Managing Exits Through Retrenchment

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Currently in India, the company is the undisputed leader in the fields of manufacturing devices for the government and public safety. In India, Motorola Solutions is headquartered in Gurgaon, Haryana and is following a focused, specialized approach to business, aiming at concentrating onthe field of security and surveillance primarily and bringing about further innovations in the same.

- COMPANY RESTRUCTURING AND IMPLEMENTATION OF RETRENCHMENT

In October 2014, Motorola Solutions sold off its enterprise business to global tech giant Zebra Technologies for $3.45 billion and the India business was significantly affected by the move. From more than 400 employees in the country, the numbers drastically came down to 80 people pan-India. As a result, many employees found themselves in new roles at the new company as well as some were requested to exit the company. The latter is known as retrenchment and applies specifically to the Motorola Solutions case.

Under the Industrial Disputes Act of 1947 of the Indian Constitution, retrenchment is defined as a process similar to downsizing, in which a company reduces outgoing money or expenditures or redirects focus in an attempt to become more financially solvent and hence resorts to cutting back or downsizing its labor force.

Section 2 of the Industrial Disputes Act, 1947 defines Retrenchment as “ the termination by the employer of the service of a workman for any reason whatsoever, otherwise than as a punishment inflicted by way of disciplinary action, but does not include:

- Voluntary Retirement of the Workman

Or

- Retirement of the workman on reaching the age of superannuating if the contract of employment between the employer and the workman concerned contains a stipulation in that behalf

Or

- Termination of the service of the workman as a result of the non-removal of the contract of employment between the employer and the workman concerned on its expiry or of such contract being terminated under a stipulation in that behalf contained therein

Or

- Termination of the service of a workman on the ground of continued ill-health

- PROCEDURESPRECEDENT TO RETRENCHMENT

Section 25F of the Industrial Disputes Act provides the conditions precedent to retrenchment:

- Retrenching an employee can be carried out only if the person has been employed for a continuous period of one year or more

- The employee has been given one months’ notice in writing indicating the reasons for retrenchment and wages have been paid for the period of the notice

- The employee has been paid compensation at the time of retrenchment, which shall be equivalent to fifteen days average pay [for every completed year of continuous service] or any part thereof in excess of six months

- Notice in the prescribed manner is served on the appropriate Government Gazette

- Calculation of average pay is done by dividing the last drawn monthly salary by 25 and then multiplying the dividend by 15 for every completed year of continuous work

Retrenchment can have wide-ranging repercussions on an organization and has costs and benefits depending on how it is managed. Positive repercussions imply that the retrenchment exercise is likely to achieve its main objective which is improved quality of service delivery. However negative repercussions of retrenchment may be disastrous for an organization’s relations with its employees and therefore needs careful tackling.

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Retrenchment may create demoralization, dampen organizational productivity and increase voluntary retrenchment. It may also discourage other employees (Apart from the ones being retrenched) to end up leaving the organization.

At Motorola Solutions, the Human Resources (HR) department had to grapple with the probable risk of souring employee relations (with the ones retrenched) as well as dealing with the ‘Survivor Syndrome’ among the remaining employees.

- RETRENCHMENT POLICIES AT MOTOROLA SOLUTIONS

The decision of downsizing is a business decision to fulfill the organizational goals of a company and is usually taken by business heads- this time it was no different. On 27 October 2014, the enterprise division of the company was sold off to technology solutions giant Zebra Technologies Corporation. Greg Brown, the CEO and Chairman of Motorola Solutions stated "With the successful close of this transaction, Motorola Solutions is now singularly focused on the very core that our company was founded and built upon - a business that continues to help build safer cities and thriving businesses around the world through innovative mission-critical communications solutions."This clearly demonstrates an overhaul in the overall structure of the company and its business and the adoption of a more narrowed-down, focused approach by the company hereon.

Prior to this restructuring, the India team had close to 500 employees- however more than 400 of them got separated from company- some were absorbed by Zebra Tech and the others were requested to exit. At present the headcount of Motorola Solutions India operations in 80-100 employees. The decision of resizing and restructure was taken by the senior management and the communication to the respective teams or units was carried out by the senior Managers. The HR department made a consistent effort to ensure the employees separating from the company are supported and hand-held throughout the painful process through effective communication. The completion of the resizing process including the documentation and other exit formalities were carried out majorly by the HR.

The implementation of any resizing program depends on the organization’s culture and the key to its success is widely viewed to lie in the communication process. The Human Resource Management International Digest (2002) advocates the need to ‘over communicate’. In line with this, constant efforts were made to provide information about the current and future situation to all employees frequently, and through various channels.