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INTRODUCTION
An employee is said to be "retrenched" when his or her job becomes redundant and the employer either cannot offer the employee any alternative position or, any alternative position offered by the employer cannot be accepted by the employee. Retrenchment can be done in two ways: One way is to slash expenditures by laying off employees, closing superfluous offices or branches, reducing benefits such as medical coverage or retirement plans, freezing hiring or salaries, or even cutting salaries.
The second way in which a company may practice retrenchment is to downsize in one market that is proving unprofitable and build up the company in a more profitable market.
RETRENCHMENT AFTER-EFFECTS
The after-affect of retrenchment is always dangerous because: It may leave organization flat-footed when things are better off, as sometimes things are better off It could further escalate costs as employees are to be compensated with severance packages. It results in sudden shortage of staff, loss of institutional memory It lowers loyalty amongst existing employees.
CONCLUSION
Although retrenchment is inevitable under some circumstances companies must resort to it only under dire conditions. Companies must take a softer approach and must look to review spending to curtail costs in certain areas It must also encourage employees to come up with innovative ideas in all departments. Management should involve employees in adjusting operations to improve efficiency.
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