I noticed that French news sources refer to the economic downturn not as a recession but as a crisis (while I was in Europe in December.) Aside from a recent headline or two on the business pages, I have not noticed American news sources taking our current situation quite so seriously. There are all kinds of projections about how bad it could get, but not so much attention to how bad it already is.
I have noticed the attention to downsizing and layoffs. For instance, Forbes.com has a weekly layoff tracker. This week's report includes Alcoa, Cigna, Eaton, EMC, and Walgreens, which together total more than 18,000 job losses. In addition, the majority of searches that lead blog readers to my blog are about either layoffs, or culture change.
So, what are some good strategies for avoiding layoffs, and riding out this economic crisis? Two recent articles provide a springboard for brainstorming.
Matt Richtel's New York Times article highlights some of the ways that companies are cutting labor costs without cutting labor. These include:
- cutting five day workweeks to four
- mandating time off
- reducing salaries
- trimming benefits
- eliminating overtime pay
- eliminating bonuses
- scaling back holiday parties
Cari Tuna's Wall Street Journal article highlights other firms that are cutting costs without resorting to layoffs. The examples she provides include:
- delaying facilities expansions
- cutting temporary staff
- bringing outsourced work back in-house to keep idled employees busy
- freezing new hiring
- offering voluntary retirement packages
- cutting budgets for travel
- asking vendors for discounts
- moving to smaller, more affordable office space
Perhaps most interesting from the symbolic and financial perspectives is the elimination of bonuses, including for CEOs. At Citigroup, executive salaries are also being reduced, up to 40 percent. And Jack Davis of the San Jose Mercury News reports that executive salary cutbacks are climbing, citing the examples of Motorola, Western Digital, and FedEx. These cutbacks can reinforce employees' attachments to the company and their leaders, since they help reinforce the view that "we're all in this together."
Fortunately, other blog writers have continued to reinforce my main message about layoffs.
- Steven Gill at the Performance Improvement blog highlights the heightened importance of communication and employee engagement during this economic slump.
- CV Harquail, who edits the blog Authentic Organizations, wrote a recent post with a valuable synthesis of research on layoffs and alternatives to layoffs. There's also a research review at iopsych.org entitled Has Downsizing Gone Too Far? A Review of the History and Results of Downsizing.
- Wayne Cascio's book, Responsible Restructuring, includes detailed case studies of companies that avoided layoffs and returned to financial health, could also be a valuable resource.
The bottom line is that layoffs are rarely the best choice for riding out a downturn, as I have written before. There are definitely other measures managers can take to reduce costs while preserving flexibility to respond quickly when the market begins to pick up again.
Comments