Keeping the Right PeopleMaking the Right Decisions When It Counts

For years now, corporate leaders have been under pressure to increase profits, to “beat yesterday.” One of the ways organizations have been able to improve the bottom line is by reducing expenses. They seek every way to be more efficient, to do more with less. In the late 1990s, Joyce Gioia and Roger Herman saw a sea change happening in Corporate America. That is why they wrote Lean & Meaningful: A New Culture for Corporate America. They saw a shift towards becoming leaner as an ongoing process:

Corporate leaders (must continuously) look carefully at how their companies are organized and staffed to meet tightly focused objectives. . .To get lean and stay lean, some organizations will have to continue their reengineering efforts.

The authors expected a continuing and consistent drive for ever greater efficiency. Therefore, it is not surprising that we continue to see thousands of workers let go, while job creation continues apace. The challenge for organizational leaders is to keep the “right” people, while reducing the workforce by the others. Another challenge for organizational leaders is the millions of

workers eligible for retirement. Who must be kept and who can we afford to see leave?Most of us remember the horror stories about AT&T and SBC. Both corporations offered severance packages to so many of their experienced, tenured employees that they had to hire back those same workers as consultants at a significant premium.

The purpose of this Executive White Paper is to help you avoid the pitfalls inherent in by any reduction in force (RIF). If you are not able to retain the right people, while transitioning out appropriately the people who are not the right ones to keep, the re-engineering may actually cost the organization more than the money that was expected to be saved.

Fortunately, we live in an age of technology, in which Human Resources leaders have new tools to capture decision and transition data through on-demand software applications, resulting in millions of dollars in savings and the ability to retain the best talent.

In the process of identifying those “right” people, there are several issues to be explored. This paper is intended to help you in your examination, then introduce you to the valuable, new tools that will provide greater efficiency in your course of action.

History and Overview of Employment Situation

Introduction

Retiring Workers Create Skills Gaps

51% of survey respondents answered “YES” when asked “Will retirements cause a knowledge/skills gap?”

Many organizations are also aware of just how they will be hurt by these large-scale retirements. Sixty four percent expect to see “reduced productivity/production capacity,” while 53% expect to see a decrease in the “quality of work,” as less experienced workers replace those who retire.

Not surprisingly, the sectors expected to be hardest hit by this retirement wave are healthcare, government, utilities, manufacturing, and financial services. These industries have the oldest median ages and most have long-acknowledged that this day was coming. Later in this paper, we will address the most effective solutions for handling this critical aging workforce crisis.

When one is considering any (RIF) for any reason, there are some important issues to consider. It is imperative to explore these issues, so that we make the right human capital decisions.

Corporate leaders (must continuously) look carefully at how their companies are organized and staffed to meet tightly focused objectives. . .To get lean and stay lean, some organizations will have to continue their reengineering efforts.

In Knowledge Infusion’s 2010 Talent Readiness Survey, the results were clear. Many organizations in United States simply do not have the talent in their workforces to maintain performance in the face of Baby Boomer retirements.

Issues to Consider

Originally developed in United Kingdom in 1922 by Sir Ian Hamilton, the concept of “span of control” comes from the assumption that managers have finite amounts of time, energy, and attention to devote to their jobs. When he examined studies of British military leaders, Hamilton found that the optimum for one person was no more than three to six direct reports.

Number of Reports.

What is the optimum number of persons reporting to one individual? The answer now is, “It depends.” It depends on the level of the leader, whether the reports must interact with each other, and how many people report to each of those folks.

Consultant D. Kevin Berchelmann echoes Hamilton’s research: “Research (mostly military-based) has shown that a leader can directly control about three to six persons effectively.” Management books used to tell us that the optimum number of reports for a manager was seven or eight. More current thinking is fewer, especially if those folks must interact with each other and each has people reporting to him/her.

In their book Industrial Management, George P. Hattrup and Brian H. Kleiner note “the addition of a fifth subordinate under one manager raises the manager’s potential interactions from 44 to 100, while the addition of an eighth subordinate increases the potential interactions from 490 to 1,080.” Common practice is to overload managers and supervisors with reports, then wonder why they are not performing to standard.We urge our clients to avoid this pitfall.

On the supervisory level, most supervisors can comfortably lead five to seven people working independently, as long as each does not require a lot of time and attention.

Span of Control

Track Record of the Individual as a Leader.

Has the person excelled in the past? Track records are important, because they are often excellent predictors of future performance. In considering any reduction in force, for those who will remain, we will probably need to “shuffle up” the remaining supervisors and managers to cover the front-line employees we keep. When we look at track records, we need to keep in mind the historical number of direct reports versus performance, because we may need to increase or reduce that number.

Changing the Number of Direct Reports.

When we consider changing the number of direct reports, we must consider . . .

First, can the individual handle an increase in the number of direct reports without losing productivity or burning out? We suggest to our clients to exercise caution when expecting more for managers and supervisors after a reduction in force. This time is particularly sensitive for the organization. The organization is especially vulnerable to employee turnover at all levels.

One the other hand, we still need to maintain certain levels of productivity. Can we expect a higher level of productivity or performance from this supervisor or manager, if we reduce the number of direct reports?

Sometimes when reducing headcounts, e.g., a facility closing or an outsourcing, companies ignore performance and inadvertently lay off top performers.

Common practice is to overload managers and supervisors with reports, then wonder why they are not performing to standard.

Performance

Expectations. If the individuals are not currently meeting the performance expectations of their supervisors or managers, our decision-making process might be easy. People who are not performing up to the standard expected seem the most logical to eliminate first. But wait! We have a lot more to think about.

Sometimes, we have excellent workers whom we have transferred or promoted into the wrong jobs. In his book, Right Person, Right Job, author Chuck Russell sums up the situation, “The tragedy is that such underperformance is accepted as being normal.” We would add, “until the organization is evaluating a reduction in force.” However, through psychometric assessments, we can determine the correct job for each person, insuring that we are always optimizing performance. Happily, we see an increase in the number of organizations embracing this technology.

Knowledge, Skills, Attitude, Environment. Once we determine that people are in the right jobs, if they are still not performing, the reason is usually one of four: Either they do not have the knowledge that they need or they do not have the skills they need or they need an attitude adjustment or we need to change their environment.

If they do not possess the knowledge they need, we must educate them; if they need better or other skills, we respond with training; if an attitude adjustment is in order, we must give them counseling; and if the environment is the problem, the solution is to change the environment.

Setting the Bar Appropriately.

One of the most difficult challenges for supervisors, managers, and executives is to set the bar at the right level for each employee. Even in the same role with the same responsibilities, often “one size does not fit all.” So what is a supervisor to do? Setting individual goals and expectations must be a joint effort between the employee and his or her direct supervisor. And both parties must agree that these are the right levels to expect. Otherwise, the situation is a set up for failure.

Higher performance.

Occasionally when there is a RIF, we can expect higher levels of performance. However, it is important not to expect these higher levels too soon. There is often a “period of adjustment,” as folks get used to their new circumstances―no matter what they are. It is also imperative that if we expect higher performance that we support it with the tools and equipment, coaching, or information required.

Performance as an issue to consider in evaluating who stays presumes that we have an effective and consistent means for assessing the performance of each individual employee. Most organizations have such a system in place, however its effectiveness and/or consistency is sometimes in question. Sometimes when reducing headcounts, e.g., a facility closing or an outsourcing, companies ignore performance and inadvertently lay off top performers. Obviously, enlightened employers will choose to avoid this pitfall, if at all possible.

Productivity

Productivity is not performance, though the two are closely related. We can have employees who are very productive, but the quality of their performance may not meet our expectations. On the other hand, we can have employees who deliver high performance, yet low productivity. That’s why it is important to discuss each separately.

Measuring productivity.

This area may be as easy as examining the output of a worker, i.e., the number of . . .characters of data stroked or functions performed or calls completed or widgets produced. However, for many jobs this process is not that simple.

How do we measure the productivity of an administrative assistant? Or a receptionist? Or even a marketing assistant? Our suggestion is to have leaders focus on a finite list of tasks to be completed and in the words of Bruce Tulgan, author of numerous books on the generations, “It’s okay to be the boss.

Meeting Productivity Expectations.

Sometimes when people are not performing up to productivity expectations, it is because they are hampered by business processes that don’t work as well as they could or because they need training or education. Sometimes coaching from the individual’s supervisor or manager can make a difference. Particularly in these tight labor market times, it is vital that we give employees as much support as possible, before we dismiss them as being “inadequate.”

Higher Productivity in The New Circumstance.

Since we are reorganizing the employee population to operate more efficiently, once the dust settles after reorganization, we generally will expect higher productivity. The key is that we must also be aware that we must honor the period of adjustment.

Caveat.

We must also remember that during and after the period of a RIF, though “the show must go on,” we must be more sensitive to increases in the needs for supervisors and managers to communicate with their people, so everybody’s productivity may suffer a bit.

The Best-Kept Secret in ManagementMost often, our direct reports have great ideas about to optimize productivity or “fix” a broken process. However, too few supervisors, managers, or executives take the time or make the effort to ask employees for their ideas and solutions. Front-line employees are the most ignored resource for innovation.

Compensation

Competitive Pay

In our research for the book How to Become an Employer of Choice, we asked thousands of employees to describe the salary they would expect to receive from a preferred employer. We anticipated that respondents would say, “A preferred employer will pay me ‘top dollar’.” However, overwhelmingly the results reflected a different message. Employees said, “Pay me what I’m worth; pay me a fair wage”.

Pay for Performance

In this Employer of Choice® research, these same respondents had a very strong response when asked about the importance of “pay for performance and/or merit.” Today’s employees have clear expectations of receiving bonuses for doing an outstanding job. Thus, we also recommend that employers pay for higher performance.

Appropriate Salaries

At the same time we want to be sure that we are paying people enough, we also make to make sure we are not over-paying for the job that is done. A time of reorganization and restructuring is an excellent time to take stock of the salaries and benefit packages we provide to employees, to compare these levels to the industry standard.

Many industry associations gather this valuable compensation information from their members. In some industries there are companies that perform this valuable research function. It is usually cost-effective to buy this data to insure that your compensation levels are appropriate.

Valued Talents/Abilities Warrant Special Treatment

Often some employees possess certain talents and abilities that make them particularly valuable to the firm, now or in the future. Not only do we want to make sure that these folks are treated in a special way, i.e., being exempt from RIF consideration, but we also want to pay special attention to the compensation for these valued individuals. During this time of vulnerability for employers, it is imperative that they retain these special employees. Losing them at this critical time will have significant consequences.

Thought leaders of the workplace community belong in this special category, as well. These are the folks that other employees respect for their perspective and wisdom. We urge our clients to identify these special people and make sure that they pay special attention to communicating with them. These thought leaders have a kind of informal power and clear influence that may be used to the company’s advantage, during the time of reorganization. We urge you not only to respect their power and influence, but to capitalize on it by including them in the decision making process whenever possible.

These days, employees look at their total compensation packages, when evaluating a prospective employer. The current rule of thumb is that benefit packages at least 15 percent of salary. That’s why it is important for us not only to look at salary, but to consider other forms of compensation as well.

Redeployment

Intellectual Capital

Sometimes, particularly older workers possess intellectual capital that the organization needs to retain. One of my favorite stories about the value of intellectual capital was shared by a leader of Vurv Technologies at a recent customer conference. He told the audience about a manufacturing facility he toured. He overhead one of the crews having a problem with a machine. “Go get Jim,” said one of the men. He knows just what to do when the machine sounds like this. About five minutes later, a fellow with white hair and broad smile showed up. Within two minutes, he had made the slight adjustment needed and was on his way. Nobody suggested that he teach anyone else what to do.

What happens when someone as valuable as Jim retires, or worse, is laid off, during a RIF? The organization that does not plan to hold onto such a person is shooting itself in the foot.

Handling Redundancy

Often when there is a redundancy of people for the jobs to be done and both are highly valued, you must find another position for the number two person. Here’s a simple list of suggestions offered to save you time and money and make your process easier.

Don’t ask employees to go through any unnecessary interviews or selection process for the alternative positions. Do arrange a meeting between the employees and their new leaders.Make an offer of suitable alternative work:

With similar status.Within the employee’s capability (or trainability).Not cause unreasonable additional inconvenience.Provide similar earnings.

Give employees a specified trial period in their new positions, which may be extended for any necessary training.

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Strategic Workforce Planning

Obviously, it would be ill-advised not to think about the organization’s future workforce needs. As the organization grows, it will need the services of different types of employees with different skills and abilities. Sometimes those needed employees are very expensive or even impossible to recruit. Be sure to take into consideration the company’s strategic plan and which skills and abilities the company will need to insure its success.

Letting go of people whose talents will be required within the next year, or possibly two, will not serve the long-term profitability of the enterprise. With labor markets tightening, we must remember the costs of recruiting and replacement, whenever we are considering who goes and who stays. (See page 00 for information about Workforce Monitor, a tool that will help you automate this process.)

Concurrent to the decisions about who to keep, should be determinations about redeployment. When considering redeployment, there are various concerns to consider. It just makes good business sense to redeploy employees whenever possible; both time and money has been invested in acclimating and training these employees.

Don’t ask employees to go through any unnecessary interviews or selection process for the alternative positions. Do arrange a meeting between the employees and their new leaders.

Cost of Replacement

Hard Costs of Replacement

Marketing costs to attract applicants, including newspaper and magazine advertising, recruiting literature, internet bulletins, staffing agencies. [For additional information on marketing techniques to attract workers, see Get the Best by Catherine D. Fyock]Cost of hiring new employees—screening, interviewing, drug, psychological, and skills testing, background checking, administrative (drop/add paperwork for employee benefits) processingRelocation expenses, including travel for interviews and house-hunting.Onboarding, including orientation and training and buddies and sponsors’ timeCost of overtime work required from regular employees to fill-in (easily measured, however don’t forget “hidden” costs like the extra costs of Social Security due to increased paycheck amounts. Lost production due to slower new employees; new employees will never be as productive as their experienced predecessors. Don’t forget to include the affects of lower productivity, like potential of lost sales, disgruntled customers, and irritated and impatient existing workers who just want to get their job done.Increased safety concerns with new employeesExpense of equipment and facilities not used/under used/improperly used. Maintenance and repair of tools, equipment, and facilities is a measurable costIncrease in unemployment insurance premiumsAdditional HR staff needed in human resources to manage exit interviews, follow-upAdministrative costs of excessive uniform issue, cleaning, collectionCost of executives’ time participating in meetings about reducing turnover

Soft Costs of Replacement

Unhappy customers due to inferior quality/service and related to that…Continuing initiatives to establish and re-establish customer relationshipsAffect on reputation in the field—customers ask “Will this company have the capacity to serve me?”Low employee moraleDifficulty recruiting to company with a reputation for high turnoverStress suffered by managerial and supervisory staff resulting in creased absenteeism and lower productivityWorkers’ resistance to new and untrained workersConstant efforts to build and re-build ever-changing teamsLack of corporate cohesiveness new employees must be acclimated to the cultureIncreased costs of promoting and maintaining corporate cultureInefficiency due to people not knowing systems, procedures, where things are.

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The cost of employee replacement is a significant to bottom line issue for many organizations. Employee turnover and the attendant replacement cost United States employers literally trillions of dollars every year, trillions of dollars that could have meant bottom line profit. Your careful analysis of the costs of replacement will support the spending necessary to prevent these significant expenses.

We could write an entire white paper on calculating the high costs of turnover; and in fact, we have. This section of this white paper hits the high spots that must not be overlooked.

Employee turnover and the attendant replacement cost United States employers literally trillions of dollars every year, trillions of dollars that could have meant bottom line profit.

Compliance Issues

We live in an increasingly litigious society. “The emotional disappointment and shock at being laid-off (often for the first time) have caused employees to challenge layoff decisions in court like never before. In the reduction-in-force (RIF) process, we must insure that we eliminate even the appearance of discrimination. This section is included merely to provide an overview of important compliance concerns. It is also important to note that laws and requirements vary by state. If there is any question whatsoever, we urge our clients to consult an employment law professional.

Anticipate Questions to Prevent Liability

To operate in full compliance, employers must proceed with RIFs in a way that minimizes legal liability. If a RIF is challenged in court, there will be questions. The key is to have good answers to those questions that defend the organization’s position. Here’s a partial list of questions.

What economic circumstances required a RIF?

Did the employer attempt to reduce its workforce with a voluntary exit incentive program before laying off workers, and if not, why not?

Did the layoff selection process focus on positions or personnel (i.e., did the selection process attempt to select the best employees or to identify the necessary functions that should be retained)?

Who was responsible for deciding which employees would be laid off, and who was involved in making recommendations that led to the decisions?

What criteria were used by managers in selecting the persons who would be laid off?

What role did previous performance evaluations play in the selection process?

What safeguards were used to ensure that the selection of employees for layoff was consistent with the established criteria?

These are just a few of the questions employers can expect to receive, if a RIF is challenged in court. Forewarned is forearmed. Using a tool to insure this compliance is simply the smart thing to do.

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Ten Steps to Reducing your Vulnerability

Review and study existing policies and practices that affect the RIF process.

Confirm and document business reasons for your RIF. Identify the person(s) best qualified to testify about the RIF process. if it is challenged. Consider whether the business reasons for your RIF need (or would benefit from) outside/third-party validation.

Consider alternatives to the RIF such as voluntary resignations as part of a buyout package.

Analyze your workforce for selection decisions and post-RIF effectiveness, thus identifying the potential pool of affected workers.

Develop appropriate selection criteria. Decide the role performance does/should play. Consider other factors: discipline, attendance, seniority, and future-potential.

Conduct a review of the impact of the above potential selections; preferably this review should be with an attorney in which the communication will be privileged. Are identified workers in protected categories adversely affected? These protected categories include age, race, creed, color, religion, disability, gender, nationality, etc., plus any state-law-protected category such as sexual orientation. If certain “objective selection criteria” have substantial disparate impacts, can the criteria still be defended? Should the selection criteria be changed?

Develop and implement a separation plan; include training for managers and decision-makers and obtaining valid releases and waivers. The statutory and court imposed requirements for valid releases change frequently. The proposed release needs to be reviewed by knowledgeable counsel, even if it was used for a prior RIF.

Carry out the termination process, including compliance with any applicable federal WARN (Worker Adjustment and Retraining Notification) Act requirements or state reduction-in-force notice statutes.

Give notice and include critical communication obligations, including any mandatory notices to government offices or officials.

Make sure you are properly documenting all aspects of the process. Also be aware of the possible aspects of inadvertently negative documentation, especially in e-mails. (See page 00 to learn about how Decision Manager can help eliminate this liability by providing a compliant format for this documentation.)

Caveat: One of the greatest challenges in protecting the firm’s liability is documentation, in particular e-mails between managers discussing individual workers or the application of selection criteria. Often these e-mails don’t match what Human Resources requires or would find acceptable. It may be wise to prohibit such e-mail communications between managers, unless they are previewed by Human Resources or legal counsel.

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To prepare this section, we consulted the Chair of Littler Mendelson’s Corporate Legal Compliance Practice Group Garry Mathiason. Here is a simplification of the firm’s step-by-step method for insuring compliance:

The Value of Maintaining Diversity

One of the benefits of being in compliance is that it often results in a diverse workforce. Diversity is important, not only because our most talented young people demand it, but also because it benefits the organization by providing a variety of perspectives. These diverse perspectives support innovation, one of the accepted keys to long-term profitability.

When reorganizing after a merger or acquisition, it is also important to take into account the diverse cultures, as well as the intellectual capital both groups possess. Having a balance of folks from each of the cultures also benefits the firm in the long run.

In the past, Human Resource professionals had to consider all of these issues using only their brains and calculators and hope that they were in compliance. Now, it’s different.

Develop and implement a separation plan; include training for managers and decision-makers and obtaining valid releases and waivers.

Decision-making Tools

Now HR Leaders have new tools to capture decision and transition data through on-demand software applications, resulting in millions of dollars in savings and their ability to retain the best talent.

By tracking retention, redeployment, and separation decisions that a manager makes on every employee-and every transaction that occurs as a result of that decision-a company can, for the first time, optimize its workforce, its single largest expense.

Unfortunately, in many, if not most, organizations, the Human Resources function has not installed adequate information systems to manage and track those decisions and their impact on the organization’s human capital position. In general, this “lack of visibility hampers control over workforce decisions and transition economics.” More specifically, the result is that whenever the company hires, transfers, or separates employees for any reason, “the often substantial direct and indirect costs of those decisions and transitions are invisible and overlooked.” This (ineffective) management control over human capital is not only inefficient; it also puts strategy execution at risk. . ..”

Here are the recommendations of the Aberdeen Group:

Collect automated baseline data on employee demographics and capabilities, such as competencies, performance evaluations, compensation classifications, salary histories

Collect automated data on decisions that cause employee transitions, such as hiring, transfers, promotions, and voluntary/involuntary separations.

Maintain a consistent data and policy framework to ensure an optimized and consistent talent pool and capture the true operational characteristics of the workforce

Develop analytic tools and dashboards to evaluate impacts of enterprise workforce decisions and transitions arising from daily operations or from a proposed or completed event, such as a merger, outsourcing, downsizing, or new product division.

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Vurv Optimize

Vurv Optimize provides decision support, automation and compliance for workforce integration and restructuring events as well as offboarding employees on an ongoing basis. Handling mergers and acquisitions outsourcing events, retirement programs, reductions in force, ordinary course terminations and voluntary separations, our application enables faster, more effective and auditable decisions around retaining, redeploying or separating employees. Delivered over the web, Vurv Optimize provides human resources, legal and management teams with tools to identify duplicate roles and positions, rapidly perform skills-based and performance-based assessments, model integration, separation and redeployment scenarios, preview post-transition talent pools, and support compliant, fact-based decisions.

Vurv Optimize is a robust, flexible solution, featuring increased transparency, greater compliance control, improved process workflow, and seamless integration. The software allows the user to systematically identify and retain the right people, saving the company millions of bottom line dollars.

Vurv Optimize allows the user to systematically identify and retain the right people, saving the company millions of bottom line dollars.

Transition Management

In any personnel change, Vurv Optimize allows the leveraging of technology to automate the process of transitioning employees out of the business, including elimination of spreadsheets, reduction of processing errors, reduced liability, faster off-payroll times, shrinks the number of people needed in Human Resources administration. The business drivers for using Vurv Optimize in transition management are compliance, process/financial improvement, mergers and acquisitions, reductions in force, and outsourcing.

Talent Management

Vurv Optimize may also be used to make day-to-day talent management more cost-effective. In this case, it leverages

decision support technology to make better enterprise-consistent retention, redeployment, and separation decisions. The company will therefore retain the right talent, reduce its hiring costs, lower its separation costs, and align talent against business needs. The business drivers for using Vurv Optimize in talent management are competing war on talent, working with the aging workforce, supporting talent retention, and aligning talent to business.

Applications of Vurv Optimize

Voluntary Events (early retirement, alumni)

Through automation, the software simplifies the offer process, allowing the user to maintain strong relationships with alumni, gain real time acceptance visibility, process payments faster, and shorten time to return on investment.

Mergers and Acquisitions

During mergers and acquisitions, two elements are particularly important: planning and speed. The system pre-analyzes integration scenarios and allow for faster integration, thereby realizing significant payroll and administrative cost savings. It identifies duplicate roles and key positions, thus helping to justify decisions (always in-compliance, fact-based). Most importantly, this analysis, speed, and planning helps to facilitate the integration of cultures.

This systems is valuable in any employee realignment, which basically covers all workforce transitions. However, they are especially helpful during:

Outsourcing and Offshoring

These days, most medium- to large-size organizations are constantly looking at the value of outsourcing and offshoring. These systems allow the user real time visibility into existing talent and quick identification of employees in duplicate roles. By helping to identify opportunities for internal mobility, the company is better able to retain and redeploy key talent and avoid losing linchpin employees, while maintaining goal alignment. The bottom line is increased global efficiency.

Reductions in Force (RIFs)

The greatest vulnerability the organization faces is associated with RIFs. Vurv delivers delivers defensible decisions particularly covering the company for WARN, EEO, Adverse Impact, Diversity, Age Distribution, ADEA, union labor contracts, SOX 404 policy situations. Faster decisions and execution result in huge payroll savings. The company keeps its most productive and valuable employees. Compliance is achieved, in part, through the retention of auditable, date stamped records. Costly “boomerangs” and alumni contractors are avoided, while retaining important relationships. This system assist the company in the proper coaching of management, so that there is greater control of the separation/offboarding experiences.

Moving from 100 to 300 separations per day reduced the total execution time by 47 days and saved the company millions in payroll.

Results Achieved

Some major household names have achieved significant savings through the use of this valuable system.

$12 Million in Severance Expenses Saved

Using Vurv Optimize, one of the nation’s top mortgage lenders redeployed 3,000 employees into other positions inside the organization. Originally planning a 10,000 employee reduction, the company saved $12 Million in severance packages by effectively decreasing the reduction-in-force to 7,000 workers. The HR administration team of four people was also able to increase productivity by 200 percent using the software. Moving from 100 to 300 separations per day reduced the total execution time by 47 days and saved the company millions in payroll.

$3.2 M per 1,000 Separations Saved

In order to avoid post-9/11 bankruptcy (like several of its competitors faced), the world’s second largest airline reduced operating costs by executing a large voluntary and involuntary reduction–in-force program. They used Vurv Optimize to manage the programs while retaining top talent, mitigating risk, and improving HR efficiency. The airline saved $3.2 Million per 1,000 separations by reducing the decision and execution time by 16 days (16 days less than planned on payroll). They also saved an estimated $150,000 per 1,000 separations in administrative costs. This decrease in cost did not include significant cost avoidance from probable litigation and legal costs, recruiting/replacement costs, and processing errors.

$360 Million in Annual Payroll Costs Saved Just 9 months after its spin-off from the parent company, this telecommunications giant lacked company-wide retirement programs and policies. Using a self-service portal in Vurv Optimize, the company offered a voluntary retirement program to 14,135 eligible employees. Twenty-six percent (3,661 employees) accepted the voluntary retirement offer, were processed, and removed from the payroll in just 30 days. The acceptance rate surpassed their goal. In a company-wide broadcast soon after the program was over, their chairman and CEO called the program “a great example of how we can use technology as a powerful, strategic tool” and added, “it serves as a model for all to follow.”

The clear message is that languaging in press releases is important. “Layoff news releases without reference to concern for employees can leave the wrong impression,” says Amme.

Ready to RIFHow to Maintain a Positive Perception of the Organization

Former news anchorman and media/crisis communications expert Rick Amme offers some sage advice about communications during this sensitive time. “You can’t be too sensitive with closings and layoffs,” says Amme in the title of his monthly column. He cites the example of a large corporation that was preparing to close a plant. Criticizing the company for insensitivity toward its workers, a local newspaper columnist noted the absence of “words (like) ‘regret,’ ‘sorry,’ or ‘pain’ in the carefully worded statements. It seems as though nobody bothers to pretend that they care about the formerly loyal workers.” The clear message is that languaging in press releases is important. “Layoff news releases without reference to concern for employees can leave the wrong impression,” says Amme. Here’s his advice about crafting appropriate press releases. “A closing or layoff announcement generally should contain three major components:

Brief statements of what is happening and why.Expression of concern for employees and what will be done on their behalf.More detail on why all of this is happening.”

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“Conversely,” he continues, “I . . .found many sympathetic references to employees. Almost all news stories reported the company’s expressed hope that it could find a buyer for the plant who would also hire the workforce. In two interviews, the company spokesperson said of employees, ‘They’ve done a great job today, and they’ve done a great job over the years, and it’s always difficult when you tell employees that you’re not going to have an opportunity for them going forward even though they’re doing a good job for you. So it’s just very tough.”

On television, the company spokesman said, “Anything we can possibly do to help make the process easier for them to get reemployed we’ll do.” “That is hardly a company not expressing concern,” adds Amme. He also counsels companies to brief “workers on the closing and efforts on their behalf before announcing the shutdown.”

Here are Amme’s basics of the layoff communications process:

Avoid a “bolt from the blue” for employees.

Plan scrupulously.

Tell supervisors first.

Communicate fast.

Notify personally.

Communicate the news as though their mother has died.

Give employees a senior official to yell at or cry with.

Provide all the transition benefits you can afford.

Put benefits in writing.

Prepare messages and Q&A’s.

Notify stakeholders before telling the media.

We urge our clients not to even consider a RIF, unless they are prepared to follow this blueprint.

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We have some additional advice to add to Amme’s recommendations. Break the news with honesty and integrity. First, be sure to talk about how you will “take care” of those being laid off. Second, keep all your promises. Finally err on the side of kindness, whenever possible. It will reap great long-term rewards.

First, be sure to talk about how you will “take care” of those being laid off.

Establish an Alumni Association

Establishing an alumni association is a very significant and important move. As the employment marketplace heats up and skilled workers become even more difficult to hire, your alumni association may prove to be your competitive advantage. Establishing an alumni association is a great structure for staying in touch with former employees, in a way that provides benefits to all.

Here are a few recommendations we make to our clients who want to start an alumni association:

Put former employees on your newsletter distribution.

Schedule alumni events.

Consider what low- or no-cost (to you) benefits you can offer to these folks.

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Humanely Transitioning People Out

Other Solutions for Transferring Intellectual Capital

One way is to have the younger employees interview older workers and record them on audio. The younger employees love it, because they feel like news reporters and the older workers like it, because they feel like celebrities.

Another interesting idea is to videotape older workers doing the job and talking about what they are doing. In other words, you are making a documentary of optimum job performance before your experienced workers are gone. Start early (at least six months) so that you have a chance to film everything that might happen. Keep the video camera handy, especially in crisis and stressful situations.

Third, schedule regular times for older workers to teach younger workers. Sometimes the older workers are reluctant. You may need to acknowledge them for who they are and what they bring to the table and let them know how vital these sessions are to smooth running of the operation upon their departure. This kind of structured knowledge transfer will serve everybody involved.

Finally, train your mentors and mentees. Many of us never had mentors; or if we did, it was very long ago. You want all of your mentors and mentees to be clear about their responsibilities in the relationships so that they serve everyone involved.

The best way to transfer this intellectual capital depends on the job, the skills needed, and the people. See what will work for you

In cases of early retirement and other workforce realignments, it will be important to transfer the intellectual capital, before you lose your experienced employees forever. Here are some tactics that we recommend to our clients to help them transfer their intellectual capital from their older, experienced workers to their younger, less-experienced employees.

Intec Corporation, headquartered in Houston, Texas, links its 500 engineers worldwide through an electronic library. Similar to a list serve, this system allows their young “Hot Shots” to ask questions of their older associates. The difference is that the questions and answers are recorded for posterity.

Lean & Meaningful: A New Culture for Corporate America, Herman and Gioia, Oakhill Press, 1998. “Managing Talent in the Face of Workforce Retirements” by Adam Miller and Mike Brennan, Talent Management Magazine, Vol. 3, No. 2, February 2007, p. 44. Ibid, p. 45. “Span of Control”, Encyclopedia of Small Business, January 1, 2002. “Span of Control”, D. Kevin Berchelmann, May 16, 2006. Industrial Management, George P. Hattrup and Brian H. Kleiner, Institute of Industrial Engineers, 1993, p. 28. Right Person, Right Job: Guess or Know, Chuck Russell, HRD Press, 2003, p. 5. It’s OK to Be the Boss: The Step-by-Step Guide to Becoming the Manager Your Employees Need, Bruce Tulgan, Collins, 2007. “Management Redeployment”, Redundancy Help, http://www.redundancyhelp.co.uk/MgtReDe.htm, 2007. “Reduction in Force”, Chapter 16, The National Employer, 2007/08 Edition, Littler Mendelson, p. 1089. Ibid. pp. 1089-1090. Interview with Garry Mathiason, J.D., Chair, Corporate Legal Compliance Practice Group, Littler Mendelson, PC, May 16, 2007. “Flying Blind with Human Capital,” David Foster, Aberdeen Group Perspective, May 8, 2006, p.1. Ibid, p.3. “You Can’t Be Too Sensitive with Closings & Layoffs”, Rick Amme, Business Journal of the Greater Triad Area, May 2007. “Crisis Management : How to Communicate a Closing or Layoff : Crisis Communications,” Rick Amme, May 2007, http://www.amme.com/article.php?SessionID=&intArticleID=186 Sun Microsystems Alumni Association Web site, http://www.sunalumni.com/about.html.

End Notes

Conclusion

Using Vurv Optimize will help you make the right decisions. You will be more consistent so that you may stay in compliance. You will be able to separate people in a more timely manner, saving thousands, if not millions of dollars. You will be able to painlessly reduce the HR headcount needed to manage events. And of course, you will drive more profit to your bottom line.

Vurv is a leading provider of on-demand strategic workforce management solutions that enable organizations of all sizes to differentiate themselves through their people. The Company offers a comprehensive set of integrated software modules that provides solutions for recruitment management, onboarding/offboarding, performance management and compensation management. Vurv’s software not only helps companies attract, hire and retain employees more efficiently, but also helps them manage their entire workforce throughout the employee lifecycle. Through the use of Vurv solutions, organizations can increase the quality of their workforce, improve efficiencies and significantly reduce administrative costs, improve regulatory compliance and more effectively manage and measure their workforce productivity.

Vurv’s applications target the needs of corporate human resources departments of all sizes as well as staffing and recruitment firms. The company’s applications are sold individually as “best-of-breed” applications or as part of an integrated strategic workforce management suite. The Company also offers strategic business consulting, global deployment and technology integration services related to its products.

About Vurv

Vurv’s on-demand solutions are designed for access through the Web with no hardware necessary for deployment by the client. Each of the company’s applications is highly configurable to allowing customers to create unique workflows and functionality without the need for customization of the source code. In addition to meeting unique customer needs as individual applications, Vurv’s products can work seamlessly together to provide customers a comprehensive strategic workforce management suite.

The company currently has more than 2,000 total customers including over 300 large, enterprise customers. Selected enterprise customers include Aetna, Boeing, BearingPoint, HSBC, L.L. Bean, Singapore Airlines, T-Mobile and Wynn Resorts.

www.vurv.com