South-Western - Management  
America Online to Close Oklahoma City Call Center
Topic Managing Human Resource Systems
Key Words Outplacement services, layoffs, downsizing
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News Story 

America Online (AOL) has decided to close its Oklahoma Call Center at the end of January due to “shifting business strategies.” Parent company Time Warner said that AOL’s subscriber base has declined from a high of 29 million subscribers in the late 1990s to 15.2 million U.S. subscribers in the third quarter of 2006. Many of these users are broadband subscribers whose AOL subscriptions are now free.

AOL employees at the Oklahoma City location will receive a severance package that includes salary, benefits, and outplacement services that vary by tenure and position. A spokesperson for AOL said that the call center opened in 1996 and was one of the first operated by the company during its period of tremendous growth. The company had a contract with the state of Oklahoma, which provided a rebate as a percentage of its payroll as it added promised employees. The company has fulfilled its contract with the state.

The Oklahoma City area has 32 call centers which employ about 19,000 people total. More than 70 call centers are located throughout the state. Oklahoma economist Robert Dauffenbach estimates that the city will lose $27 million in payroll plus indirect impacts due directly to the closing of the AOL center.

Questions
1.

What is downsizing? Do companies that downsize generally see an increase in productivity and profits?

2.

The article says that AOL plans to provide outplacement services to its displaced employees. What are outplacement services and what are the benefits of providing this type of service?

3.

Do some reading in your textbook about layoffs. What are some guidelines that a company should follow if layoffs are a necessity? List at least three of those guidelines here.

Source “America Online to Close City Call Center,” Daily Oklahoman, Dec.2, 2006, p NA.
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