Attn HR Dept: Alternatives To Layoffs
January 5, 2009 at 6:16 AM (PT)
Cutting wages or hours across the board in an attempt to save jobs would save more money and be less agonizing than layoffs, writes PETER CAPPELLI in HUMAN RESOURCE EXECUTIVE ONLINE. But too few companies even consider such alternatives, possibly more due to psychological reasons, than fiscal ones.
The recent front-page story in the NEW YORK TIMES followed similar stories in THE WALL STREET JOURNAL and on NATIONAL PUBLIC RADIO and other outlets about companies pursuing alternatives to layoffs that would cut costs in other ways.
There is at least some circumstantial evidence that the need to keep your workforce together by avoiding layoffs is even more important now than in the past.
The idea that there are alternative ways of handling the need to cut costs without laying off individual workers is actually a very old story. In fact, up until the mid-1980s, the idea that an employer would dismiss workers permanently -- that they were not expected to come back after business picked up -- was so rare that the Bureau of Labor Statistics did not even keep track of such cuts.
Given the steepness of the current downturn, it isn't surprising that there would be a lot of attention directed at layoffs and their alternatives. Further, there is at least some circumstantial evidence that the need to keep your workforce together by avoiding layoffs is even more important now than in the past.
The best example of a significant company that is pursuing real alternatives to layoffs is FEDEX, where they are cutting wages to reduce costs. What is particularly important about the cuts at FEDEX is that the cuts are even bigger for executives: 10% for executive pay, 5% for everyone else. FEDEX also announced for the first time that it will not be advertising in the SUPER BOWL, another very public effort to save money.
CAPPELLI concludes that the fact that virtually every company, despite their varying circumstances, ends up pursuing exactly the same approach to cost-cutting suggests that the processes involved have more to do with psychology -- herd mentalities -- than to any rational processes.
Read the full article here.