Promotion, Transfer

and separation
(Retrenchment & VRS)
 Promotion

 Promotion is upward movement of employees

 Promotion means an improvement in pay, prestige,
position and responsibilities of an employee within
an organization.
 A mere shifting of an employee to a different job
which has beet working hours, better location and
more pleasing working conditions does not amount
to promotions
 Purposes of promotion

 To motivate employees for higher productivity

 To attract and retain the services of qualified and
competent people
 To recognize and reward the efficiency of an employee
 To increase the effectiveness of the employee and of
the organization
 To fill up higher vacancies fro within the organization.
 To build loyalty, morale and a sense of belongingness
in the employee.
 To impress upon others that opportunities are available
to them too in the organization, if they perform well
 Principles of promotion
 Clear policy for filling the positions from internal
employees or through recruitment. Top positions are
normally filled through recruitment and lower and
middle positions through promotions
 Basis of promotion usually is merit or seniority
 Basis of promotion may also be competence of the
individual
 No frequent promotions
 Promotion should be preceded by job analysis and
performance evaluation
 Promotional policy should be discussed with the union
 Transfer

 Transfer is also called as horizontal or lateral

movement of employees.
 Transfer involves change of job (accompanied by a
change in the place of the job) of an employee
without a change in responsibilities and
remuneration
 Need and purpose of Transfers
transfer
 1. To meet organizational needs
 2. To satisfy employee Needs
 3. To better utilization of Employees
 4. To make the Employee More versatile
 5. To adjust the work force
 6. To provide Relief
 7. To Punish Employees
 Principles of transfer

 The frequency of transfers and the minimum

period between transfers need to be decided upon
and made known to all the employees.
 The authority which would handle transfers is to be
decided
 The criteria for entertaining transfers need to be
laid down and strictly adhered to.
 The area of the organization over which transfers
can be made need to be defined.
 Performance of the employee should be assessed
before transfer.
 Types of transfer

 Specifically transfers may be production,

replacement, versatility, shift and remedial
 Production transfers: to meet the shortage of
employees during production
 Replacement transfers: to replace senior positions by
junior officers
 Versatility Transfers: To make employees versatile and
competent in different areas
 Shift transfers: transfers between work shifts
 Remedial transfer: on request of employees (also called
personal transfers)
 Separations

quits

Voluntary
retirements

Discharges
Separations
Layoffs

involuntary Retrenchments

VRS

Rightsizing
 Voluntary separations

 When employee decides to terminate his/her

relationship with the employer. Tow types are
 Quits: out of dissatisfaction in the current job, and
 Retirements: Occur when the employees reach end of
their careers
 Involuntary separations

 Employer terminates the employee

 Three reasons
 Organization is passing through a lean phase
 Faulty hiring leading to a mismatch
 Employee exhibits deviant behavior vitiating the
environment
 Contd..

 Types
 Discharges: also called termination and is done when
the employer find the employee to be non performing
 Layoffs: Temporary separation. Section 2 (KKK) of the
Industrial Disputes Act, 1947, defines lay-off as a failure,
refusal or inability of an employer to give employment to a
worker whose name is present on the rolls but who has
not been retrenched. It may be for a definite period, after
which the employee may be recalled
 Retrenchment: termination by the employer because of
productivity or economic reasons. It differs from the
dismissal because here it takes place without any fault of
the employee.
 Contd..

 VRS (Voluntary Retirement Scheme): sending

home surplus labor. Also called golden handshake
plan. It is with benefits
 Like Hindustan Lever VRS consisted –
 A lump sum payment equal to 2.25 times in July 1992
salary multiplied by remaining years of service
(subsequently reduced to 15 years service)
 Pension equal to 70% of the July 1992 salary payable till
the age of 60 (the company’s retirement age)
 Prizes such as computers, trucks, houses, and so forth
(99 in all) to be decided on the basis of a lucky draw.
 Contd..

 Rightsizing: means reducing the size of the

workforce or increasing it to maintain the employee
strength at the most desired level.
 Mostly it is downsizing only
 Triggered by –
 The company’s bottom line is threatened
 Technological advancements renders people redundant,
and
 Organizational restricting
 Contd..

 It is quite painful for the employee and his family.

 Affects the morale of all the employees
 Guidelines to manage
downsizing
 Consider the human element
 Make ‘who goes and who stays’ decisions judiciously
 Delay and pay hikes
 Freeze hiring
 Restrict overtime
 Retain or redeploy employees
 Engage part-time employees
 Switch to job sharing
 Implement early retirement plans
 Attend to morale of serving employees
 Managing separations

 Positive outcomes
 Organizations become fitter and trimmer
 Saving on wage and salary bill
 Fresh ideas brought by new entrants
 Negative outcomes
 Disrupts employee morale, may rather add to cost
 Cost of turnover include retirement costs and hiring and
training costs