corporation/Kelvinator India

Man-Power Rationalization
Identification of Redundant staff
 Contract to supply material
 Official Vendors
 Coach and Train
Special Grade Product Mangers
 Supervision by younger person
 Benefits of knowledge and experience

IMPACTS
 Fall in direct employment rates(70%)
 Turnover improvement(200 % annual)
Plan in advance
Communicate the
reasons
Identify non-performers
Transform redundant
mangers
Constantly reassure the
remaining ones
Why Change the CEO?
 He is unable to live up to the new mandate of
Restructuring
Reengineering
Relearning

 That is he can no longer be the company’s

leader tomorrow
If the CEO has a health problem make it clear
to him that you are vying for a change

Fix a strict retirement age(Ex. Lever Group)

Set stretch targets for the CEO and keep

reviewing them periodically
Temper the termination by ensuring that
CEO goes with dignity.

Use overseas transfers or non-executive

positions to cushion the blow.

Keep the decision secret until a successor

has been identified.
Deflect attention from firing by focusing on
the CEO being appointed.

Create a system of organizational exit by

settingan age limit for CEOs too.
The basic DON’TS to keep in mind

 Don’t Rush into Dismissal

 As the CEO might allege company has been unfair
 As he could divulge company secrets
 Don’t Humiliate the man.
 It reflects badly on the company
 Makes it difficult to attract star performers later
 Don’t let him pick his own successor.
 As the company could be stuck with someone it
doesn’t want
 Have to go through the removal process again.
 
Objective
To identify the factors compelling employees to
leave.

Formal Interview - Departing manager and a Senior

Human Resource Executive
Uninhibited Feedback

Helps Identify
 Employee Dissatisfaction
 System weakness-Implement Correction in policy and
working
 Problem in Individual-Council the Individual 

 Evaluates company’s HR policies vis-à-vis those of competitors

 Offers a glimpse of competitors’ recruitment strategies