Following Rogers’ offer of voluntary packages to 10,000 employees, three experts look at the advantages and risks of the strategy
Rogers Communications' recent offer of voluntary buyouts to roughly 10,000 employees — nearly half of its workforce — has put a spotlight on the practice as a workforce strategy. The telecommunications giant is pursuing departures rather than terminations, a choice that carries both considerable advantages and meaningful risks compared to traditional mass layoffs, according to experts.
Employment lawyer Lior Samfiru of Samfiru Tumarkin LLP identifies a couple of fundamental reasons companies pursue voluntary buyouts.
“The first is to save money, and the reason for that is with a termination, the law dictates what you have to pay employees, and that amount can be very significant,” says Samfiru. “A lot of these employers like Rogers have long-service employees for whom severance can add up quickly, and with a buyout or a voluntary package there's no requirement to pay anything — it's really what you and the employee agree to.”
Beyond financial savings, a second crucial advantage emerges: morale within the organization, says Samfiru. “When you let go of a lot of people, it certainly can affect morale and people's view of the company, and they start looking over their shoulders,” he says. “It's just bad for workplace morale, where in a voluntary situation it doesn't have the same significant effect on the employees.”
Legal strategy and compliance
Daniel Lublin of Whitten and Lublin Employment Lawyers explains the appeal of voluntary separation packages. “There's a really well-thought-through strategy when it comes to voluntary separation packages (VSPs) because really the idea is to minimize or mute the risk altogether,” says Lublin. “So you're not technically terminating people, you're offering them the opportunity to take a separation payment in exchange for leaving and signing a release of claims.”
This fundamentally alters legal obligations: “Statutory termination obligations don't apply, mass layoff provisions under the legislation don't apply, and common law severance and separation package amounts don't really compute when it comes to voluntary separation packages,” says Lublin.
However, employers must exercise caution that they don’t target specific employees for packages in a way that runs afoul of the law, according to Lublin. “Companies have to roll these out in a way that's not targeted, because that could look or appear to look like a potential human rights concern,” he says. “If, for example, the only group of people being offered voluntary separations are your oldest workers, those who have medical conditions, or those who are of a certain denomination and background.”
The retention paradox
Yet complexity emerges regarding who actually accepts these offers. Nita Chhinzer, associate professor of human resources at the University of Guelph, says she’s researched voluntary separation programs extensively, and she challenges conventional assumptions that poor performers, less-engaged employees, or those close to retirement will be the ones to take companies up on the offer to leave.
"Companies think that they will get rid of their poor performers, but what happens in reality is, it's actually your star performers who could choose to exit,” says Chhinzer. “Your star performers have highly marketable skills and high levels of transferability in the market, they’re often the ones who are more networked, and they know that they can secure employment down the road — they will feel incentivized to take a package and possibly take a quick vacation if they're getting a package and a chance to go work for a competitor.”
Chhinzer also says some take an offer to save face: “Some of them might leave because they think they'll be on the cutting block anyways, and this is an empowering opportunity for them,” she says. “But the strong performers who were perhaps already being coveted or identified by others are likely to leave as well.”
However, Chhinzer agrees that VSPs can be better for company culture. “When companies unilaterally make the decision in involuntary layoffs, survivors often feel disempowered, they feel guilty, and they have a high level of mistrust in management, and that has a big impact on organizational performance moving forward — which is why post-layoffs, a lot of organizations struggle with their employee performance,” she says. “So what employers think they can do is offer voluntary layoffs and they’re seen as a more humane approach rather than the company dropping the axe, because the employee is self-selecting into their employment termination, and they might be doing this because they feel that incentive of getting to say, ‘I was the one who chose to leave’ and it might not stigmatize them as much [as an involuntary termination] in the future.”
Specific eligibility over blanket packages
While the number of employees offered seems large, Rogers' approach differs from some other broad-based packages, according to Chhinzer. “They're doing eligible groups rather than offering blanket incentive packages such as the federal government did — something we’ve traditionally cautioned against in our research,” she says.
By excluding Maple Leaf Sports & Entertainment employees, on-air talent, and other strategic groups, Rogers reduces uncontrolled departures. “Having those exempt people also identifies for HR that this isn't just an open free-for-all,” says Chhinzer. “We might otherwise have 30 people out of a group of 40 who are applying for this incentive, but that's likely not going to happen [at Rogers], which could then cause future labour shortages.”
Both Samfiru and Lublin highlight a central operational challenge with broader VSPs: uncertainty about uptake. “The biggest concern that an employer would have is they don't know how many people are going to accept — while Rogers may have offered this to half their employees, I'm sure they don’t want half their employees to be gone,” says Samfiru. “If you're doing something across the country in various offices, you could be in a situation where people with similar roles accept and you're not staffed properly for a particular role.”
Not offering enough in the packages can be a risk that doesn’t solve the workforce issue, says Lublin. “I can see a situation where not enough compensation is offered to people, so they don't accept the voluntary separation or they don't indicate interest, and therefore you're not really shedding the headcount that you were hoping to,” he says.
Economic headwinds may stymie the strategy
The state of the economy and the world can also limit the effectiveness of VSPs to trim the workforce, says Chhinzer. “People are less likely to exit an organization during times of high levels of uncertainty, whether incentivized or not, so these targets often don’t achieve the desired result, which means that the company may inevitably end up doing involuntary layoffs,” she says. “One of the leading triggers for any type of turnover is your perception of alternative employment in the open market, and right now that's going to be low.”
With a voluntary situation, the law doesn’t matter — it’s what people think is right for themselves, says Samfiru. “What I always see on my end is people trying to assess whether the offer is good, and what I remind them is that what's good is what you consider to be good,” he says.
