layoffs 1

[Sneakers]

If a company decides to implement layoffs for whatever reason, is there a standard criteria for who gets the boot? seniority? experience? salary? random? etc..

I've always pondered this and now I have some friends and family that may be affected.

Matthew Dunbar, CSWP
New Balance Athletic Shoe, Inc.

 

[SomptingGuy]

USA, no.
EU, yes. Proven redundancy, however flimsy the proof.
Rest of World, ??

- Steve

 

[ctopher]

Here in the U.S., we're all just numbers. The most important people needed to sustain a company will usually stay.

Chris
SolidWorks/PDMWorks 08 3.1
AutoCAD 08
ctopher's home (updated Aug 5, 2008)
ctopher's blog
SolidWorks Legion

 

[corus]

It all depends on the country you live in. In the UK lay-offs, or redundancy, is because your role is no longer needed, and not you the person. Where there are several of you in that role then the employer must show that a selection process has been carried out that is unrelated to a particular person. Otherwise the employee can claim unfair dismissal Last in, first out, is a common method of selection, but my guess is that the employer will prune the tree of the dead wood they have hanging on and claim they have made an unbiased selection. Difficult to disprove. I'd do a search on the internet for your particular country to see which laws are applicable, if any.

corus

 

[KENAT]

It can vary by each situation.

Even if you have national/state laws, there may be other protections in place due to company policies, employment contracts, union agreements etc.

Here, when they do lay offs first to go were people who'd upset management and/or got too big for their boots, at least from senior managements point of view.

Next were genuine dead wood, or at least less vibrant growth.

Next were people who's positions just couldn't be justified any more.

However, none of these were absolute, and things like salary & experience were taken into account - or so I'm lead to believe.

Ctopher, I wish I could believe what you say, but from what I've seen they'll lay people off because they don't understand what they do, not because they don't actually need them.

KENAT,

Have you reminded yourself of faq731-376 recently, or taken a look at

http://eng-tips.com/market.cfm?

 

[IRstuff]

In the US, it's essentially redundancy as well. Most companies do a "toten-pole" of the people in the department, and rank-order them for essentialness. That's when being "familiar" with obscure software may be a factor ;-) Likewise, "deadwood" will be totem-poled near the bottom.

Interestingly, just when there's a glut of jobseekers, those that can hire usually pull back, since there's a much higher probability that those laid off were the least productive and essential to their former companies. Almost like "damaged" goods.

Note that the US requires 60-day notice for plant closures.

TTFN

FAQ731-376

 

[nickelkid]

A typical peak shaving layoff in union shops low seniority goes first, non-union dead wood and threats to insecure management first.

When a company in the US is in survival mode all bets are off, anything could happen.

 

[moltenmetal]

Sneakers: the only answer to that question is "it depends"!

If rumours about large pending layoffs get spread sufficiently prior to the event, then sometimes the good staff see the writing on the wall and depart to greener pastures voluntarily. That can lead to the dumbing-down of the workforce over time, if the only ones who stay are the ones without options.

If buy-out packages for early retirement are offered, then voluntary redundancy can take care of some of the pain. But you do tend to lose experienced people under those circumstances. And sometimes the local labour rules or company policy require that any buy-out be offered to everyone in a particular job and experience class, rather than being selectively offered only to the deadwood. Again, a good way to lose key staff...

There's no truly fair way to downsize. There's also no truly objective way to hire. Both processes involve discriminating on some basis between those who stay and those who go. The trick is to keep the arbitrary stuff out of the decision-making process, but that implies that there's some univeraslly agreed-to, objective measure of a person's value to a company. Using seniority as a criterion may seem to be more objective, but it's really just as arbitrary. It can hardly be considered to be more fair when some unproductive old fart is retained while some bright up and comer is let go.

 

[MadMango]

From what I have seen:

golf outings ? lay-off chance ?
dependents ? lay-off chance ?

"Art without engineering is dreaming; Engineering without art is calculating."

Have you read faq731-376 to make the best use of these Forums?

 

[KENAT]

At the end of the day, the personality contest will come into play, especially in places with less regulation etc.

If your face doesn't fit, don't count on surviving lay offs.

KENAT,

Have you reminded yourself of faq731-376 recently, or taken a look at

http://eng-tips.com/market.cfm?

 

[ctopher]

KENAT,
"they don't understand what they do" is also true. I have seen both ways.

I was laid off once with another guy. We were the only two out of a couple hundred employees. The reason given to us by the VP of engineering? They didn't meet their $100M goal, they were stuck at $20M!

I didn't know my salary made such a difference!

Chris
SolidWorks/PDMWorks 08 3.1
AutoCAD 08
ctopher's home (updated Aug 5, 2008)
ctopher's blog
SolidWorks Legion

 

[IRstuff]

It's leveraged, like a securatized debt obligation that's covered by a credit default swap ;-)

TTFN

FAQ731-376

 

[KENAT]

Yeah Ctopher, you must have been getting some good benny's and/or had some serious overhead.

KENAT,

Have you reminded yourself of faq731-376 recently, or taken a look at

http://eng-tips.com/market.cfm?

 

[jmw]

The short answer in the UK is that any and all and contradictory criteria can be selected according to the whim, wit or wisdom of the Management/HR.

Options include "Last in First out" (with a legal obligation about the definition of redundancy and the entitlements, this can be the least expensive).

Culling the highest paid, those with pensions about to be claimed (the Wall Mart approach?) those with special contracts (easiest way to harmonise the different contractual terms across a range of component companies merged into one).

It can also include favourites (brown nosers) and "public enemies" being retained by the last of which I mean (and have had it expressed in exactly those terms) that if there is someone the management really do not like, they would rather not make him/her redundant and pay him redundancy money but instead go through the disciplinary procedures at every opportunity so they can fire that person without paying him/her a penny.

There may also be an element of opportunism.

For example, a company I worked for was taken over by another. Our products made stacks of cash and the new companies were in a "commodities style" market where they practically gave the product away for free.

BUT, and a big BUT, the new company was structuring to sell itself t a major global company that wanted the other companies products to complete its portfolio and could care less about our products. Ergo, all resources were diverted to the non-profit product range and our products were then treated as cash cows and with zero ongoing investment.
"Natural wastage" took care of most of the support for the cash cow products and when the opportunity arose they made others of us (those who didn't take the hint and get new jobs) were finally made redundant.

Then they sold the company.

Some companies will offer to reduce numbers through natural wastage and voluntary redundancies. This is a poor option if they intend to stay in business since it is those who are most marketable who will opt for VR and usually the most skilled and representing the most loss to the company and the most gain to their competitors.

Some companies have adopted an alternative ageist approach by letting go the old fogies and keeping the brash new youngsters. One National Bank was on such a policy until its new owners put a stop to it calling it voluntary amnesia.

There are some sneaky tricks played too.
One is a progression of small cuts; 5 or 10 people at a time laid off. This allows them to spread the workload over fewer and fewer people (and selectively so) which encourages some to look for new jobs and save the company paying redundancy (imagine trying to find new jobs when the company lets a huge lot go at once - would you rather forgo the redundancy and get ahead of the rush at the job centre or take a chance that when they let you go you will get a new job?).

Another is the new jobs ploy (disguised as "restructuring"). They hint (leak) that some redundancies are imminent and then propose that as part of restructuring some new jobs are being created and applications are invited. Worried workers think that the new jobs will be more secure and apply for them.
Oops!
New contracts could apply but whatever the contract says, there will be a trial period during which they will decide your work is unsatisfactory and let you go without having to make you redundant.

In short, pretty well any approach is possible, pretty well any approach is bad news for the workers and by some fluke management also usually manage to choose the worst possible method for their own long term survival...

For legal obligations you will need to check your local statutes and consult with some appropriate agency, government or union, for advice.

JMW

http://www.ViscoAnalyser.com

 

[ajack1]

Jmw I do wonder how well informed you are with regard to the post above about UK law. Much of what you say is simply not true, for example.

“The short answer in the UK is that any and all and contradictory criteria can be selected according to the whim, wit or wisdom of the Management/HR.”

This is not true any contradictory criteria will be seen as discrimination.

“ "Last in First out" (with a legal obligation about the definition of redundancy and the entitlements, this can be the least expensive).”

If you choose this route alone you are likely to be seen as discriminating against younger workers.

“Culling the highest paid, those with pensions about to be claimed (the Wall Mart approach?) those with special contracts (easiest way to harmonise the different contractual terms across a range of component companies merged into one).”

You cannot discriminate against anyone in terms of pay or benefits.

“Some companies will offer to reduce numbers through natural wastage and voluntary redundancies. This is a poor option if they intend to stay in business since it is those who are most marketable who will opt for VR and usually the most skilled and representing the most loss to the company and the most gain to their competitors.”

Whilst I agree this is not good for the company they have a legal obligation to explore all other options before making compulsory redundancies, to not offer this would break that legal obligation.

“Some companies have adopted an alternative ageist approach by letting go the old fogies and keeping the brash new youngsters. One National Bank was on such a policy until its new owners put a stop to it calling it voluntary amnesia.”

That is simply discrimination on the grounds of age.

“Another is the new jobs ploy (disguised as "restructuring"). They hint (leak) that some redundancies are imminent and then propose that as part of restructuring some new jobs are being created and applications are invited. Worried workers think that the new jobs will be more secure and apply for them.”

Again it is a legal obligation to try and provide alternative employment, i.e. retraining. As for leaking that some redundancies are imminent again it is a legal obligation to inform anyone who is being considered for redundancy as soon as possible.

I have been made redundant and also had to make people redundant and both are a very unpleasant experience. It is a terrible thing to have to do to know you are having such a negative impact on someone who has done nothing wrong and does not deserve it but it is something sometimes you have to do.

It is not made any easier by the legal obligations here is a brief summary, just have a look around the links to see what a minefield it really is.

http://www.berr.gov.uk/whatwedo/employment/employment-legislation/employment-guidance/page30889.html

 

[SomptingGuy]

When I read JMW's post I wondered whether the UK company I work for is unusual in the way it follows the letter of the law.

I've been through several layoff periods. In each, no discrimination on any grounds mentioned has been evident (although it may have been well covered up). The layoffs were each time a vertical slice through the company, caring not for grade, salary, skills or anything. Sure some "deadwood" did go each time, but also some well respected people.

Something that happened quite a bit the last time round was that someone would be offered a new job at a lower level, doing the same work, i.e. a pay cut.


- Steve

 

[jmw]

Ajack1,
I could wish that I had invented it all and that it always happened as the legal requirements intended. Sadly, in the UK, unlike France where law making is easier because it is, conversely, the spirit of the law rather than the letter of the law that matters, English law is all about the letter of the law. It matters about where a comma goes and precise wording. It opens the door to management to seek to abide by the letter of the law while thrusting a dagger through its spirit.

Of course, I should have to concede that maybe some of the examples I give from my earlier working life have been made curiosities by changes in the law, but I suggest there is a wide gap between what is intended and what actually can happen.

Management can and do act in ways which ought to be considered morally reprehensible but management is skilled in exploiting and evading the laws. Often they justify their actions as a "legal obligation to the shareholders".

I have witnessed instances of all the examples I gave, at some time over the course of my working life in the UK, some in companies I have worked for, some in others.
The Ageism example was UK national Bank and not all that long ago.

Discrimination is only discrimination if someone decides to make the call. In many instances people do not.
Also, be aware of the trip limits that determine when certain rules come into force and below which they don't.

Companies also are very aware of the legal situation and much of their strategy is based on exploiting every possible means to do things their way.

Lay-offs do not come overnight. They are usually preceded by a period of poor performance. This creates a scenario where there are no pay rises. where workers find more and more responsibilities placed on them as workers leave, are not replaced and the management wants the same amount of work done. By the time redundancies come around the salary level, upon which redundancy payments are calculated, is well below par. Many employees, often the most able, have taken the "natural wastage" route.

Retraining? Help with finding new jobs? again, the legal minimum doesn't actually do much for the worker beyond satisfying the legal requirements.

At one company they decided after many years long service, to dump one of the office girls. They didn't make here redundant, they instead offered her a promotion on a new contract with a trial period. But, being sloppy, they fired her one day after her trial period was over, instead of the day before, and I was able to advise her to take the company to court for wrongful dismissal which she did and which earned her a useful settlement.

One engineer at my last company was one of the older folk slated for redundancy (contradictory: ever a fully ageist policy the proportion of older employees is none the less high but far from balanced; legally? what chance would anyone have to show that they were being discriminatory?). His retraining options? non-existent. Help finding a new job? A token - mainly it consisted of bringing the job centre people into the offices. They found him nothing.
In the end, he found himself a new job in the aerospace part of the group in the adjacent building.
When management learned of it they told him that because it was a sister company he didn't qualify for redundancy payment. There was a lot of heat generated over this but what the outcome was, I don't fully recall. It was an argument about whether he would transfer with his seniority etc. or whether he should be considered to have become unemployed by the company before taking up his new role.

They then sold the aerospace company for £43million at the bottom of the aerospace depression almost while still arguing about his paltry redundancy payment.

In my own case, having declined to apply for their new job and taken the redundancy option they had to rescind it all for a couple of weeks while I went out to Russia to complete a project (which personally, I didn't mind as I wanted this success to my credit) and then re-instate the redundancy on my return.

To believe that everything is open, honest and above board and that the management are well intentioned and have the workers interests at heart at all times may be fine with some companies but not with others.

Some companies/management can be extraordinarily vindictive when thwarted. This isn't about "shareholder" duty but personal nature.

At one company rationalisation meant closing down a factory and shifting the manufacturing and personnel 10 miles up the road to another factory.
Some people they let go. Others they were obliged to make redundant and take on under new contracts at the new place of employment.

The service engineering manager was nearing retirement age and had been with the company, man and boy, all his working life from its being a family owned London company to a Sussex subsidiary of a major conglomerate.
He looked at how much redundancy he would be entitled to. He decided to to take the money and set up in business for himself doing exactly what he had done before but as an independent agent (at the competing company they called in all their service engineers and told them they were no longer employed by the company but were to be set up as self-employed independent agents).
The company had to pay him his redundancy and they then blacked him. To carry out his service work he had to visit clients, see what parts were needed and get them to order the parts for him as the company would not supply him.

A colleague was posted to the USA to run the engineering group. Political infighting at the UK head office suddenly saw him recalled with no job to come to. They made up a job for him which, with nothing esle to do, he had to accept but almost immediately he then found a position with a US company and quit to take it up. The chairman of the group then wrote a letter to the US employer which was as blatant a piece of libellous character assassination as you could find. Legal? not likely under either UK or US law, but it didn't stop the chairman doing it. Fortunately for my colleague the US employer laughed it of and took it for what it was.

The reason we have laws and lawyers is because people don't always do what they are expected to do. Whether we can afford lawyers or not or know enough to know when we need them is something else again.



JMW

http://www.ViscoAnalyser.com

 

[thruthefence]

If we were really smart, we would come up with a way to package the layoffs as a "market" and use them to hedge the economy! You know, trade them on the futures & options market! You know, at the beginning of the "war on terror" there was actually a plan afoot to do this with terrorist activity. The people in charge felt the "smart money" would sniff out what's going on with the bad guys, & trade accordingly. The Guv'ment would then ratchet up ( or down ) the "threat level" depending on the call/put ratio.

 

[KENAT]

jmw, I've had some insights into redundancy dealings in the UK and a lot of what you put rings true. It may be that many of the 'loopholes' have been filled over time so perhaps ajack’s assessment of the current situation is correct.

However, the ability of a determined management to weasel around the law should not be underestimated.

KENAT,

Have you reminded yourself of faq731-376 recently, or taken a look at

http://eng-tips.com/market.cfm?

 

[ajack1]

Jmw you are correct about having to work within the letter of the law rather than the spirit of it but you are left with no option.

When I had to make redundancies I had long talks with ACAS to try and do everything “right” if you actually read the law it is impossible not to discriminate against someone and they will only ever offer guidelines rather than specific recommendations.

Maybe you would be so kind as to tell me how if I have two good and basically equal workers I can get rid of only one without discriminating against them? I certainly could not work it out and ACAS could not give me a definitive answer either.

You continually give examples where it is wrong to let the eldest or youngest go or the lowest or highest paid, at the end of the day you have to let someone go, however fair you try and be you are going to have to treat someone in a way they do not deserve to be treated and still try and remain within the law.

On other areas you are just completely wrong, for example “Lay-offs do not come overnight. They are usually preceded by a period of poor performance. This creates a scenario where there are no pay rises. where workers find more and more responsibilities placed on them as workers leave, are not replaced and the management wants the same amount of work done. By the time redundancies come around the salary level, upon which redundancy payments are calculated, is well below par.”

Redundancy pay (or minimum redundancy pay at least) has nothing to do with your current salary it is a set of figures set out by the government. You are correct it does not come overnight, it is a last resort action or at least it should be, do you suggest that you start laying people off at the first whiff of bad times ahead?

Making people redundant remains one of the worst things about running a business and it is not something taken lightly in most cases and unless someone is lucky enough to walk straight into another job or bring forward their retirement you know it is going to hurt that person in many ways, I can assure you that is not a good feeling. Things like large payments and extensive training are not usually an option to smaller companies as you are in hard times, which is why you are doing this in the first place.

As you seem to know everything that is wrong would be please tell me the right and fair way to make someone redundant? Because I have been unable to work it out.