Furloughs or Commitment

by  Mike Henry  |  Leadership Development

I read a very perceptive post on Harvard Business Review’s blog by Tammy Erickson called How the Recession Is Changing Talent Management. You need to read the article because she presents a compelling case for how the actions of businesses contribute to the prevailing attitude of free-agency in managerial and professional workers.

She claims that reducing hours or exercising furloughs for knowledge workers further disengages those same workers. What does a manager do when asked to work 32 hours a week for 80% of their regular pay? The managers and knowledge workers generally work to get a unit of work done. Can you only lead your team 80%? If this professional associate was working 45-60 hours to get the job done, do they cut their effort 20% to match their pay cut, or do they cut to 32 hours? Why would any employer want to incent a managerial worker to do something less than a complete job?

She mentioned that the problem went back to the 1981 recession, but I think it goes back further. This is a problem of engagement and sustainability.  We haven’t done a very good job of creating a sustainable culture in industry.  Relationships between people and profits have always been tenuous since the industrial revolution began.  Over the last 60 years, we have witnessed many task-oriented jobs becoming commodities. In the book, A Whole New Mind, which I review here, Daniel H. Pink points out that if it can be done overseas or by a machine, you can expect that to eventually happen. If the position can be cut into chunks and priced by the hour, then you can expect it will soon be done by workers in a country with different economics or by a computer somewhere at little or no variable cost. He suggests that the highest valued jobs in the future will be jobs that require the right-side of the brain; the artistic, creative, relational side. These are the most difficult skills to put in a time and money box.  How many hours does it take to create a painting? How long must one work at building a client relationship?

The engagement slide began early in the industrial age. Compensating someone fairly for contributing their life to the well-being of a company is very complex. First there were unions and pensions; then contractors and 401k’s and options. Furloughing knowledge workers further disengages knowledge workers, accelerating the devaluation of several types of jobs, companies or even entire industries.

Can a business actually exercise the courage to choose? Does anyone know of any businesses that have chosen not to trade people for profit? Would it kill the company to lose a little more money for a short period of time in exchange for demonstrating that their people matter more than this quarter’s numbers? How would the associates react if their company decided to lose money this quarter but keep everyone? Those very people who stayed might come up with the solution to the short-term financial difficulty without furloughs or devaluing the very people necessary for survival.

What do you think? Can a business actually have the guts to put its people before one quarter’s numbers? Should they? I’m sure some readers would think that a business should never lose a cent.  Commitment must always be demonstrated before received.  Organizations making that kind of commitment will receive it in return.  If you know of any, mention them in the comments so we can give them some kudos.


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About The Author

Articles By mike-henry
Chief Instigator (Founder) of Lead Change Group and VP of IT for a mid sized technology company. Passionate about character-based leadership and making a positive difference.  »  View Profile

What People Are Saying

Jim Holland  |  27 Jun 2009  |  Reply

Mike – thanks for the post. “The courage to choose” is a hard one. Recently, I made that decision. As a senior member of an executive team, I had to reduce the size of my team in late 2008. This year, I decided to “RIF myself” to keep a revenue generating team intact. If you practice servant leadership, it makes it easier to understand what decisions need to be done and when. I could have easily reduced my team further to save my own postion, but realized I could get a portion of the revenue flowing, reduce costs and assign activities to a capable team. If you are a “connected” leader, who knows the personalities, capabilities, skills, heart and drive of a team, you will have better insight into any type of changes that may arise.

Mandy Vavrinak  |  28 Jun 2009  |  Reply


Enjoyed the brief discussion we had on this topic in person and enjoyed your post, too. I think it’s absolutely critical that people begin to really look at where real value comes from in the employee equation. You are right… if the job can be sliced and diced, it will be… and then shipped out. This is also related to the “crowdsourcing” push, which is depressing the value of right-brained work, too. Economic pressures being what they are, people are content to make a quick few bucks today rather than take time to build relationships and make more money later through a trusted client/vendor/partner situation. What they don’t realize is that when the economy rebounds, no one who has been paying them $300 for a logo will now be willing to pay $600. No one will ever value your work at a higher price point than you set for yourself. Have you ever had a client get a bill and say, “Really, it was such an outstanding job… I’m going to send you an extra $500?” :)

Steve  |  30 Jun 2009  |  Reply

“Can a business actually have the guts to put its people before one quarter’s numbers?”

This quote raises a much deeper issue – one that plagues our economy on several levels. The over-emphasis on one quarter’s numbers, especially stock price, is huge. It’s easy to see what leads to much of the corruption at the helm of major corporations when the top leadership is rewarded based on short-term stock price. What incentive is there to keep the long-term in view?

Patricia Shafer  |  03 Jul 2009  |  Reply

Re: the conversation about “the courage to choose”, whether companies “must” pursue layoffs, and whether forced part-time arrangements lead to disengagement, I seem to recall a recent FORTUNE article profiling 9 or so companies that as of mid-January, despite recession, had never had a layoff. Question: does that mean they operate from a different philosophy of profits vs. people, or they’re simply being run in a more sustainable way? I recall that the list included, for example, Aflac, Devon Energy . . . Re: Steve’s comment on business being plagued by a focus on quarterly numbers, I led a piece of global research a couple of years ago in which we interviewed managers in 40 countries and 3 industries. One finding was how much managers in other countries think that “being Wall Street-driven” and “focusing on quarterly profits vs. people” is a US phenomenon that has been exported (because much of the world’s recognized frameworks for and research on management are generated in North America), leaving managers around the global feeling pressured to focus on the bottom line first and foremost. They didn’t use the word “plague” or “epidemic” per se, but they definitely indicated they thought there had a been a spread of an “all that matters is the quarterly bottom line” and they felt somewhat powerless to fight the phenomenon.

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