Do you know how to effectively deal with succession planning, downsizing and other departures?
Managing a big workforce is often a very difficult task. In order for your organization to thrive in the long-term and retain qualified individuals, a roadmap must be laid for what the organization will do in the future to maintain success. By setting in place a succession plan, an organization will better understand who will be best suited for key positions within the company. Through succession planning, the organization can identify and recruit talented individuals while at the same time developing their knowledge, skills and abilities through training and development. After establishing future goals, being prepared for the unknown such as dealing with downsizing, handling terminations, planning for retirement and addressing employee turnover are all key factors that need to be carefully examined.
Before you begin restructuring your organization, it is important to think over the following questions:
Succession planning is a process where an organization ensures that employees are recruited and developed to replace each key role within the company. By generating a succession plan, you will be able to identify and recruit talented employees, and further develop their knowledge, skills, and abilities for future advancement and promotions to more challenging positions. Having a succession planning process is important for any organization because as a firm expands, loses key employees or has employee promotions within the company, succession planning ensures that you have sufficient employees to fill positions within all levels of the organization.
Step #1 – Identifying key positions or key groups (current/future)
Step #2 – Identifying competencies
Step #3 – Identifying and assessing potential candidates
Step #4 – Learning and development plans
Step #5 – Implementation and evaluation
While planning for retirement is an individual’s responsibility, many organizations provide retirement plans or other support to their employees as part of a benefits package. Many employees are choosing to work later in life.
Planning for retirement is important because employers are providing their employees with an income when they are retired and are not earning an income from working. The retirement plans can be set up in a variety of ways that will form a guaranteed payment. Retirement plans usually involve both the employer and employee to contribute money into an account while employed so that they will receive benefits upon retirement. The employers can help their employees plan for retirement by educating them on retirement plans workshops, and any retirement plans offered in the organization.
The Ontario Government announced the elimination of mandatory retirement at age 65, effective December 2006.The implication of the elimination of mandatory retirement is that some employees may wish to extend their employment beyond their 65th birthday. It is important that anyone wishing to stay beyond age 65 inform their department/organization well in advance in order to ensure that appropriate planning can occur.
Federally-regulated employers no longer have a mandatory retirement age; in 2011 sections of the Canadian Human Rights Act and Canada Labour Code that permit employers to force employees to retire once they reach a certain age, regardless of their ability to do the job, were repealed.
For most employers, it is going to be a challenge designing a compensation and benefit package with having four different generations working in the company. It is important to design a compensation and benefit structure that addresses the unique needs of each demographic group.
It is important that companies understand the details of their pension plan, whether it is a defined benefit or contribution or simply an RRSP program before considering design changes. Employers must be careful when providing employees with a pension plan so as to not only offer contributions to an RRSP. This often leads to employees not being able to retire.
Some common retirement plans are:
Pension plans are classified as defined benefit or defined contribution according to how the payments are determined.
REGISTERED RETIREMENT SAVINGS PLANS
A Registered Retirement Savings Plan or RRSP is an account that provides tax benefits for saving for retirement. The RRSP is not based on the employer/employee relationship. RRSPs can provide ways to save money for retirement and defer and reduce taxes because:
RRSP accounts can be setup as either:
Public pensions and benefits that individuals might be eligible for:
Continued focus on employee turnover is of critical importance, because of the direct relation of turnover to improvements in labour costs and customer satisfaction.
Employee turnover is the normal process of replacing one worker with another for any reason. While there is some employee turnover that may be healthy for organizations, excessive employee turnover can be extremely costly and will negatively impact revenues and productivity.
Questions that are important to consider when it comes to employee turnover are:
Companies often take a deep interest in their employee turnover rates because replacing workers can be a costly part of doing business. When a company must replace a worker, it incurs direct and indirect expenses. Moreover, constant and regular turnover not only reduces employee morale and productivity, it shows big problems ahead for the organization
The many costs associated with employee turnover can include reduced productivity, recruiting and hiring expenses, training programs for new employees, high risk liability, and high unemployment taxes. There are also intangible impacts on the organization such as the company’s reputation in their respective marketplace, customers who must await the newly replaced employee and work with someone new who may not be trained and proficient, and it also hinders the company’s ability to attract and hire high performing individuals.
Sigma Assessments Inc. has identified the following costs of turnover:
These causes of turnover have also been excerpted from Sigma Assessments Inc.:
In order to minimize turnover in the workplace here are some of the ways you can use to address the problem. Many of these have been touched on throughout this portal.
Exit interviews are conducted with employees who are leaving your organization. The primary purpose of an exit interview is to discover why the employee is leaving, gather and analyze the data, and put it to good use to increase the retention rates of the company.
Exit interviews are critical to the future growth of an organization and its people. When an employee leaves an organization, an exit interview can:
There are numerous reasons why employees may put in their resignation, and many of the encountered reasons employees resign include:
The US’s National Federation of Independent Businesses (NFIB) identifies the following steps for conducting an exit interview
A few questions to consider for a more effective exit interview include:
Employee terminations can be difficult and often an emotional experience, especially for the employee being terminated. The employer must be prepared for a potential employee emotional outburst, the planning of the employee termination process, and ensuring security throughout the termination process. The way in which an employer handles the termination process can impact both the reputation of the organization and the morale of remaining employees. Possible legal implications add to the stress.
This section focus on individual terminations; for information on group terminations, please go to Deal with Downsizing.
At times, dismissal may be the only option that an employer has left to deal with poor performance. For dismissal to take place the organization must have grounds; dismissal action is not a personal decision. Just cause for dismissal includes any act by the employee that could seriously affect the operation, management, or reputation of the organization. This would include fraud, dishonesty, forgery, harassment, incompetence, insubordination, continuous absenteeism, or refusal to obey reasonable orders. An employee who is negligent or consistently makes errors on the job, and who has been warned, can be terminated for cause. In these situations, there should be supporting documentation provided that describes both the manager’s and the organization’s attempts to assist the employee in correcting the problem.
This documentation must clearly show that:
When terminating an employee for either poor performance, reduction in your labour force or other financial reasons, it is often seen as a difficult task because of the potential liability and risk this may cause to the organization. The method in which an organization handles terminations not only affects possible employment discrimination or employment-related lawsuits, it can also have an effect on employee morale and the organizations reputation. It is recommended that you consult a lawyer for advice on the best way to proceed.
HR Council’s HR Toolkit provides the following definitions of these key components.
The Ontario Ministry of Labour has developed tools to help employers figure out their obligations around terminations.
HR Council’s HR Toolkit outlines these key steps to reducing potential issues or legal action around terminations. You will see that many of them are preventative and take place at the beginning of, or even before, the employment relationship.
You are required to issue a Record of Employment (ROE) when an employee is laid-off, terminated, or resigns. The ROE is the single most important document in establishing an Employment Insurance (EI) claim. ROE Web is a secure web-based application that enables you to create, submit, and print ROEs electronically). Find out more by clicking here.
You are responsible for completing ROEs for a small, medium or large business. Service Canada encourages you to submit your records of employment electronically.
Knowing how to deal with downsizing is important for any organization because it’s not just empty desks, it’s a radical change that also affects those that stay. The remaining staff will experience various emotions and employers need to make a concerted effort to keep morale up, can reduce issues with poor productivity and job dissatisfaction. Those who leave will often take to social media and other outlets to share their experiences (good and bad) and your company’s reputation can be quickly affected. It is also important to explore all of your options to see if there are other cost-reduction methods that could be implemented instead.
When your organization is faced with tough times, there are many cost-reduction strategies that you can explore before turning to downsizing. In his Ivey Business Journal article, HR Strategies that Can Take the Sting Out of Downsizing-Related Layoffs, Franco Gandolfi lays out these popular approaches that emerged from his research.
HR practices for short-range cost adjustments (a business slowdown of up to 6 months)
HR practices for medium-range cost adjustments (a business slowdown of 6-12months)
HR practices for long-range cost adjustments (a downturn exceeding 12 months)
At this stage, layoffs may be unavoidable, but firms take measures to be able to re-attract and re-gain layoff victims in a post-downsizing phase by looking at:
The federal government’s Work-Sharing program can help your organization avoid permanent layoffs. Service Canada describes the program an adjustment program designed to help employers and employees avoid layoffs when there is a temporary reduction in the normal level of business activity that is beyond the control of the employer. It provides income support to employees eligible for Employment Insurance benefits who work a temporarily reduced work week. Employees must agree to a reduced schedule of work and to share the available work over a specified period of time. Implementing this program can help the company reduce salary costs without resorting to layoffs.
The Alliance of Sector Councils provides the following tips for dealing with the uncertainties of downsizing:
The Alliance of Sector Councils also outlines four basic principles that are excerpted here:
1. Plan layoffs carefully. Take the time to ensure your layoff plan is in sync with your business plan. Look at your current projects—particularly those that are critical to the business. Make sure you have a clear idea of the projects that will be underway once the crisis is over.
2. Be prepared. Consider writing up and practicing a script and make a list of questions that might be asked with answers ready. Get to the point and remember that much of what is said in a layoff meeting will not be retained, so have resources available for affected employees, such as information on benefits, separation terms, and important contacts and other written information. Finally, make sure you have fully planned the necessary post-layoff logistics.
3. Know the law. Know your responsibilities as an employer. The law stipulates that employees must get either some notice prior to dismissal or be compensated instead. There are also certain rules that apply when laying off groups of individuals, Speak to a lawyer or contact your provincial labour board to make sure that you are meeting your obligations in accordance with the law.
4. Treat people with dignity and respect. Distancing yourself because you feel bad won’t make anyone feel better; remember that this is not your fault, and avoiding people will not minimize feelings of guilt or hurt, but will make them worse. Be kind and compassionate andgive people the respect they need.
The Canada Labour Code outlines the procedures to follow when a group termination involves 50 or more employees from a single industrial establishment who are dismissed simultaneously within a four-week period. Because of the number of employees involved, it is unlikely to apply to small and medium sized enterprises; however, if you would like to find out more, see Mass Terminations at the Ontario Ministry of Labour website.