1. Sure, if you have to hire temporary replacement workers to cover your furloughed staff then you won’t save much money – that seems pretty obvious. And if a furlough is going to allow your construction site to get ransacked you might want to avoid that.

2. I think many companies are considering furloughs because their workload has decreased. Maybe they anticipate it increasing again in the future and the cost of laying people off and then hiring new people is greater than a short furlough. Either way, if the workload would pile up as a result of a furlough then doing layoffs will have the same impact – more work for the people remaining.

3. This is a pretty good and a tough one to figure out. While top performers are important, many businesses rely on the second tier performers as well and if you alienate all of them you could get in trouble.

4. For many organizations layoffs will cause the same turmoil as a furlough. Just like with a furlough, no company is going to promise that there won’t be more layoffs.

5. Is the author saying furloughs never work? I’m sure there are plenty of times when furloughs are followed by layoffs – just like many times layoffs are followed by more layoffs – but I don’t see what that invalidates the idea of a furlough.

6. Once again, I’m not sure how layoffs don’t have the same (or worse) impact on being “fully staffed”. If you do layoffs you’re permanently not fully staffed. Obviously, there are some businesses where a company-wide furlough for any duration would have a huge impact on customers – I assume those companies would do staggered furloughs or consider other options. I don’t think a customer would decide to take their business to a company that did layoffs instead of one that did a furlough.

7. I think this is the same as point #2 and has the same issues – if you do layoffs your best people will have that much more on their plate, which would negatively impact product quality.

8. Again, I think doing layoffs would give the remaining staff as much uncertainty as a furlough would. If you do layoffs these innovators will be facing a larger workload with the same number of hours – is that better than the same workload with fewer hours?

9. Seriously, I don’t understand why a furlough is a short-term solution but layoffs are a long-term solution. Both situations freak out the employees.

10. Same thing – would people refer candidates to a company that just did a round or two of layoffs? Many places, when they do layoffs, target the more recent hires – seems like a scarier situation than a furlough. No doubt, in either case you’re going to run into problems with recruiting but I really don’t see why a furlough would be worse than layoffs.

11. This seems silly – you wouldn’t implement a furlough program that then forced you to hire expensive consultants to cover your missing employees. Does anyone do that? Of course that’s a bad idea. Also, won’t teamwork suffer when you lay off half the team? Seems like you’re better off working on the project knowing that your teammates will be back soon to help out.

12. I don’t know much about this one.

13. I think if your business has complex scheduling needs then you would need to implement a furlough program that can accommodate those needs.

The example the author gives is entertaining but does nothing to support his position. First of all, if the team fired the third receiver they would have been without 6 catches and 71 yards in the game. Without the third string QB their preparation for the game would have suffered. Wouldn’t they have been better off doing a one-day furlough of the entire team? Why can’t a furlough program be tailored to the organization?

I guess my main point is that there are certainly many drawbacks to doing a furlough and I’m sure there are many situations where a round of layoffs is a better plan. However, I don’t think you can make the blanket statement that layoffs are always the better approach.

I think there’s a lot of value in keeping a good team together. If your team is made up of similarly performing members (i.e. not a couple of super stars and a handful of duds) then sharing the pain with the hopes of having the team intact when business picks up again seems like a valid approach to take.

Additionally, what was not addressed is how top performers respond when a lay-off/RIF occurs–and that is a reduction in productivity. There was a very good ERE article last December which addressed the issues of decreased productivity and confirmed what many HR people already knew–that employee productivity declines after a layoff.

Merlynn Bertini

Here the author shares an oft sited Machiavellian premise that sharing the burden of a tough economic climate through “temporary furloughs” is not fair to “top performers” and that management is simply too spineless to cut dead wood, and cut deeply.

His main statement is that “the key to any effective salary-savings program is to target the individuals who add little value compared to their salary.”

But, there are countless reasons Top Performers ARE sacrificed in every downturn, and cause for concern if you find yourself still on the corporate payroll; wheather furloughed or not. In either case, at the end of the day you may easily find that you have been “left behind.”

His main statement is that “the key to any effective salary-savings program is to target the individuals who add little value compared to their salary.”

But, there are countless reasons Top Performers ARE sacrificed in every downturn; and cause for concern if you find yourself still on the corporate payroll.

At the end of the day you may find that you have in fact been “left behind.”

I would like to add, though, that these are supposed to be cost saving measures across the board. I would imagine the CFOs just love the idea that the major liability of vacation time is reduced greatly across the whole company, since employees would most likely be required to take vacation time.

Additionally, I would imagine that over the last few years these companies have cut through re-engineering, right sizing and related projects. The high performers in these companies already are stretched beyond what was considered normal work. Eliminating the under performers should be limited to those whose work would not negatively effect the work and performance of those higher performers.

Basically, companies like Toyota and Cisco, who have eliminated non performing units, may be hoping that things turn around for the whole organization that is currently underperforming across the board.

Where furloughing really hurts is in customer service and repair related services. Additionally, there must be a law of diminishing returns. Just like companies that cut costs to manufacture products in much lower cost environments. Although you can hire 10 or more possibly there than in the Western countries, more often than not, those 10 can never afford to buy the product they are manufacturing, so, here we have a lose/lose scenario.

I think the above companies have to have considered they are close to the bone and have reduced in the past to what they feel are optimum levels. Any more could create even more work force problems.

Joe Slevin
http://www.linkedin.com/in/joeslevin

One more note: For all the literature out there about the ultimate costs of (and alternatives to) layoffs, cuts and furloughs – businesses continue to do these things in droves. What gives? Is it that people seems like many either refuse to listen? Refuse to believe it? Or are they simply taking a “we’ll cross that bridge when we get there” approach?

1) It usually takes a small novel reviewed by an entire legal team to get someone fired.

2) Order of layoff is often determined by seniority, not job performance.

One could easily argue that what is really required in many public organizations is system-wide reform. The efforts we’ve seen to try to do that lately have met with mixed success.

That said, even companies that have done little or no workforce planning will be well served in using the current economic downturn as an opportunity to identify which organizational roles will be fundamental to the growth of the business when the economy ultimately begins to recover, or even if it doesn’t. Using workforce planning techniques to match a company’s demand for employees with projected supply, and developing proactive strategies to address any gaps is a critical responsibility of HR in bad, as well as good, times. Doing so enables firms to make informed and strategic decisions when forced to cut staff, as opposed to taking the proverbial “peanut butter” approach that cuts not just fat from the organization, but muscle and bone as well.