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Managing job loss and changeover

22 Comments · Business outsourcing

Managing job loss and changeover is assuredly among the most difficult challenges that managers face, no matter what the cause of the upheaval.

It is no secret that most rank-and-file employees in the organization who are likely to be displaced by a business process outsourcing (BPO) initiative are living paycheck to paycheck.

The looming prospect of job displacement as a result of the organization’s decision to outsource is not likely to be met with shouts of joy.

Whether the anticipated job displacement includes termination or shifting responsibilities, the reaction is predictable: Some will rush for the exit, others will cower and hope for the best, others will fight, and some will simply deny reality.

Each of these reactions to the prospect of outsourcing must be managed and, the good news is, each of these can be managed.

A thorough analysis of the costs of a BPO project will include projected job losses and job shifts, and the cost of outplacement and/or retraining services.

Many firms opt for a ruthless strategy during reduction-in-force (RIF) initiatives, bur others have found tremendous value in using a more humane approach. Whatever approach is chosen, a detailed RIF plan is essential to minimize rancor, control the culture, and reduce exposure to liability.

A detailed RIF plan will consider a wide range of factors when identifying the individuals who will be terminated and the procedures to be used to undertake the terminations.

An RIF plan should consider each individual’s skills and abilities and determinations of their relative contributions to the firm.

It would be unwise to simply use an across-the-board RIF strategy if there are promising up-and-comers who would be terminated in the process.

The organization does not want to lose potential future stars to the cost-cutting measures that are part of the BPO project.

An RIF plan is typically developed by the management team in an off-site and secure setting. The list of individuals targeted for termination should be carefully guarded.

Managers’ should receive thorough training on the procedures that will be used with the terminated employees. The Ethics and Governance insert provides a few guidelines on how to develop an RIF plan that minimizes exposure to liability.

The RIF plan should consider the options available to reduce the impact of the displacement for employees. For instance, early retirement programs may be an option for senior employees.

Voluntary buyouts of employment agreements may be used in cases where a contract is in force. Many organizations attempt to obtain a release of potential claims from workers terminated as a result of an RIF.

This will require some form of consideration from the organization, usually severance pay. Other forms of consideration for a release include a reference letter or payment of insurance premiums for a defined period.

Some firms have been able to shift employees from direct employment to contract labor, using them on an as-needed basis. Such an arrangement often works very well both for the organization and for the displaced worker.

Elements of a Defensible RIF Plan
Employers should follow these essential steps when carrying out a reduction in force RIF:

• Decide what criteria will be used to select those for termination (e.g., geography, seniority, line of work, merit ranking).
• Make sure the criteria are followed.
• Be certain that the RIF criteria conform to company policy.
• Have at least one level of review of termination decisions.
• Perform a “disparate impact” review of those chosen for termination to make sure there is no discrimination, even unintentional.
• Document the entire process.
Source: Fair Employment Practices Guidelines, January 15, 2003 (Aspen Publishers).

The RIF plan should also include provisions for assisting displaced employees in their desire to gain new employment. Some firms set up career and psychological counseling services to assist employees through the initial shock.

Many also establish job centers-usually away from the corporate campus- to help employees find new jobs. The job centers provide support in résumé writing, interviewing skills, and job listings.

They may also provide employees with other short-term services such as daycare for parents who cannot afford it without a job, seminars on job hunting, and even training programs to help people achieve new skills for a changed job market.


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