Case A- Nokia closes plant in Germany
communicatinglabourrights.wordpress.com article told about Nokia´s plans to close a plant in Germany, and relocating the operations to Romania in order to improve their competitiveness in the markets. This would result to about 2300 employees getting fired in Germany operations. The article also includes information about issues concerning Nokia getting funds from EU, and the funds would have been considered as a unfair competition against other companies in the same markets.
The situation with German plant of Nokia was described "hostile" by Juha Äkräs, Nokia´s Senior vice president of human resources. Äkräs was designated to talk to the 2300 employees in German and address them the issue on layoffs. (Sucher and Gupta, 2018.)
According to Sucher and Gupta, there were serious consequences after the layoffs in Germany. A week after after the layoffs, 15 000 people protested at Bochum, Germany. Also German government officials launched an investigation about Nokia and demanded Nokia to pay back subsidies it had received for the plant. Another consequence was that unions called for a boycott of Nokia products. After all, the shut down of the German plant cost Nokia around 200 million euros.
From Nokia´s point of view, they thought they are doing the necessary thing to ensure the business keeps going and production is as effective as possible. Of course this situation was difficult for both parties, the employer and employees in Germany. Also, this kind of layoffs could make other employees in different countries think about their jobs and can they keep them.
In the case 7B, YLE reports about Nokia cutting 3500 jobs to ensure its profitability. Nokia´s Executive Vice President of markets, Niklas Savander told ''It is impractical to manufacture products in Europe when one has to fly all the components to Europe and then fly the ready-made phones back to Asia.''
I think this is well reasoned, it makes sense that if you make phones for Asian markets, it would be more effective what comes to the supply chain management to produce the products in Asia unless it would be a competitive advantage for some reason to manufacture products in Finland. It surely lowers Nokia´s manufacturing and transportation costs to make products in Asia.
In YLE´s article in 2012, it was stated that hundreds of former Nokia employees leave Accenture where they were outsourced earlier. Nokia had transferred 1200 Symbian developers to Accenture. Due to this move, some Accenture employees had so little to do, that there was no other option than letting go employees. Accenture provided the employees leaving the company with layoff packages. Also, the transferred employees have not been pleased with the new employer, Accenture.
This employee outsourcing could be considered not so successful in my opinion since there was not enough work at Accenture for the transferred employees too. It although good that the employer provided these packages consisting up to 15 months of compensation to the employees and employees have plenty of time to find a new job.
Exit management includes many topics in organizations, such as employee relations and resourcing, health and safety, compensation, benefit and training and development. All these areas must be considered when making for instance layoff plans or other crucial decisions regarding employees. According to a presentation made by Elizabeth SanMiguel and Anita Pösö, there are different situations where exit management is needed. Employees could leave an organization for different reasons, for example when retiring, employer terminates employee contract or an employee decides to leave him/herself. These different situations need different approaches to handling employees leaving the company.
Companies do bad layoffs and for the wrong reasons or even both of these at the same situation. By "bad" layoff is meant that the they are not fair or have too large negative effects on the business. The job cuts in Bochum resulted to outrage because Nokia had generated so much profit the year before, so people did not understand the need of the layoffs or considered it unfair.(Sucher and Gupta, 2018.)
How layoffs affect the organization?
According to Sucher and Gupta, shown in a study conducted by Deepak Datta in University of Texas, found that in a financial side, layoffs resulted companies to suffer declines in profitability and the drop in profits lasted about three years prior layoffs. Another study conducted by researchers in Auburn University, Baylor University and the University of Tennessee found that companies which have had layoffs are twice as likely to file for a bankruptcy compared to companies not having layoffs. Also, after layoffs the employees who kept their job suffered from about 20% decline in a job performance. Here was just some effects that layoffs can have in an organization.
Collective dismissals in Finland and United Kingdom
When an employer needs to layoff people in Finland, there are some rules for collective dismissals. According to Tehy´s websites, collective dismissals have to be processed if an employer is considering layoffs because of financial or production reasons. Negotiations about this kind of dismissals need to be done if there is more than 20 employees in the company. Declaration of dismissal needs to be given to the employees as soon as possible. The negotiations about dismissals has to be done before any layoffs or decisions. Employer need to inform the employees five days before the negotiations in paper. In addition to the employer and employees, work placement trustee takes part to the negotiations.
According to gov.uk, if the employer is about to layoff 20 or more employees, the collective redundancy rules apply. There should be a consultation between the employer and a representative, such as trade union or and elected employee representative. The collective consultation must cover ways to avoid redundancies, the reasons for layoffs, how to keep the number of dismissals to a minimum and how to limit the effects for employees involved. If there is 20-99 employees involved, the consultation must start at least 30 days before any dismissals take effect and if there is 100 or more employees involved, the consultation must start 45 days before any dismissals. If an employee has fixed-term contract, the employees does not have to be included in the negotiations except if the employer would end the fixed-term contract early due to the collective dismissals.
There are always challenges depending on the situation and the case. I have been part of one collective dismissal before and I was not dismissed, but the situation affected the work efficiency and productivity quite a lot for many employees. In many cases, the employer must layoff people because of financial difficulties of the organization. In both countries, Finland and UK, there are certain rules to apply to the dismissals. This is in protection of the employees and also employers. There are stated in both countries´ rules that some one outside the company must be involved in the negotiations to ensure that the process is fair for everyone. Another benefit of these rules are that the employees must be informed early about the upcoming dismissals so that they have time to prepare themselves. In Finland it is sure that if you are dismissed, you can get financial support from KELA which is partly financed by the government.
Sources
https://communicatinglabourrights.wordpress.com/2008/01/17/nokia-closes-plant-in-germany-and-relocates-in-romania/. Accessed 1.11.2018
https://yle.fi/uutiset/osasto/news/nokia_cuts_3500_jobs_to_ensure_profitability/5431070. Accessed 1.11.2018.
https://yle.fi/uutiset/osasto/news/hundreds_of_nokias_outsourced_symbian_developers_leaving_accenture/5252177. Accessed 1.11.2018.
https://hbr.org/2018/05/layoffs-that-dont-break-your-company. Accessed 1.11.2018 and 6.11.2018.
https://haagahelia.sharepoint.com/:p:/r/sites/globba/coursematerials2/_layouts/15/Doc.aspx?sourcedoc=%7B6a4d3a01-c1c3-49ac-abc1-8e84d99737e3%7D&action=default. Accesssed 1.11.2018.
https://www.tehy.fi/fi/apua/tyosuhteen-paattyminen-ja-lomautus/yt-neuvottelut-tyovoimaa-vahennettaessa. Accessed 6.11.2018.
https://www.gov.uk/redundant-your-rights/consultation. Accessed 6.11.2018.
Picture 1: http://nokiamob.net/2017/09/24/nokia-plans-to-cut-597-jobs-in-france-by-end-2019-unions-strongly-against/
Picture 2: https://www.harpermacleod.co.uk/hm-insights/2016/march/can-demotion-for-gross-misconduct-amount-to-unfair-constructive-dismissal/
Picture 3: https://www.personneltoday.com/hr/6-april-collective-redundancy-reforms-why-three-little-words-mean-huge-confusion-update/
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