Author Archives: Tony Abraham

About Tony Abraham

Tony Abraham is director of human resources for Modern Industries Inc., a Phoenix-based manufacturing company specializing in aerospace, semiconductor and the medical industries.

Keep Workers Working

Ways To Keep Workers Working In A Troubled Economy

Our current job market is struggling through one of the worst periods of unemployment in memory. The unemployment rate continues to creep toward the unspeakable double digits, a number not reached in Arizona for more than 25 years. Whatever name is attached — downsizing, rightsizing, re-sizing, layoff, offboarding, reduction-in-force, restructuring — the result is the same: lost jobs in the name of economic turmoil that has no conscience.

Whether you are amazed at the statistics or whether you are one, there is no doubt you have watched the economy take a frightening toll on your workplace. Those who are fortunate enough to still earn a paycheck have had to watch their co-workers walked out in myriad reduction-in-force actions that have dominated news media from California to Florida. Few companies have been spared in their attempts to balance their books by slashing one of the most expensive items on their check register — payroll costs. It’s an ugly story that plays out in all corners, and there is little confidence that the worst of the cutbacks is behind us.

Local public job assistance resources have been overwhelmed. According to Patrick Burkhart, assistant director at Maricopa Workforce Connections, the no-charge centers have approached capacity in their attempts to provide local job seekers with a head start on hunting for new positions. The MWC has experienced a 100 percent increase in year-over-year traffic in its centers, which currently assist up to 500 job seekers per day in each of the two “one stop” centers. While laid-off workers range from the highly skilled to laborers, preparing them for their next opportunity is often an exercise in futility. With so few available positions, and no job growth predicted for 2009, it becomes a cruel parody of “all dressed up and no place to go.”

Corporate executives cannot be blamed for adding to this unemployment quagmire. Their directive is to ensure financial survival through any legitimate means available. For most, that means a consideration of reducing work force costs, which may include not only wages, but also significant associated costs of health and welfare benefits, matching 401(k) contributions, profit sharing, tuition reimbursement, training or other company-provided benefits or perks. There is also an indirect impact on the company; a deterioration of employee loyalty, decreased customer confidence, and perhaps most importantly, a sense of apprehension among employees in fearing a loss of their own jobs. The result may have an effect on employee productivity and in retaining and attracting the best and brightest talent for the future.

It is no wonder then that reducing headcount is considered a last resort among decision makers. But what should companies do to prevent having to announce the dreaded “L” word, as 60 percent of surveyed U.S. companies plan to do in 2009, and thereby disrupt internal work operations for perhaps the long term? Executives first need to create a realistic vision of the direction of their business, attempt to recognize the timing of the “bottom” for their industry, and then set a plan in place to preserve a profit margin that will sustain the business. This analysis has become the key leadership initiative that guides decision making, and may ultimately affect the survival of the company.

It is said that desperate times call for desperate measures. If so, companies are often cornered into making tough sacrifices in the name of survival. Human resources can play an integral role in the strategic analysis of the business plan, and while cost reductions must be considered to save jobs, there may also be time for process improvement opportunities.

Among budget initiatives to be considered:
Freeze unnecessary discretionary spending — Travel for other than customer visits, employee “business” lunches, social events, overtime, temporary help, consultants, new software, advertising, and conferences or training that are not critical can be curtailed.

Wage considerations — In addition to a bonus and wage freeze, consider a salary reduction, perhaps only for those earning above a targeted salary. Depending on work requirements, consider a reduced workweek in exchange for the wage reduction, or have a temporary company shutdown. Suspend any policy that allows employees to cash-in vacation or paid time off (PTO) accruals, and instead mandate they use the time.

Company contributions to employee programs — For companies that need to make a more serious dent in expenditures, cutbacks may be made in the health care plan design, tuition reimbursement, 401(k) match, or company paid life insurance or disability plans.

Don’t expect employees to express appreciation for these types of actions, but every wage earner in today’s work force understands the reality of a balance sheet and its affect on his or her job. While employees usually bear the brunt of company cutbacks, there are actions HR can propose that might soften the impact.

Cross training and skill enhancement — A business slowdown is an excellent time to prepare employees to assume additional job skills for the future through on-the-job cross training.

Solicit employee input — Using employees to provide savings suggestions will enhance their buy-in and may even improve morale. Above all else, they want to keep their jobs and when viewed as a partnership with the company, will help foster mutual respect.

Job transfer — Either as an assignment of temporary resources or a long-term solution to unbalanced workloads, employees may be interested in moving to a new function with a different career path.

Communicate — Employees may be more understanding of the company’s plight if they are able to share the news along the way with no surprises.

Today, we still find ourselves in the middle of a sluggish economy that has turned into a marathon, but the finish line must be somewhere down the road. Leaders who can see that far will make the right strategic decisions in the best interest of their organization and its employees. Those who consistently communicate that vision, and take action to save jobs wherever possible, will find a loyal work force ready and willing to enjoy better times ahead.