(Published September 1, 2008)
A couple of weeks ago I read an article in the newspaper about a new trend that's developing in this tight economy — employers cutting employees' hours to save on expenses. What surprised me about the article was that the writer clearly saw this as a bad thing. It focused on how hard it was for employees to make ends meet on a reduced schedule.
I couldn't help wondering about the alternative. Would they prefer an out-and-out layoff? After all, if you've got two employees and can only afford to pay one of them, seems to me you've got two choices: You can lay off one and continue to pay the other in full, or you can reduce the hours of both of them so that they each have some income instead of no income.
If you take the first option, as an employee, I have a 50% chance of being the one that ends up with no income, but in the second option, I keep 50% of my pay and, in most if not all states, get partial unemployment benefits to make up some of the difference. That's a whole lot better than nothing but the unemployment compensation.
I read a funny debate online a few years ago. An employer was eliminating a benefit because it had become too costly and the employer couldn't afford it any more. I think it might have been a costly health insurance plan that was being replaced by a less costly one, but I'm not certain any more. Several people were complaining how unfair it was that they wouldn't have the benefit any longer, and someone made the suggestion, in all seriousness, that what the employer should have done instead was lay off a few people to save money and keep the benefit. I couldn't help wondering how that person would feel if she were the one who lost her job so that her former co-workers could have a better benefit package.
In today's tight economy, it only makes sense to consider all the options before going to layoffs. Granted, we are not the ones with ultimate responsibility for our employees' financial situations, but if we expect some loyalty from them, the least we can do is show some loyalty to them. Assuming, of course, that you do not have contracts or collective bargaining agreements that specify what you can and cannot do in such cases, you might want to consider saving costs with benefits reductions, hours reductions, or job shares before going to layoffs.
Sometimes they can't be avoided. If you have to eliminate full-time employees, you have to. But if there are ways to save the costs you need to save without cutting positions altogether, it would seem, at least to me, if not to the writer of the article I read, to make sense. It's a tough job market out there, and employees who are let go might have a hard time finding other jobs. If it is possible to give them some hours instead of no hours, that would be my recommendation, even if the writer of the newspaper article disagrees!
Catherine Bannon is an HR consultant in Marshfield, MA (catherine.bannon@gmail.com). Bannon worked for 10 years in HR management before starting her consulting practice.
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