Theoretical Situation #1 You are HR manager in service company You are HR manager in service company The industry is facing a downturn The industry is facing a downturn You have excess personnel You have excess personnel What do you do? What do you do? –Fire people –Re-train –Compensate How much ? How much ?

Implications Legal Legal –Avoiding Union issues –Avoiding unfair dismissal law suits –Shareholder responsibility Ethical Ethical –Employee welfare Financial remuneration Financial remuneration Fair treatment (repeated hiring/firing) Fair treatment (repeated hiring/firing) Other implications Other implications –Employee retaliation / sabotage –Company reputation effects

Summary of UK Case Facts Bradford & Bingley (Banking) Bradford & Bingley (Banking) –Voluntary job losses & retraining General Manufacturing Industry General Manufacturing Industry –Layoffs with minimum payoff and notice period Marks & Spencer (Retail) Marks & Spencer (Retail) –Close stores, job losses in UK –Look to sell stores and retain employees in EU Corus (Steel Manufacturer) Corus (Steel Manufacturer) –Plant closures, Job losses Banking (Merrill Lynch & Goldman Sachs) Banking (Merrill Lynch & Goldman Sachs) –Job freezes, job cuts, voluntary redundancies Rover (Automotive) Rover (Automotive) –Pay and pension cuts

Change in Policies and Employers’ Attitude to Redundancy Changes in EU law for companies to find alternatives to closures & job losses Changes in EU law for companies to find alternatives to closures & job losses Increase in minimum redundancy package Increase in minimum redundancy package Increase in number of unfair dismissal complaints Increase in number of unfair dismissal complaints Increase in cost to businesses Increase in cost to businesses Change in business redundancy behaviour Change in business redundancy behaviour

Proposal - Hierarchy of Options 1. Re-train Employees 2. Everyone Takes a Pay-cut 3. Voluntary Layoffs 4. Enforced Layoffs – Generous payout 5. Enforced Layoffs – Min. payout

Theoretical Situation #2 You are HR manager in service company You are HR manager in service company Do you repeatedly hire and fire employees to meet demand? Do you repeatedly hire and fire employees to meet demand? # of employees Time

Implications Shareholder perspective Shareholder perspective –Do whatever necessary to maximize profits –Hiring / firing / re-hiring if necessary Employee perspective Employee perspective –Stable employment –Company should absorb inefficiency due to temporary excess staff

Proposal – Hiring & Firing HR manager should find ethically suitable middle ground considering all stakeholders HR manager should find ethically suitable middle ground considering all stakeholders # of employees Time Employees HR Manager - Compromise Stakeholder

Theoretical Situation #3 You are HR manager in a service company You are HR manager in a service company You have to select an employee for redundancy. You have to select an employee for redundancy. Employee A Employee A –Good performer –Single white male Employee B Employee B –Average performer –Single mother of five Who do you choose ? Who do you choose ?

Implications Ethical Ethical –Consideration needs to be given to individual circumstances Legal Legal –Shareholders want best performing employees

Proposal - HRM Attention to Ethical Issues Emphasis on ethics varies Emphasis on ethics varies –Some EU countries – Ethical approach to redundancy – profile considerations –US – Less ethical approach – performance based redundancy