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Companies Abandon No-Layoff Policies
No-layoff policies have become one of the many victims of the current recession. In November, Enterprise Rental Car of St. Louis announced the elimination of more than 1,000 jobs, as part of the company's first layoff since it was founded in 1957. Gentex Corp., a Zeeland, Mich., auto parts suppliers that had long avoided layoffs, announced in December it would be laying off as many as 400 employees. Even Microsoft, which hasn't had a significant companywide layoff in its history, announced in January it would be trimming 5,000 jobs over the next 18 months. Most of the job cuts are expected to affect positions in research and development, marketing, sales, finance, legal, HR and IT. The depth and breadth of the economic downturn is clearly taking its toll on companies that have previously withstood difficult times, experts say. Still, some companies that have either formal or informal policies against laying off workers, such as Aflac and steelmaker Nucor, say they have no current plans to abandon them. "We have a no-layoff practice that we have been able to follow going back to 1966," Nucor spokesman Gregg Lucas told CNN/Money. "That no-layoff practice continues even today in the current challenging economic environment." But, companies such as Nucor are becoming increasingly rare. "No layoff polices have been dismantled piece by piece in the past few recessions," says John Challenger, CEO of Challenger, Gray and Christmas, a Chicago-based outplacement consultant. "We're now at a point where we're seeing the last vestiges of companies with these programs." In the current downturn, Challenger says, cutting wages and salaries seems to be stickier than cutting jobs. Richard Doherty, vice president of client services for Right Management in Seattle, agrees that no-layoff policies are slowly but surely disappearing. "I see more and more companies altering their policies to give themselves more flexibility," he says. Employers, especially those in tight labor markets, are anxious about losing their status as employers of choice, Doherty says, but it's becoming harder and harder for them keep layoffs off the table. "They eventually are having to let people go," he says. Doherty's advice to companies that have to abandon their no-layoff policies: Don't panic. If companies are going to bite the bullet on layoffs, he says, they should do so "in an orderly way and realize that you could be working in a scarce labor environment in the future. Understand how your talent policies support the future talent you're going to need." Companies also need to become better at collecting and analyzing data to ensure they're making the right decisions, Doherty and others say. "Beyond comp data at the highest levels, there's simply not a lot of good data out there. "Now's the time for companies to take a hard look at the cost of their policies and the value they're truly getting from them," he says. Experts also emphasize the importance of communication. "One of the most critical steps is communication," Challenger says. "People understand what's going on in their industries. If your culture is strong and you explain why you're doing what you're doing, why there's little choice left, they're going to be more understanding."
February 3, 2009 Copyright 2009© LRP Publications |
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