What are the causes of Separation ?
Separation occurs when an employee leaves the organization. In the former, initiation for separation is taken by the employee himself or herself. Where the employer initiates to separate an employee, it becomes involuntary separation. In the latter employee entertains the feeling of injustice and seeks legal protection to undo it.
Voluntary Separation: Voluntary separations occur when the employee decides to terminates his or her relationship with the organization. Quits and retirements are the most manifestations of voluntary separations.
Quits: An employee decides to quit when his or her level of dissatisfaction with the present job is high or a more attractive alternative job is awaiting the individual. The reasons for dissatisfaction may be because of the job itself or because of jib extrinsic factors such as supervision, company policy, compensation, advancement opportunities, health, spouse relocation and the like.
During economic boom, jobs are available in plenty. Compensation people will get multiple offers at any given time. Some of them stay with the organization in the name of loyalty or some other commitment. Majority accept the more attractive offers and prefer to leave the company.
Organizations often encourage quits through cash incentives. Popularly called voluntary retirement schemes (VRS), these separations are resorted to when organization are experiencing losses. They resort to cost saving the bottom-line and believe that the best way of cutting down the cost is through reducing the wage and salary bill. As VRSs are induced by the management, we prefer to discuss them under involuntary separations category.
Retirement: Retirement occur when employees reach the end of their careers. The age for an employer’s superannuation differs. In some states it is 58 years and in Central Government it is 60. Many governments have raised the limit to 60 and 62 respectively as there is shortage of skilled people to fill up the vacant jobs.
Retirement differs from quits. When the employees superannuates and leave the leave the organization, he or she carries several benefits with himself or herself. Such a privilege is denied to the employee who quits. Second, retirement occurs at the end of an employee’s career but the quit can take place at any time. Third, superannuation shall not leave any soured relationship behind the relationship behind the retiree but a quit is likely to result in hurt feelings with the employers.
Involuntary Separations: Employers resort to terminate employment contact with employees for at least three reasons:
- Organization Is during through lean period and is unable to maintain the existing labour.
- Initial faulty hiring resulting in mismatching between job and employee fit.
- Employee exhibits deviant behavior vitiating the environment around.
Discharge: A discharge takes place when the employer discovers that it is no more desirable to keep an employee any longer. Discharge, also called termination, should be avoided as far as possible. Any termination is as reflection on the company’s HR system. In addition, termination is expensive as the firm must seek replacement, hire and train the new hiree. Finally a discharged individual is likely to badmouth about the company.
Layoffs: A layoffs is a temporary separations of the employee at the instance of the employer. Section 2 of the Individual Disputes Act, 1947, defines lay-offs as the as the failure, refusal or inability of an employer to give employment to a worker whose name is present on the rolls but who has not been retrenched. A lay-off may be for a definite period on the expiry of which the employee will by recalled by employer for duty. It may extend to any length of time, with the result the employees is unable to estimate when he or she can recall his or her employees.
A lay-off may be occasioned by one of the following reasons:
- Shortage of coal, power or raw materials.
- Accumulation of stocks.
- Breakdown of machinery.
- Economic recession.
- For the other reason.
Resignation: A resignation refers to the termination of employment at the instance of the employee, when she marries and had to quit for personal reasons, or when an employee suffers from ill health. The administration of separation caused by resignation is very simple because the employee because the employee himself\herself is responsible for it.
Discharge: Where the termination of employment is initiated by the employers, it is known dismissal or discharge, which is a drastic step and should be taken after careful thought. A dismissal needs to be supports by just and sufficient reasons.
The following reasons lead to the dismissal of an employee:
- Excessive absenteeism.
- Serious misconduct.
- False statement of qualification at the time of employment.
- Theft of company’s property.
Retrenchment: Retrenchment too results in the separation of an employee from his/her employer. It refers to the termination of the services of employees because of the replacement of labour by machines or the closer of a department due to continuing lack of demand for the products manufactured in that particular department of the organization. If the plant itself is closed, as was once done by the proprietors of the Binny Mills, the management and employees have to leave for good.
Retrenchment like lay-off, entitles the employees to compensation which, it terms of section 25(f) of the Industrial Disputes Act, 1947, is equivalent to fifteen days, average pay for every completed year of continuous service.
However, retrenchment differs from lay-off in that, in the latter the employee continuous to be in the employment of the organization and is sure to be recalled after the end of the period of lay-off. But in retrenchment the employee is sent home for good, and his or her connections with the company are served immediately.
Voluntary Retirement Scheme: Voluntary retirement Scheme (VRS) is yet another type of separation. Beginning in the early, 1980s companies both in public and private sectors, have been sending home surplus labour for good, not strictly by retrenchment but by a novel scheme called the VRS, euphemistically called the Golden Hand Shake Plan. Handsome compensation are paid to those workers who opt to leave. For example, in Hindustan Unilever the VRS consisted of:
- A lump sum payment equal to 2.25 times the July 1992 salary multiplied by the remaining years of service (subsequently reduced to 15 years of service).
- Pension equal to 70% of the July 1992 salary payable till the age of 60.
- Prizes such as computers, trucks, houses, and so forth (99 in all) to be decided on the basis of a lucky draw.
Management prefer to pay hefty sums and reduce staff strength than retaining surplus labour and continuing to pay them idle wages. Further VRS is perceived as a painless and time saving of trimming staff strength, easing out unproductive older workers and other deadwood. Unions too cannot object as the schemes are voluntary.
VRS also results in separation of employee from employer. VRS is resorted to where organizations have surplus .Firms will be required to pay wages for idle time if VRS is not involved to trim the surplus labour-forces.
Rightsizing: Rightsizing theoretically means reducing the size of workforce or increasing it to maintain the employee strength at the most desired level. In reality, rightsizing means downsizing the employee strength through planned elimination of jobs. A record of sort was created by GE when it released 104,000 its 402000 of its workers during 1980s.
Downsizing is not an involuntary separation method by itself. In fact, to downsize employee strength firms need to adopt other methods. But because of its repeated focus in corporate circles.
Downsizing is triggered by at least three factors:
- The company’s bottom line Is threatened.
- Technological advancement renders people redundant.
- Organizational restructuring.
Downsizing through claimed as a desirable corporate strategy creates more problems than it can solve. One of the biggest problems is employee morale. Downsizing creates not a ripple but a tidal wave thought the organization. The surviving employees experience trauma- they have lost identifies, colleagues, security, power and control. Moreover the economics benefits trauma- they have lost identify, colleagues, security, power and control. Moreover the economic benefits expected by the organization often fail to materialize. As a proof of this, the study conducted by the American Management Association during 1990s is worth recollection. About 34% achieved increased productivity and over 30% experienced decreased productivity. A staggering 86% experienced diminished employee morale. Only 61% achieved cost reduction.