Prelim 2 Study Guide - 11:47:00 PM Lecture 10 Downsizing...

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16/04/2007 22:47:00 Lecture 10: Downsizing Voluntary terminations Quit Retirement Involuntary terminations Discharge: The most drastic termination of employment is involuntary termination, in its most severe form known as "firing" or "sacking". A less severe form is to be laid off or made redundant, which is usually not strictly related to personal performance but economic cycles or the company's need to restructure itself. Layoff: the termination of employment of an employee or (more commonly) a group of employees for business reasons, such as the decision that certain positions are no longer necessary. Remember that not all turnover is bad. Separations in hospitality industry Separation is any form of people leaving through quits, layoff, or discharge. 70% total separation rate in 2004 (# separations / total employment) Cost and Benefits of Separations Costs o Recruitment and selection costs o Training costs o Separation costs o Lost productivity Benefits o Reduced labor costs o Replacement of poor performers o Increased innovation
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o Opportunity for greater diversity Simple perspective : All turnover is bad Modern perspective : Turnover can be managed for greater organizational effectiveness Turnover in hospitality: Blessing or curse? Estimated cost of turnover: o 50% of salary to 1 x salary. This means $36 billion to $73 billion! o Hinkin and Tracey say cost of turnover for hospitality (entry level) jobs was 30% of salary.So about $22 billion Lower turnover isn’t necessarily better. This may be effective for a company. You must manage turnover strategically Predicting Turnover “Prevailing Model” Job Satisfaction + Organizational Commitment -> Turnover intentions= Turnover “Unfolding Model”: Actions and feelings that lead to turnover. Path 1: Shock->Script->Turnover Path 2: Shock->Dissatisfaction-> Turnover Path 3: Shock -> Dissatisfaction-> Job Search -> Turnover Path 4a: Job Dissatisfaction -> Turnover Path 4b: Job Dissatisfaction->Job Search-> Turnover Other Turnover Evidence: Performance and Turnover (Correlation chart) Overall: Performance and turnover are negatively correlated (-.30)
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Relationship is contingent on pay for performance relationship Performance trend matters (what is the person’s performance experience) Strategic Approach to Turnover Determine whether it is a problem Determine why people are leaving Investigate reasons why people stay Develop top-level support Identify targets Ways to Reduce Turnover Routinely assess job satisfaction and organizational commitment Have resources available to make changes Look for common sources of “shocks” Enhance job embeddedness (Spurman is an idiot…this is not a word. I think he means find ways of making each position an integral part of the organization.) Managing Layoffs WARN Act: Requires US employers with 100 or more employees to give 60 days notice (or
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