Fast Company: Wharton’s Peter Cappelli on Historical Precedence for Flexible Downsizing

Today, Microsoft announced the first layoffs in its history. Nowhere in the announcement were flexible alternatives to job cuts mentioned.  The signal this sends to other organizations is that cutting employees is the only way to achieve labor cost savings.  But, it’s not.

Since the summer, I’ve mentioned in numerous posts the need for a three-tiered, more flexible approach to downsizing that goes beyond job cuts (here, here, here and here).  This message gains importance each week as the rate of layoffs by companies, like Microsoft, continues to snowball.

There are creative, cost-effective ways to use strategic work+life flexibility to reduce labor costs while remaining connected to valuable talent. These options include reduced schedules, job sharing, sabbaticals, and contract workers.  But I didn’t realize that there’s historical precedence for flexible downsizing until I read a terrific article entitled, “Alternatives to Layoffs,” in Human Resource Executive Online by Dr. Peter Cappelli, the director of the Center for Human Resources at the Wharton School of Business (a recent blog post by AWLP’s Kathie Lingle also provides interesting historical context).

Not only does Cappelli outline the history of a more flexible approach to labor cost reductions, but he’s as mystified, as I am, that companies aren’t considering these alternatives.  In fact, he contends we are witnessing a “herd mentality” in the organizational response to the economic downturn.  Companies need to reduce costs, see their peers laying off workers, and think that’s what they need to do.  No, it’s not.

In an effort to shift the herd, I spoke recently with Dr. Cappelli.  Highlights of our conversation include: (click here for more)