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Downsizing of workforce is generally implemented through Voluntary Retirement Scheme (VRS). Under this scheme, the organisation and its employees enter into a mutual agreement under which employees agree to voluntarily retire on payment of agreed compensation by the employer. VRS has come to be recognized as GOLDEN HANDSHAKE because of the benefits for both the employees and the employers. The employees get handsome amount under the VRS package and the employees save recurring fat wage bills in the long- run.
VRS is not new to India but has attracted the attention after the liberalisation in Indian economy which has increased the competition and has forced many organisation to have a relook at their redundant human resources which have been a source of fat wage bills without corresponding production.
VRS has been used in India as a part of downsizing strategy to cut the size of the wage bill. VRS has been executed in both public and private sector undertakings by offering attractive sepration package known as ‘golden handshake’. Such organisations include public sector banks, TISCO, SAIL, Bajaj, Auto, Philips India, Hindustan Unilever Ltd.etc.
However, it has some disadvatages also like efficient employees may leave the firm and inefficient may stay back which would reduce the skill base of the firm, VRS might increase the workload of existing employees if it is used to cut the pay bills.
34 Comments. Leave new
This is a very popular technique of reducing labor strength.. The plus point is that both the parties concerned are mutually happy..
Yes,true vinita !
As it cuts the huge wage bills of the organisations. And on the same hand beneficial to the employee too.
thanks for ur comment 🙂
Creates instability to the production level.
Yes, monika it do creates instability..but also vacates the seats for new talent which is beneficial for the organizations .
Creates unstability to the production level.
Well Written
Informative 😀 …
Thanks abhinandan !
Ty anirudh !
🙂
Some clauses need to be attached with this scheme to get the maximum benefits. Well articulated.
Informative post..!
Thanks padmaa and Ria for ur comments !
😉
good work 🙂
nicee 🙂
Would like to read More on this
concise article.good piece of work!
Ty shubhangi and aman 🙂
Mostly seen in take overs or government jobs. Well written
Yes siddhant, actually many goverment employess opts for this but it is private sectors also .
ty for ur comment !:)
Yes actually many govt employees opts for this but it is in private sectors also .
ty for ur comment !
🙂
Nice job! well written.. keep going 🙂
Ty dear for appreciating it !
🙂
New information! Thanks!!
Nice.
Thanks a lot !
🙂
very precisely written article.
good article.
Thanks !
🙂
Well Written
Good choice for the topic!
Informative 🙂
Well presented!
Very informative
Good job, Shikha
Yeah! VRS is widely being practiced in India to reduce the surplus staff.