Workforce reduction is one of the toughest challenges for a human resources manager. In today’s marketplace, financial and growth considerations can change rapidly, affecting an organization’s potential growth or even its existence in some cases. The latter is especially true with startup companies, or new organizations that may initially grow a bit too quickly and then must retrench when the market changes. Planning for a reduction is the responsibility of the human resource manager, and if done correctly can mitigate some of the difficulty and toll taken on all concerned.

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Scenario: Your boss tells you the company is suffering losses in the market, and if some employees are not laid off in the next 3 months, the company may not survive.

Based on your reading in Chapter 5 and Table 5.2:

• Discuss what options you would consider, and why, when planning for a reduction in the workforce.
• Why would your choices for planning a reduction in the workforce be preferable to others?

 

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TABLE 5.2 HR Strategies for Addressing a Labor Shortage or Surplus OPTIONS FOR REDUCING A SURPLUS ОPTION SPEED OF RESULTS AMOUNT OF SUFFERING CAUSED Downsizing Fast High Pay reductions Fast High Demotions Fast High Transfers Fast Moderate Work sharing Fast Moderate Flashcardseze Slow Low Natural attrition Slow Low Early retirement Slow Low Retraining Slow Low OPTIONS FOR AVOIDING A SHORTAGE OPTION SPEED OF RESULTS ABILITY TO CHANGE LATER Overtime Fast High Temporary employees Fast High Outsourcing Fast High Retrained transfers Slow High Turnover reductions Slow Moderate New external hires Slow Low Technological innovation Slow Low TABLE 5.2 HR Strategies for Addressing a Labor Shortage or Surplus OPTIONS FOR REDUCING A SURPLUS ОPTION SPEED OF RESULTS AMOUNT OF SUFFERING CAUSED Downsizing Fast High Pay reductions Fast High Demotions Fast High Transfers Fast Moderate Work sharing Fast Moderate Flashcardseze Slow Low Natural attrition Slow Low Early retirement Slow Low Retraining Slow Low OPTIONS FOR AVOIDING A SHORTAGE OPTION SPEED OF RESULTS ABILITY TO CHANGE LATER Overtime Fast High Temporary employees Fast High Outsourcing Fast High Retrained transfers Slow High Turnover reductions Slow Moderate New external hires Slow Low Technological innovation Slow Low

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