Professor Tom Davenport of Babson College recently wrote on interesting post on blogs.harvardbusiness.org entitled, “Is Forced Time Off Fair?” He challenges the “fairness” of flexible labor cost savings strategies such as reduced schedules/salaries, unpaid vacation days, job sharing, and furloughs. And he warns of unintended consequences like losing people who don’t want to participate. While he raises points worth considering, even most of the commenters responding to the post on the site agree—these alternatives may not be completely “fair” but they are necessary in many cases, and are certainly better than layoffs.
Professor Davenport starts off by saying,
“One of the common approaches to dealing with this recession is for companies to ask—well, tell—employees to take time off without pay every week or two. This 10 or 20% haircut is supposed to indicate that ‘we’re all in this together,’ and that it’s better for everyone to suffer a little than lay some people off. While I have sympathies with this philosophy, I’m not sure it’s either fair or wise.”
A “common” approach? Unfortunately, it isn’t common enough
There was a glimmer of good news a couple of weeks ago. Watson Wyatt released a study that found the number of companies saying they were going to cut jobs decreased from the previous quarter. However, as the recession drags on, the pressure to manage labor costs will continue especially since employment is a lagging indicator to a recovery.
As I have written numerous times, a comprehensive cost/benefit analysis clearly shows that the benefits of layoffs are limited. Even more companies should be considering alternatives to layoffs that lower labor costs but retain employees. For inspiration, check out the Downsizing Flexibility Champions honor roll.
What’s “fair” when hard choices have to be made to save labor costs? (Click here for more)