To the extent that senior workers are, by virtue of their seniority, more highly paid, the firm gets more economic bang by terminating more senior employees. In settings where the knowledge base and technology change rapidly, recent hires may be more in tune with important new developments, giving another reason to discharge more senior workers. But potential claims of age discrimination (in locations where there are laws against age discrimination) must be attended to. Consequently, when a firm decides it would prefer to prune selectively from its more senior workers, early retirement programs, carefully crafted to avoid any adverse selection and appearance of age discrimination, may be more desirable. Layoffs targeted at older workers are also unlikely to appear distributive just. Organizations with a culture that emphasizes loyalty will obviously have an especially difficult time with targeting senior workers, as will organizations that depend on slowly developed firm-specific human capital.

In short, downsizing represents a potential legal minefield, and the relevant law is still evolving rapidly. In recent years, courts have made it clear that age discrimination statutes protect workers from discriminatory treatment, including layoffs, based on age where the employer\’s actions are based on discriminatory and unfounded notions about the capabilities of workers as a function of their chronological age. Of course, wages frequently rise with seniority, and seniority in turn is frequently correlated with age. Consequently, a downsizing motivated purely by cost-cutting considerations-say, a firm with a high tenure workforce, whose wages were no longer competitive newer, younger competitors – is likely to result in layoffs concentrated among older, higher wage workers.

If you are contemplating a large-scale layoff, labor lawyers counsel extreme caution, deliberation, and documentation, especially in contexts that are covered by collective bargaining or advance notification requirements, where there is potential for discrimination claims, or where managers may wittingly or unwittingly have given employees an impression that their employment was secure. Consequently, the starting point of any downsizing campaign needs to be a careful assessment of its appropriateness and the dimensions along which layoffs should be structured. To what extent can the organization use layoffs as one tool within a broader organizational change initiative?

If such an analysis leads management to decide that layoffs are appropriate, whether seniority-based or otherwise, then the lawyers will want the homework and the paper trail to begin in earnest. Ideally, to convince relevant outsiders of the business necessity of layoffs in situations like this, management will want to have the following sorts of information and documentation:

a) How the organization\’s wage structure, seniority distribution, and staffing ratios compare with relevant benchmarks (including before the downsizing);

b) Empirical relationships between the company\’s hiring, compensation, and career development practices on the one hand, and important business outcomes on the other (e.g., if layoffs are to be concentrated disproportionately among more senior employees, evidence of demonstrable negative relationships between seniority and important outcomes);

c) Where layoffs are done selectively within a business unit, evidence that demonstrates that the company\’s performance management system is valid and provides a defensible and legitimate basis for ranking employees in terms of layoffs; and

d) Documentation of having fully explored the feasibility of reassigning workers or lowering the compensation of employees who would otherwise have been laid off.

The kinds of evidence that increasingly are needed in legal proceedings-to help convince a court that a downsizing that might adversely impact a particular group is defensible for business reasons – will also be crucial in demonstrating distributive and procedural justice and thus in minimizing the psychological damage of the layoffs on survivors and prospective employees.

http://www.arturvictoria.info/
http://sites.google.com/site/cliptheschoolbeginning/
http://sites.google.com/site/arturvictoriasite
http://adesg-europa.blogspot.com/

http://www.arturvictoria.info/
http://sites.google.com/site/cliptheschoolbeginning/
http://sites.google.com/site/arturvictoriasite
http://adesg-europa.blogspot.com/

Author Bio: http://www.arturvictoria.info/
http://sites.google.com/site/cliptheschoolbeginning/
http://sites.google.com/site/arturvictoriasite
http://adesg-europa.blogspot.com/

Category: Business Management
Keywords: Organization, behavior, human, information, career, responsible, planning, human resources, leader,