T. Ramayah, T. Ramayah and Muhamad Jantan, Muhamad Jantan and Krishnan, Chandra Mohan
(2004)
Retrenchment Strategy In Human Resource
Management: The Case Of Voluntary
Separation Scheme (Vss).
Asian Academy of Management Journal (AAMJ), 9 (2).
pp. 1-28.
ISSN 1394-2603
Abstract
One of the major challenges of business leadership in this millennium is to manage
continued improvement in a competitive position. In order to stay competitive, companies
are trying to become more "mean and lean". To achieve this, many major corporations
have adopted the "downsizing and rightsizing" strategy. Voluntary Separation Scheme
(VSS) has been a global phenomenon since the 1980's and is common particularly in
larger companies. In this study, the reaction to the VSS program involving the employees
of a government agency embracing privatisation was studied, specifically the influence of
the basic needs and referent power on the choice of acceptance and non-acceptance of
VSS. The second objective of this study was to evaluate the success or failure of the VSS
from the workers perspective in particular, whether their decision met their needs. The
results showed that basic needs had an influence on the acceptance and the nonacceptance of VSS, namely health needs, security needs and self-esteem needs. All the
referent powers (subjective norms) had an influence, but surprisingly close friends had
the strongest influence. Differences were also found between the expectations and the
perception of the workers who accepted or rejected the VSS. From the workers'
perspective, it appeared that the VSS carried out in this organization was not a success.
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