Case 6.4

MedEquip Inc., a medical services company with 500 employees, has experienced an extensive business downturn. They are planning to implement a layoff of about 20% of the hourly and managerial workforces. Because of time demands and financial pressure, they will implement the layoff in 30 days.

As an HR consultant brought in to help with the layoff, they turn to you for answers. This experience will be traumatic, since MedEquip has “verbally” committed to lifetime employment. They are planning to use work performance as the layoff criterion. Only about 3 areas of the business will be affected — MIS, facilities, and accounting. Management is concerned about security in these areas, and there are minimal backup files available.

While it is a large company, MedEquip has built a family atmosphere and everyone feels very close to everyone else. Corporate headquarters is in a fairly small community of about 10,000 people. They have hired a PR specialist to handle the press releases and public communications about the layoff.

When the layoffs begin, Olivia and Quincy, two middle managers who will not be laid off, will hold group meetings with the sections involved. They then plan to have professional associates inform others about the layoff. They want you to conduct large group briefings orally. They do not want to give employees anything in print so they won’t be drawn into litigation.

97. Refer to Case 6.4. Given the time frame and number of employees MedEquip will layoff, which of the following is true?

a) They are not in violation of WARN because they are laying off less than 50% of the workforce.

b) They can offer laid-off employees 60 days of income instead of 60 days warning.

c) They are not subject to WARN because they are too small of an employer.

d) They are not subject to WARN because they aren’t closing the business.

e) They are in violation of WARN and must extend the layoff deadline by 30 days.

98. Refer to Case 6.4. What is your evaluation of their layoff criterion?

a) It is not legal.

b) It will disproportionately impact women and minorities.

c) It is the most common criterion used. They will have no trouble.

d) It is more subject to legal challenge than other criteria, but it will help them retain their top performers.

e) It will result in the “last in” being the “first out.”

99. Refer to Case 6.4. Given the primary areas affected by the layoff, you should recommend:

a) escorting affected employees off-site as soon as they are notified.

b) not worrying about security.

c) holding the large group termination session at the end of the week so employees can blow off steam over the weekend.

d) providing employees an opportunity to “let off steam” in the termination meeting.

e) having HR conduct the termination sessions one-on-one with the employees.

100. Refer to Case 6.4. The CEO asks your opinion on Olivia and Quincy’s plan for the termination process. You should tell her that:

a) it is a solid and humane way to share the bad news.

b) not providing written documents is good, an oral briefing is sufficient.

c) having an outsider brief them in a large group is the best way to control any hostile feelings.

d) they should also coordinate media relations.

e) it is a very poor strategy and violates almost every rule a manager should follow in communicating a layoff.

Organizers Company has been making the most of new business technologies and many of the jobs that previously required many people are taking much less effort. Paul, who is president of the company, sees the need to eliminate some middle managers and institute work teams to eliminate ineffective or unnecessary work processes. He believes that the changes he wishes to make won’t cost the business financially. Most of the middle managers have been with the company anywhere from 10-15 years, but are a long way from retirement.

One problem that Paul recognizes is that Zena, an upper-level manager, has been coming to work late, missing deadlines on assignments, and refusing to complete one important assignment, passing it to a line manager. Paul has warned her personally about the consequences for further actions and has even meted out several proscribed disciplinary actions against Zena. Her work habits have not improved and Paul feels he may have to take further action.

101. Refer to Case 6.5. By Paul’s estimation, Organizers Company needs to do which of the following to improve efficiency?

a) Downsize.

b) Perform a large-scale layoff.

c) Offer early retirement incentives.

d) Rightsize.

e) None of the above

102. Refer to Case 6.5. Paul believes strongly in trying to provide lifetime employment and will use a layoff only as a last resort. What would be the best strategy to reduce middle management?

a) Offer early retirement to the employees in middle management.

b) Discharge employees in middle management.

c) Institute a pay freeze only for employees in middle management.

d) Encourage employees in middle management to take voluntary time off.

e) Use pay incentives to encourage the middle management employees to quit voluntarily.

103. Refer to Case 6.5. In his plans for reducing the work force, Paul is primarily addressing cost issues relating to:

a) creating rings of defense.

b) recruiting.

c) separation.

d) designing job changes.

e) c and d

104. Refer to Case 6.5. Paul’s actions towards Zena’s performance is an example of:

a) discrimination.

b) forcing her to retire.

c) arbitrary discipline.

d) progressive discipline procedure.

e) a ring of defense.

105. Refer to Case 6.5. If Anthony terminates Martha’s employment, this will be an example of a:

a) layoff.

b) discharge.

c) retirement.

d) buyout.

e) quit.

TRUE/FALSE QUESTIONS

106. Yao-Huan is reviewing the rate at which employees have been leaving his firm. He is reviewing the firm’s turnover rate.

107. It costs the U.S Navy over $1.5 million to replace a fighter pilot who leaves the military.

108. The costs to replace a departing employee generally include: recruitment, selection, health care benefits until they find a new job, and unemployment compensation costs.

109. Selection costs may include relocation costs, training costs, and severance pay.

110. Marissa quit her current employer for a new job. She is talking with the director of HR about why she left. Marissa is going through outplacement assistance.

111. When conducting exit interviews, management should assume employees will be honest with them, since the employees have already decided to leave the company.