Round 3: Layoffs


Spreadsheet for Calculating the Net Short-Term Cost Savings (Benefit) of a Layoff

Line

Amount

Long-Term Savings

1

Annual total compensation cost per employee

(Annual total compensation cost/employee)

2

Total number of employees to be laid off

(No.of employees to be laid off)

3

Total Long-Term cost savings

(Annual total compensation cost/employee No.to be laid off)

Short-Term Cost to Implement

4

Outplacement services (generally a minimum of $500 per employee)

($ in outplacement services per employee)

5

Severance package per employee (generally several weeks pay and benefit continuation for each year of service)

($ in salary and benefit continuation per employee)

6

Accumulated paid vacation

($ in accumulated vacation per employee)

7

Total cost per employee

(Sum Lines 4–6)

8

Total cost to implement layoff

(Multiply Line 2 Line 7)

9

Net Short-Term Cost Savings (Benefit)

(Line 3 Line 8)

Spreadsheet for Calculating the Real Long-Term Cost of a Layoff

Line

Item

Amount

1

Recruitment,selection,and orientation cost expended per employee laid off (can amount to $12,500 to screen and $7500 to orient)

($ per employee laid off)

2

Training investment per employee hired as a replacement (can amount to $3000 per person per year)

($ per employee laid off)

3

Recruitment,selection,and orientation cost expended per employee hired as a replacement (can amount to $12,500 to screen and $ 7500 to orient)

($ per employee laid off)

4

Market premium paid to attract replacement into the company

($ difference between salary of the laid-off person and salary offered to the replacement)

5

Cost of additional supervision (estimate the percentage of a supervisor’s time required during the first year times the supervisor’s salary)

(% of additional supervisor’s time required supervisor’s salary)

6

Economic opportunity cost of lower productivity during first year of the replacement’s employment

(% at which the new person works estimate of the value of his work output during the first year)

7

Total long-term cost per replacement

(Sum Lines 1–6)

8

Number laid off

(No.laid off)

9

Total long-term cost for replacing those laid off

Line 7 Line 8




The Headcount Solution. How to Cut Compensation Costs and Keep Your Best People
The Headcount Solution : How to Cut Compensation Costs and Keep Your Best People
ISBN: 0071402993
EAN: 2147483647
Year: 2002
Pages: 143

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