Furloughs : Employee’s Headache

Furloughs:

During the period of recession, we heard about the news that numerous companies implemented furloughs in order to save money and to avoid layoffs. Some companies asked or forced their employees to take days off without pay. Furloughs have been deployed in a variety of industries from healthcare, education to transportation and high technology. Firms use furloughs instead of layoffs because they lack the courage to look individual employees in the eye and terminate them. From the company perspective, the key to any effective salary-saving program is to target the individuals who add little value compared to their salary.

Problems with Employee Furloughs:

Here are some issues or problems that they can cause:

1. Cost Saving: Most Furloughs save a lot less money than actual layoffs would. The employees receive either a reduced wage or no wage, but their employee benefits remain same. If the organization freezes project, the damage due to natural calamity and the pilferage that occurs during the delay might cost you more than the actual labor savings from the furlough.
2. The workload doesn’t decrease: 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.
3. Top Performers deserve better: 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.
4. It’s not really a short-term solution: 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 place. Stretching out the pain with the same end result isn’t a sign of great management.
5. Product quality: Reduced workloads affect product quality. Reduced staffing levels and having your best people “out that day” will likely increase error and accident rates and it will hurt your brand image.
6. Teamwork: Project deadlines don’t change because of furloughs. Because some furlough programs allow individuals to take their “time off” during different time periods, teamwork will deteriorate. Projects that require all team members to be there at the same time will suffer dramatically. If a manager is on furlough, poorly supervised employees are likely to do undesirable things during their absence. Because your experts will be available for fewer hours, costly consultants might have to be hired to supplement their normal workload. If your organization conducts research or experiments, reduced staffing levels may kill or damage them.
7. Scheduling. Furloughs are a nightmare to scheduling managers. If individuals are allowed to select their own days off, the amount of time that managers would have to devote to scheduling in order to keep the workers happy, as well is to maintain performance, would be significant.

Thoughts:

There is no weaker area within talent management than workforce planning. This problem, coupled with the fact that managers and executives are literally “afraid” to make tough termination decisions, result in the widespread use of many ineffective cost-reduction approaches that end up doing more harm than good. A majority of the organizations that instituted employee furlough programs will have to institute a second round of cuts or layoffs before the year is over.