Critical Factors Here is yet another case that proves to have many critical factors. We are dealing with a company that is downsizing, which may cause employee concerns. They are facing the need to make a decision on how to make the appropriate selection of employees to layoff, without facing Title VII discrimination violations, and they obviously have an issue that needs to be addressed with how the company is currently handling employee evaluations and appraisals. The most critical issue here is how to determine the appropriate way to select who will be laid off.
The Division Manager Karen Howell had initially identified a way to select the employees based on past performance scores, but after learning the inconsistent nature they have been followed and the lack of the managers following the policies and procedures, Karen realized this would not be an acceptable way to make these decisions. If D-Bart did use the performance appraisal scores to determine layoffs, this could subject D-Bart to violating some Title VII discrimination rules.
If there is not a consistent no bias process put into place employees could look to raise lawsuits against the company claiming unfair practices and age discrimination. Although the burden of proof is the responsibility of the plaintiff, when there are inconsistent practices, the employees may have an opportunity to file such a suit, stating that the performance scores were scored appropriately or fairly and therefore caused them a disparate impact absent an employer’s discriminatory intent (Leadership Conference, 2001).
Along with now having to determine a new way to select the twenty percent, D-Bart will also have to address and be aware of the impact the layoff will have to the employees. Layoffs can impact both the employees that will remain and the employees that are being let go. Employees that are laid off will have to face job loss, loss of income and both physical and psychological effects (The Human Side, 2005). The employees that are still employed will have to adapt to a new location, new co-workers, and potentially a new culture.
Layoffs could have the potential to cause a decline in morale, which could also lead to lower productivity (The Human Side, 2005). The last critical factor to discuss here is the issue the company has with enforcing its policies and having a fair employee performance evaluation process. The shear fact th the managers at D-Bart have not handled their performance evaluations appropriately, they have put themselves in a tough position that could actually open them up to some concerns with individuals concerned with Title VII discrimination cases.
The company needs to cut 20% of their employees and without proper documentation and good solid reviews; they are not able to rely on the performance review evaluations. This now leaves them no other choice but to choose a different way to select which employees will be let go. Depending on the outcome, employees could raise questions of discrimination whether it is by age, longevity, race, religion or sex, the process will be open to a much larger opportunity of scrutiny.
Opportunities The HR management team has their hands full here. First and foremost they will need to determine a new way to select the 20% of employees that are to be laid off. There are potentially several different approaches here that will work for this process. 1) Depending on how quickly the plant is to be closed, HR could start addressing the performance appraisal process and make sure a new equitable plan is in place. This plan, if time allowed, could be used to make the selections.
The concerns with this option would be if the employees had time to understand and adjust to the new performance guidelines and if there would still be any concerns with Title VII discrimination. The tricky part with discrimination is that even if there is a true rando process, it will still depend on the outcome and what impact it had on the staff. An individual that was a poor performer may be the most likely employee to be let go, but if that individual is in a protected class and there were not strong procedures in place, the company still could be faced with a lawsuit. )
Another option could be to look at volunteer layoffs. Due to the fact they are looking to reduce only 20% of the workforce, there may be an opportunity to offer a buyout for people that are willing to leave their employment. Relocation may not be feasible for all staff. If this option was investigated, it may take some of the pressure off of the company in making random decisions. The risk here is that it may not result in enough layoffs and an alternate process may still have to be utilized.
There are also concerns that some of the more productive employees may take the layoff and the company could potentially lose productivity that they had not intended. 3) The last option would be a completely random selection process, somewhat like a lottery. All staff in each department would be assigned a number and with a random section, 20% would be selected to be reduced. This is probably the safest in terms of not facing any Title VII discrimination concerns, but could also yield some negative results to the company.
The company would want to make sure the process was well documented and potentially even performed by an independent party. Regardless of the outcome, there still could be some concerns of the impact this reduction has had on certain individuals if they fall into protected classes. This could also have an increased concern with employee morale, as valued employees may feel they are not valued and can be eliminated regardless of the quality of work they are providing for the company. Solution
In this situation, I would recommend the D-Bart company to look at offering buyouts or volunteer layoffs first (option 2). As mentioned in the listed option, this would probably allow the company to take volunteers and avoid any potential lawsuit implications. This solution is not necessarily as cost effective as the performance appraisal process, as there will probably be the need to offer severance packages and potentially the need to offer an extension on benefits to make the opportunity appealing to the 20%.
These costs may not have been necessary if the performance evaluation process had been consistent and followed by all managers. Along with pursuing this option, it is apparent the D-Bart needs to reset the playing field and spend time on implementing a well structured performance evaluation process for their organization. Even though this may not be an issue for the plant in San Francisco, it is definitely an issue at the San Jose plant and they are now transferring 80% of the San Jose plant employees into a new area, without any formal performance appraisal process.
It will be important for the merger that these employees understand the rules and policies of the new location and that management brings together a consistent process. There will already be the additional pressures and stresses that a merger brings, but having inconsistent policies and procedures could just lead to bigger continuing issues for HR and the company. Now would be a very good time to make sure all staff is made aware of the company’s employee handbook and procedures.