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    SAIL's Voluntary Retirement Scheme

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    Renei Karyll Baaco
    1) SAIL launched various voluntary retirement schemes (VRS) to meet McKinsey's target of reducing its workforce to 100,000 employees by 2003, but few workers accepted the offers due to hesitations around the consequences. 2) Younger workers were hesitant to accept VRS due to the unstable income, while older workers were hesitant to lose the daily routine and sense of purpose from full-time work. 3) Restructuring and workforce reductions through VRS need to go hand-in-hand for business sustainability, as reducing employees alone does not guarantee positive organizational outcomes.

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    SAIL's Voluntary Retirement Scheme

    Uploaded by

    Renei Karyll Baaco
    2K views4 pages
    1) SAIL launched various voluntary retirement schemes (VRS) to meet McKinsey's target of reducing its workforce to 100,000 employees by 2003, but few workers accepted the offers due to hesitations around the consequences. 2) Younger workers were hesitant to accept VRS due to the unstable income, while older workers were hesitant to lose the daily routine and sense of purpose from full-time work. 3) Restructuring and workforce reductions through VRS need to go hand-in-hand for business sustainability, as reducing employees alone does not guarantee positive organizational outcomes.

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    SAIL’s Voluntary Retirement Scheme

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    1) SAIL launched various voluntary retirement schemes (VRS) to meet McKinsey's target of reducing its workforce to 100,000 employees by 2003, but few workers accepted the offers due to hesitations around the consequences. 2) Younger workers were hesitant to accept VRS due to the unstable income, while older workers were hesitant to lose the daily routine and sense of purpose from full-time work. 3) Restructuring and workforce reductions through VRS need to go hand-in-hand for business sustainability, as reducing employees alone does not guarantee positive organizational outcomes.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    2K views4 pages

    SAIL's Voluntary Retirement Scheme

    Uploaded by

    Renei Karyll Baaco
    1) SAIL launched various voluntary retirement schemes (VRS) to meet McKinsey's target of reducing its workforce to 100,000 employees by 2003, but few workers accepted the offers due to hesitations around the consequences. 2) Younger workers were hesitant to accept VRS due to the unstable income, while older workers were hesitant to lose the daily routine and sense of purpose from full-time work. 3) Restructuring and workforce reductions through VRS need to go hand-in-hand for business sustainability, as reducing employees alone does not guarantee positive organizational outcomes.

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    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    of 4

    Renei Karyll D.

    Ba-aco
    BAAA 2222 Industrial Relations

    SAIL’s Voluntary Retirement Scheme

    1. McKinsey's recommendation is that SAIL cut its workforce to 100,000 by the end of 2003.

    SAIL has launched various VR schemes to meet this target. Though every time the company is

    comes out with improved schemes there are still not many takers. What according to you could

    be the reasons?

    VRS efforts did not reach the target reduction of workforce by 60,000 due to the

    hesitations of different age groups behind the consequences of accepting the VR. Accepting the

    VR for younger workers means unstable source of income. Workers on this age group are still

    growing their savings and living on their means. Most does not have the liberty and resources to

    pursue their dreams so they start by working to earn and not because of dreams or passion. In

    addition, accepting the VR does not guarantee better job opportunity and welfare. They would

    rather work on an unfulfilling job than lose a source of income. Accepting the VR for older

    workers and workers that rendered long years of service means a transition from the daily routine

    of a full-time job to the unstructured life of retirement. These workers already have a habit of

    going to work and losing such habit might translate to a lack of sense of purpose. They might get

    bored and prefer to work than do nothing productive. Furthermore, pursuing personal dreams on

    their stage of life might not be that desirable for them because they will lose the sense of

    security. They rather choose a career that is known to them than to take a risky venture. No

    matter how attractive VR schemes might be, older and younger workers will consider its long-

    term financial and welfare benefits which VR is limited to offer.


    2. The staff education exercise on VRS at SAIL seems to be more of a reaction to the power

    plant hive-off fiasco than a proactive measure. What other steps can SAIL take to educate

    employees about VRS? Explain.

    The company-wide information dissemination program must focus on the actions to be

    taken by SAIL in assuring protection of employee’s interests. Instead of discussing the why’s

    and how’s of SAIL financial and business restructuring plan, SAIL must understand first what is

    important to the employees who will decide whether to accept the offer and then make sure the

    program addresses those issues. In addition, more education exercises must be conducted to

    reach the majority of 160,000 employees. Only 16,000 employees were included on the

    education exercise and such number against the total SAIL employees is not effective to

    communicate the intentions of SAIL. Including a larger number of employees resonate that SAIL

    is concerned about the welfare of its employees and has the employee’s interest at heart. To

    strengthen comprehension, SAIL can invite spouses or family members of the employees during

    the staff education exercise. Many of the spouses take care of the family finances. Thus, hearing

    about the offer directly from SAIL is more favorable to help them on their decision-making.

    During the education exercises, SAIL must consider the personal nature of employees’ responses

    and be sensitive to their concerns. In doing so influences results and form SAIL’s morale with

    the remaining employees after the VR offer ends.


    3. According to McKinsey proposals, offering VRS to employees was the part of the

    restructuring plan. Do you think VRS is sufficient without restructuring or vice-versa? Comment.

    SAIL in 1998 incurred huge financial loss and projected another loss on the following

    years. Such financial situation is an indication that something is wrong on the current business

    structure. The company’s workforce is beyond what the company needs and lacks proper work

    function. More numbers supposedly improve productivity but SAIL’s situation is the opposite

    that resulted to negative organizational outcomes. Hence, restructuring is necessary to improve

    organizational outcomes and adapt to the changing business environment. In most cases,

    financial and operational changes are needed for business sustainability and maintain relevance

    on the economic demands. SAIL’s VRS is not sufficient without restructuring because it will be

    counterproductive. The mere reduction of employees does not guarantee positive organizational

    outcomes. Thus, restructuring and VRS goes together to effectively change the business for the

    better. Restructuring creates effective operational structure which includes appropriate work

    functions. The VRS is a way of molding proper work functions to assure productivity and

    manage costs. Restructuring and VRS together will provide maximum organizational impact that

    SAIL wants to achieve.


    4. In February 2001, SAIL ended its four-year recruitment freeze by announcing its plans to fill

    up more than 250 posts. Do you think this is the right move especially when a VRS is being

    offered to its employees? Explain.

    Offering jobs right after offering VRS to the employees will create doubts on the

    remaining employees. They will think that SAIL does not prioritize the employee’s interests and

    insensitive to the impact of its restructuring plans even though they are the ones who is greatly

    affected of the change. It will lessen the morale of the employees and affect SAIL’s reputation.

    SAIL should initially offer the new positions to the remaining employees who has the right

    credentials. Considering the seniority and prioritizing its remaining employees will boost

    employee’s morale and ease their doubts on the effects of restructuring.

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