Layoff Someone – Gracefully

Author: Abhinav Bhatt

It can be very disturbing to lay off a person; however, it is important to know how to lay someone off gracefully. This can be very difficult to layoff as a part of organization restructuring, cutting headcount, economic/cost cutting etc. especially when the reason is not the poor performance of the employee.

It is needless to say that the manager/supervisor needs to be sensitive. Below could be few suggestions that could be used to layoff someone- Gracefully:

1.    Preparation needs to be done before meeting the employee. Careful planning can limit the misunderstandings, anger and allegations. Make sure all the documents are in place before the meeting.

2.    The organization can provide an employee some additional considerations like severance, medical coverage. Some perks like advance salary of a few months can help an employee find another job after he/she is laid off.

3.    While meeting the employee, one needs to explain why the person is being laid off. One must be firm but courteous while outlining the reasons as briefly as possible and make sure that the employee fully understands why he or she is being fired and not criticized.

4.    It is generally management’s decision to layoff an employee hence; one should try to limit the explanation and discussion about the termination and should not apologize for the same.

5.    Let the employee express the feelings. Remind about the severance package or benefits offered.

6.    Collect everything related to access that company provided, like the access cards, ID cards, and cross check which passwords, access codes, and permissions need to be changed.

7.    Tell the employee how long they have to gather belongings and leave the area/premises. If possible, try to organize for a quick and graceful exit. Try to conclude meeting with a handshake and sincerely wish that the employee will do well in the future.

Some Quick DONTs

v  Do not set lay-off traps; these are often counteracted by lawsuits

v  Steer clear of humiliation (e.g., having others escorted out, using public lay-offs to make an example).

 

Some of the above ideas have been taken from the internet and some have been reflected from the movie - Up in the Air (2009)

International HRM- Paying Expatriates  -Meenu Singh

                                                                                        

                                                            

                                                                                                                              

Globalization of business has probably touched HR managers more severely than any other functional head. The process of Procuring, allocations and effectively utilizing human resources in an international business is called international human resource management (IHRM).

Model of IHRM

    

One activity that receives considerable attention of an International HR manager is designing

attractive remuneration packages for the expatriate.

OBJECTIVES WHILE DESIGNING EXPAT PAY PACKAGES:

Any expatriate remuneration package needs to be designed to achieve the following objectives:-

1.     1. Attract employees who are qualified and interested in international assignments.

2.     2.  Facilitate movement of expats from one subsidiary to another, from home country to subsidiaries and from subsidiaries back to the home country

3.     3. Provide a consistent and reasonable relationship between pay levels of employees at Head quarters, domestic affiliates and foreign subsidiaries.

4.     4. Be cost effective

CHALLENGES WHILE DESIGNING AN INTERNATIONAL REMUNERATION PACKAGE:

Generally, following problems come up while designing an international remuneration package:-

1.      1.  Discrepancies in pay between, parent, host and third country nationals

2.      2.  Need to vary compensation packages depending on employee’s stage of life and customize it accordingly (e.g. young children, children in college etc)

3.      3. Remuneration issues related to re entry into parent-country organization or home country.

4.      4. Remuneration issues to deal with changes in international business environment

Factors influencing international Compensation

Expat compensation depends on Internal and external factors

Components of Expat Compensation                                                     

1. Base Salary

2. Benefits

3. Allowances

4. Incentives  

5. Taxes          

Base Salary

This acquires a slightly different meaning from the domestic setting. In domestic sense, base salary denotes cash compensation that serves as benchmark for bonuses, benefits etc.

For Expats, this is the primary component of a package of allowances many of which are directly related to the base salary (e.g. COLA, Housing allowance etc) and is the basis for in- service benefits and pension contributions.

BS may be paid in the currency or home or host country.

This is the founding block for international remuneration.

Base pay can be decides based on 2 methods:-

1.      Home country based method – setting the base in relation to how the employee would be paid for doing the same job in the home country

2.      Host country based method – Setting Base pay in relation to how the job is paid in the host country. Advantage- Creates parity among host country nationals and expats. Concern- Disparity  with one’s own income in host country

Benefits – these constitute a major element of remuneration of a regular employee. These usually include things such as insurance, retirals, social security contributions, etc..                                                                                                                         

Benefits could be :-

1. Required benefits mandated by Law
2. Discretionary benefits like health insurance, retirals,

Following is the list of issues surrounding benefits package to expats:-

-          Whether MNCs should maintain expats in home country benefits programs especially if these programs are not tax deductable

-          Whether companies have option of enrolling employees in host country benefits program and making up for any difference in coverage

-          Whether host country regulations regarding termination of employment affects employee benefit entitlement

-          Whether home/host country is responsible for employee’s social security benefits

-          Whether benefits should be subject to requirements of home or host country

-          Which country should pay for benefits

-          Whether other benefits should be used to offset any loss/shortfall in coverage

-          Whether home country benefits program should be available to local citizens

-          What happens to continuity of benefits once the expat returns to his origin country

Allowances- these are an expensive feature. One common allowance is COLA (cost of Living allowance) – payment for difference between home & host country to provide the expat with the same standard of living enjoyed by him/her in the home country.

Other allowances could be – relocation allowance (to move house hold goods etc), Children’s education allowances, hardship allowance etc..

There could be some unique allowances such as spouse assistance. In case of loss of income of spouse on account of the employee’s move- the company could either cover for the loss through remuneration or alternatively look at providing a suitable opening in its subsidiary in the host country.

Incentives – There could be an incentives program to keep the expat motivated.

This could be in the form of ongoing premiums or one time lump sum. Most companies giving such incentives are following the lump sum premium approach paid only at the time of acceptance of assignment. The payment retains its motivational value and cost to company is less as there is only one payment with no future financial commitment. This is also because incentive is a separate payment distinguishable from regular pay and is more readily available for spending or saving.

Taxes –

Final component of remuneration relates to taxes.

This needs to be considered separately as the expat may have to pay tax in both home and host country if the 2 countries don’t have a reciprocal tax treaty.

MNCs usually follow one of the following approaches to handle international taxation:-

-          Tax equalization- The employee should pay no more or no less tax than he would have paid had he never left his former home. Hence, the company should be paying all related worldwide effective taxes for the assignee. With this intention, firms withold an amount equal to the home country tax obligation of the expat and pays taxes in the host country. This also called Hypo tax

-          Tax Protection – employee pays tax that s/he would pay on remuneration in the home country. The employee in this situation is entitled to any windfall received if total taxes are less in host country than home country.

Tailoring the Expat salary packages

      

Working with the components described above, MNCs seek to tailor packages to fit specific situations.

Approaches followed by MNCs :-

1. Balance sheet approach – Compensation package which equates or balances an expats purchasing power in the host country with the purchasing power in the home country. For this purpose, companies provide with additional salary. The increased salary includes adjustment for difference in taxes, housing, cost of basic goods & services.
2. Going rate approach – Expat compensation is linked to the salary structure in the host country
3. Lump sum Method – giving a predetermined pay and letting the individual decide how to spend/save the money
4. Cafeteria approach – giving an expat a series of options and letting individual decide how to spend available funds
5. Regional systems – Company creates /sets a compensation system for all expats assigned to a particular region    

Stay Interview - A Contemporary Approach

Author: Monalisa Singh

Coming from an HR background, I know how to write a Letter of Intent or a Company Policy or even a personal diary but writing this blog is my first attempt on blogging in lifetime. 

It was when Ms. Shilpa Shinde, our Professor, instructed us about our next assignment supposedly on blog writing, that I knew that the time has come to take a plunge into it, but then as it would be with any other blogger, being my first blog I wanted to make it special and hence decided to write on a topic which is quite virgin and is still in a germination stage. - STAY INTERVIEW. 

One of the reasons it is special to me was that it conceptualized in my previous company by my team and me.I was first introduced to this concept 4 years back through the Times of India. By then I already had a fair idea of Job Interview, Exit interview, Separation Interview & Visa Interview, as I have conducted a fair number of them but I had no idea whatsoever about Stay Interview.

The idea behind Stay Interview is to know the reason why an Employee would like to continue working with the company. And also to understand the issues an Employee may be facing, get his feedback from time to time while he's still at the job. It helps giving food for thought to the Management as to what may possibly be wrong and the scope of improvement.

These days hopping jobs is a common practice among efficient employees which compounded by huge competition, has created and absolute scarcity of employable employees in the market. Therefore if right measures are not taken in time one could face high attrition in one’s company. 

So it leads to the question how can it be avoided.  My two cents to overcome the above problem would be to follow the golden rule – “Conduct Stay Interviews to Avoid Exit Interviews.”

As an HR expert rightly pointed out, "Asking Employees at the time of quitting, why they are leaving?, is like asking your spouse how to improve a marriage, the day before the divorce is final. By that time it's just too late.

Stay interviews focus on what is going right, rather than what went wrong. It’s a proactive approach. It can help in attracting and retaining the right talent and thus saving cost for the company in terms of eliminating the need and cost of fresh hiring, training etc.

The concept is based on the ‘Hawthorne Effect’, which states that people who are given attention are a motivated lot. As a Manager, to motivate your Employees it is important that you listen to them and show it in some ways.

Employers should use simple and direct questions in stay interviews, and they should be conducted among a sample group that represents a cross-section of the company. 

Ideally, the participants represent about 20 per cent of total staff from different areas of the business and varying levels of seniority. The HRD professionals of the organization & the immediate supervisors should be involved as key partners and facilitators in the process. The interview can include an initial online survey, followed up by a brief face-to-face meeting, which should take no more than 45 minutes per person.

The frequency to conduct Stay interviews should be based on number of employees & type of organization. For a small organization, it could be within three months and for a huge set-up it could be six months. A stay interview should address the following topics:

• the employee's immediate manager;
• the employee's team/colleagues;
• the employee's ability to deal with customers and deliver the required level of service;
• the workplace culture;
• resources and technology;
• knowledge sharing;
• career development;
• improvements to the organization;
• the reason the employee was attracted to the job initially, and does it still apply today; and
• Whether the employee feels the employer's promises are being delivered.

Based on these, stay interview questions could include, but not limited to:

• What is it that keeps you here?
• What might entice you away?
• What are the things you like about your work?
• What do you like best/least?
• Are we fully utilizing your talents?
• What makes for a great day at work?
• What is it that keeps you motivated?
• What is something new you would like to learn this year?
• What can we do differently to best assist you?
• Are there things you would like to change about your job, team or department?
• Has something caused you to consider leaving? Has it been resolved?
• What is one thing that would make your job more satisfying and rewarding?
• Do you feel supported in your career goals?
• Do you feel we recognize you? What kind of recognition would be meaningful for you? 

As pointed out earlier stay interviews not only save costs and keep attrition in check but they also:

• Provide a snap shot of employee satisfaction levels;
• Identify any issues or potential problems as they occur;
• Identify employees who are 'at risk' of resigning and address the issues to prevent their departure;
• Determine whether the organization is delivering on its promises to employees;
• Identify any areas that are preventing employees performing to the best of their ability;
• Provide another mechanism for feedback, which employees value; and
• Provide valuable insight to help proactively address issues affecting staff morale and retention.

While implementing one shouldn’t be apprehensive about what the staff might say. Obviously, one can’t always meet employee’s requests. But one can acknowledge their feelings, mere expressing one’s support and assuring that one will do what one can to explore options, does wonders at times.  As a tip, I will say that one should avoid saying as a representative of the company that you won’t be able to meet their needs in your initial meeting –because for some employees, that’s more than enough to prompt a job search. Instead, promise to review their feedback and give them a timeline for further discussion. Sometimes, employees simply want to be heard.

So rush and ask your employees – “What makes you stay here?” – Before it’s too late

“Rightsizing”

Author: Nrupa Rajhans

“Mise à la Bonne Taille” is a sweet French word for rightsizing, but in reality it is not so sweet, it’s quite sour. Rightsizing means reducing employee numbers so that the workforce is the "right" size for the amount of work that needs to be completed and restructuring with the goal of reducing costs and improving efficiency and effectiveness.

Definition of Rightsizing:

“The process of a corporation reorganizing or restructuring their business by cost-cutting, reduction of workforce or reorganizing upper-level management. The goal is to get the company molded properly to achieve the maximum profit. The term rightsizing is often used by companies instead of downsizing because it sounds less drastic.”

The Objectives of Rightsizing:

·        To ensure that all required functions are properly organized and performed

·        The functions not required are either eliminated or outsourced.

·         The best person is placed in each position.

·        The main objective of rightsizing is to gain control on the cost and to maximize the profitability by using the above objectives.

 Rightsizing can be achieved in an organization by many means such as:

·        Freezing recruitment means to stop recruiting until not required.

·        Releasing the long term sick i.e. suggesting the old people for early retirement

·        Releasing poor performers (Downsizing)

·        By restructuring the organization

Example:

Below is the Hierarchical structure of Sales and Service division Before Rightsizing

And the result After Rightsizing -

With rightsizing used to reduce the number of workforce, will initially improve productivity figures of the organization. This trick gives the link between reducing numbers and productivity and also tells when to stop the reduction of workforce as soon as the productivity improves. Another way of rightsizing includes the closing of nonprofit areas and opening of new areas where the organization anticipates the profits. This may lead to employees losing their job in one area but new job are created in the new area.

Impact of Rightsizing on the remaining employees:

Rightsizing has a severe impact on all employees. The employees who are laid off during the process are left jobless. But those employees who are retained face big challenges. The common byproducts of rightsizing that the employees will have are low employee morale and feelings of job insecurity. If the employees feel that their colleagues have not been treated with dignity, their work performance will often suffer. 

HR’s role in Rightsizing:

HR plays a major role in the process of rightsizing. It has to manage the problem of dismissing a large number of employees in a dignified manner in order to help minimize the trauma associated with rightsizing. Employees who are laid off tend to suffer from depression, anxiety, insomnia, high blood pressure, marital discord, and a host of other problems. Thus, when companies decide that rightsizing is the best course of action, the HR managers should do this work in such a way that it does the least harm to employees and their families. This also includes taking the time to allow dismissed employees to air their thoughts, instead of laying them off quickly and impersonally, and providing assistance in finding new jobs.  

HR’s another major challenge is to deal with the remaining employees of the organization. As there are many negative effects of rightsizing such as less employee trust, feelings of job insecurity, low motivation, etc. To improve these effects, the HR managers should provide the support and guidance which the employees need. HR managers should also communicate with employees regularly to discuss performance and strategies for meeting the goals. In addition, managers should encourage employee initiative and effective communication and also provide employees with rewards for excellent work. By promoting employee initiative and even employee involvement in decision-making, managers can help restore employee trust and commitment and helps to increase employee motivation. Therefore a HR manager should be very smart and alert at the time of rightsizing.