CASE 8

CASE 8

Employee Separation

Employee separation is a moment when an employee stops working at a company. As there can be many reasons for employee separation, and it is not only bad for employee but for the company as well. Employee will lose his incomes, and company have to find and train new employee which is not that cheap.

Very firstly, we need to define the turnover rate. Turnover rate calculated by taking the number of employees divided by the average number of employees during the period, and times twelve divided by the numbers of months in the period.

We must not forget the fact that there is the voluntary terminations as well as involuntary terminations. Both of them can be put in the either the category external or internal, marking the place where the decision for the termination came from. An external, voluntary terminatin would be a quit, and an internal involuntary termination would be a mandatory transfer.

As mentioned, the costs of termination are severe. The costs consist of:

- Recruitment costs. Finding and recruiting a new employee forces the company to invest in marketing and recruiting.

- Selection and training costs force the company to select the right employee –

and that costs money in the form of salaries who search and select the right people. Training costs can be immense, depending on the job that needs to be occupied.

- Separation costs have to be faced in the form of exit interviews and outplacement assistance. (Gomez, Balking & Cardy 2016).

Employee termination does not only have disadvantages but advantages as well. Advantages includes for example reduced labour costs, in case new employee has a lower salary, or no new employee is needed at all. When Nokia relocated jobs to Romania, they saved money by paying lower wages (YLE 2011).

Other advantages are for example the replacement of poor performers, increased innovation and the opportunity for better diversity in company.

But before a company decides to lay off employees, they should consider alternatives to layoffs. Such an option could be for example employment policies, which can include a hiring freeze, and providing early retirement packets to those in age.

In case company still decided on a layoff, it should notify employees fairly in time. Also, the layoff criteria’s should be discussed and developed  in advance, and the communication with the laid-off employees should be kept active as well, to ensure that everything goes well. The last thing the company should do is extremely important; Reassuring the position of employees still with the company.

Sources:

YLE 2011, 1-2. Nokia cuts 3500 jobs “to ensure profitability”.

URL:http://yle.fi/uutiset/osasto/news/nokia_cuts_3500_jobs_to_ensure_profitability/5431070

Accessed on the 05.05.2017

Gomez, Balkin & Cardy 2016, 204-225. Managing Human Resources, 8 th edition, Pearson.