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Layoff Survival Guide: Creative Approaches to Layoffs

Creative Approaches to Layoffs


Creative Approaches to Layoffs
 
It's the classic layoff problem. Relief from bottom-line pressure on the one hand; and low morale, bad publicity, and the loss of talented employees on the other. In the face of an economic downturn they believe to be temporary, companies need to be resourceful in looking for alternatives to the traditional layoff. In the past, some large employers forced to layoff workers have pulled together some very creative approaches to this dubious issue.

Consulting powerhouse Accenture announced a voluntary sabbatical program known as "Flexleave." Offered to about 1,400 consultants mostly in the United States, the program gave each employee 20 percent of their salaries and continued benefits over a six- to 12-month period. Stock options remained in place for those who took the offer. The only caveat: while employees could take another job during their leave, they couldn't work for a competitor.

And computer-networking giant Cisco Systems offered 8,500 employees an unusual deal as well. Instead of a severance package, affected employees received a third of their salaries, all benefits, and stock-option awards while working for one year at a not-for-profit group already associated with the company.

Reaping benefits from imaginative solutions
Companies that operate at the forefront of knowledge face not only pressure to solve their own problems in an innovative manner, but also the awareness that those let go today could turn up at a vendor, client, or competitor tomorrow. For high-profile companies, those are compelling challenges.

"Accenture offered great solution for a temporary downturn," said Bill Coleman, senior vice president of compensation at Salary.com. "by offering this approach the organization didn't lose the people it worked so hard to recruit and train. They did the unexpected, , and in some ways it's really a loyalty-builder."

Employees who chose Cisco's or Accenture's package earned very real psychic and personal benefits. They were able to retain their status with a desirable employer, while being able to pursue a special interest or simply rejoice in being home during the week.

Another option is to refuse to terminate people at all. Southwest Airlines has a no-layoff policy. Federal Express has a similar policy, so when shipping volumes decrease, the company leaves jobs open, takes job requisitions off the books, and cuts hours.

Even companies who must layoff people have more wiggle room than they might think for an imaginative solution that suits their circumstances. Some other creative strategies are shown below.

Creative layoff strategies.

                                                                                                                                                                                                                                                                                                                                             

                   
Company
                 

                   

                      Strategy
                 
415
                    Productions

                   

The
                      company offered either an overall 5 percent pay cut, or
                      a four-day work week reflecting the appropriate decrease
                      in pay.

                 
Acxiom
                    Corporation
A
                    5 percent mandatory pay cut, plus an additional 5 percent
                    volunteer pay cut is tempered with increased stock options.
Charles
                    Schwab Corp.
The
                    company guaranteed a $7,500 bonus for any affected employee
                    who gets rehired within 18 months. In addition, company founder
                    Charles Schwab and his wife have created a $10 million educational
                    fund for these workers. The fund will cover as much as $20,000
                    worth of tuition over two years at accredited academic institutions.
                   
Texas
                    Instruments
The
                    chip maker began "lending" several human-resources staffers
                    to vendors for as many as eight months, with the intention
                    of bringing them back to their original jobs at the end of
                    that period. The supplier reimburses Texas Instruments for
                    the staffers' salaries during the loan period and agrees not
                    to offer them a permanent job.

Company Strategy
415 Productions The company offered either an overall 5 percent pay cut, or a four-day work week reflecting the appropriate decrease in pay.
 
Acxiom Corporation A 5 percent mandatory pay cut, plus an additional 5 percent volunteer pay cut is tempered with increased stock options.
Charles Schwab Corp. The company guaranteed a $7,500 bonus for any affected employee who gets rehired within 18 months. In addition, company founder Charles Schwab and his wife have created a $10 million educational fund for these workers. The fund will cover as much as $20,000 worth of tuition over two years at accredited academic institutions. 
Texas Instruments The chip maker began "lending" several human-resources staffers to vendors for as many as eight months, with the intention of bringing them back to their original jobs at the end of that period. The supplier reimburses Texas Instruments for the staffers' salaries during the loan period and agrees not to offer them a permanent job.

Reset your expectations
Layoffs - no matter how creative - are a by-product of an economy in flux. Employment experts say they've seen changes in the way job hunters set their career paths. "People used to do five- to 10-year runs at companies; now they're doing two to three," said Michael O'Leary of Boston-based recruiter Kingston Dwight Associates.

"Lifetime employment isn't what we expect," added outplacement guru John Challenger, CEO of outplacement firm Challenger, Gray & Christmas.

Maybe not. But no-no words such as "caution" and "stability" are seeping into the vocabularies of even the most senior-level job hunters. Allan Steinmetz, founder and CEO of Inward Strategic Consulting, a change management and strategy consulting firm based in Boston, said he knows one formerly powerful dot-com executive who now wants "just a job that pays me a salary."

And Sharon Jordan-Evans, founder and president of the Jordan-Evans Group in Southern California, says workers still want to find a place to land for a while. "People still desire to be loyal - I think that's human nature. But it's not the blind loyalty of the past."