Employee separations occur when employees cease to be members of an organization. Separations and outplacement can be managed effectively. Managers should plan for the outflow of their human resources with thoughtful policies. Employee separations have both costs and benefits. The costs include (1) recruitment costs, (2) selection costs, (3) training costs, and (4) separation costs. The benefits are (1) reduced labor costs, (2) replacement of poor performers, (3) increased innovation, and (4) the opportunity for greater diversity.

Employees may leave either voluntarily or involuntarily. Voluntary separations include quits and retirements. Involuntary separations include discharges and layoffs. When an employee is forced to leave involuntarily, a much greater level of documentation is necessary to show that a manager’s decision to terminate the employee was fair.

When downsizing an organization, managers may elect to use voluntary early retirements as an alternative to layoffs. Early retirement programs must be managed so that eligible employees do not perceive that they are being forced to retire.

Layoffs should be used as a last resort after all other cost-cutting alternatives have been exhausted. Important considerations in developing a layoff policy include (1) notifying employees, (2) developing layoff criteria, (3) communicating to laid-off employees, (4) coordinating media relations, (5) maintaining security, and (6) reassuring survivors of the layoff.

No matter what policy is used to reduce the workforce, it is a good idea for the organization to use outplacement services to help separated employees cope with their emotions and minimize the amount of time they are unemployed.