Chapter 6

Managerial perspective: Global competition and technological advances have changed the rules of
competition forcing many firms to become increasingly productive with smaller workforces. Managers
must not only develop skills to help an employee who leaves the company voluntarily but they must also
aid employees who have been fired for cause or are being let go for economic reasons

Employee separation: An employee separation occurs when an employee ceases to be a member of an
organization. The turnover rate is measured of the rate at which employees leaves the firm.
The cost of employees separation: The cost of turnover can differ across organizations and some costs
associated with turnover can be difficult to estimate.

 Selection cost: Are associated with selecting, hiring, and placing a new employee in a job,
interviewing the job applicant includes the cost associated with travel to the interview site and the
productivity lost in organizing the interviews and arranging meetings to a make selection decision.

 Training costs: Most new employees need some specific training to do their job. Training costs
also include the costs associated with an orientation to the companys values and culture.
 Separation costs: A company incurs separation costs for all employees who leave, wether or not
they will be replaced. The largest separation cost is compensation in terms of pay and benefits

1. The benefit of employee separation:
2. Although many people see separations negatively, they have several benefits. When turnover rates
   are too low, few new employees will be hired and opportunities for promotion are sharply
   curtailed
3. Reduced labor costs: An organization can reduce its total labor cost by reducing the size of its
   workforce. Although separations costs in a layoff can be considerable, the salary savings resulting
   from the elimination of some jobs can easily outweigh the separation pay and other expenditures
   associated with the layoff
4. Replacement of poor performance: An integral part of management is identifying poor
   performance and helping them to improve their performance
5. Increased innovation: Separations create advancements opportunities for high performing
   individuals

Types of employee separations
They can be divided into two categories

 Voluntary separations: Occur when an employee decide, for personal or professional reasons to
end the relationship with the employer. The decision could be based on the employee obtaining a
better job

 Involuntary separations : Occurs when management decides to terminate its relationshipwith an
employee due to economic necessity or a poor fit between the employee and the organization.
Involuntary separations are the result of very serious and painful decisions that can have