Home Work Essay

Submitted By Mississippiflood
Words: 1651
Pages: 7

Firms use furloughs instead of layoffs because they lack the courage to look individual employees in the eye and terminate them.
The key to any effective salary-savings program is to target the individuals who add little value compared to their salary. The process of selecting low-performers can cause turmoil among employees, so managers take the easy way out by cutting a portion of the salary of every employee.
In my view, managers get paid to make tough decisions, not to avoid them.
This “peanut butter” approach where you spread the pain evenly might seem like a good socialist type idea, but if your goal is to maintain a high level of organizational performance, furloughs can cause more problems than they solve. Although they are designed to save money, most furloughs save a lot less money than actual layoffs would. During furloughs, employees receive either a reduced wage or no wage, but their employee benefits (up to 40% of salaried), equipment costs, office costs, etc., continue. Many organizations have units that require certain staffing levels (i.e., hospitals) or 24-hour service providers. In those situations, you will be forced to pay expensive overtime (or to hire costly contract replacements) to make up for individuals who are out on furlough that day. As a result, the net savings is less than most reductions in force. If your organization also freezes construction projects, the weather damage and the pilferage that occurs during the delay might cost you more than the actual labor savings from the furlough. Just because an employee doesn’t come to work doesn’t mean that someone else will do the work for them. It merely means that there will be more work “piled up” when they return from their furlough days. The net result is that employees have to do the same amount of work in less time. Obviously this formula increases employee stress, customer wait time, and error rates. Treating everyone equally might seem fair, but actually, it’s not fair to top performers. They have done an excellent job, delivered tremendous value for the organization, yet are punished the same as poor performers. In other words, if you had a choice between furloughing Tiger Woods and Homer Simpson, would you actually furlough them both? Wouldn’t you want your top performers there everyday? It’s also important to realize that top performers differ from average workers in that they are in constant demand. Regardless of the economy, top performers have other job opportunities. A better practice would be to reward your top performers by permanently releasing the bottom performers so they don’t have to work alongside them. Incidentally, the idle time off during furloughs is an opportune time for all employees to look for another job where performance is rewarded. Incidentally, furloughs unfairly frustrate high-performing and mission-critical business units because they are treated (punished) the same as the slacker business units. In the same light, business units with a short-term impact and focus are damaged, while units with a long-term focus (who could stand some delays in the short-term) receive the same level of cuts. Again failing to offer pinpoint cuts demonstrates bad management decision-making. Most organizations fail to adequately explain why the furloughs are needed, and none promise that they won’t be repeated. Both the talk of furloughs and their actual execution is always a major distraction to employees. Both will cause stress and anxiety, but more importantly the amount of inner office discussion, rumors, and gossip will increase to the point where it will be hard to get any work done. Pinpoint layoffs are painful but they’re over quickly and they don’t drag out the pain and turmoil. While furloughs are billed as short-term solutions there’s plenty of research to show that they don’t always forestall layoffs. What you end up getting is short-term turmoil and then the same layoffs that you probably should have done in the first…