Lay Off the Ax - Brief Article

HR Magazine, July, 2001 by Adrienne Fox

As of May, U.S. corporations announced plans to cut 652,510 jobs, surpassing the total for all of last year by 38,550, according to Challenger, Gray & Christmas, the Chicago outplacement firm that tracks layoffs.

While this year has broken layoff records, it's nothing new for companies to serve up pink slips when the economy goes south and profits get squeezed. It's the quickest way to cut overhead.

But, it may not be the smartest way.

Studies show that companies that slash their workforces during short-term economic slowdowns take longer to rebound when times get better. Businesses that cut more than the fat are left hobbled by demoralized, skeletal staffs that can't handle increased production when things perk up.

So, this time around, some companies have heeded that warning and decided to go another route. Instead of issuing pink slips at the first sign of trouble, they have asked their staffs to provide temporary relief through pay cuts, shorter hours and unused vacation time. From an HR perspective, it feels good to find ways to keep people employed. And from a business perspective, it makes sense.

In Frank Jossi's story on alternatives to layoffs on page 46, HR professionals speak about creative options their companies have come up with to curtail--and possibly prevent--layoffs. They also discuss how, in being honest with their workforces, they helped create more respected, open organizations. So when the economy does pick up again, not only will they have the requisite staff to handle the work, the staff won't have been demoralized in the process.