Furloughs: An Alternative to Layoffs for Economic Downturns

Sandra J. Sucher; Susan J. Winterberg

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Background Note | HBS Case Collection | February 2014

Furloughs: An Alternative to Layoffs for Economic Downturns

by Sandra J. Sucher and Susan J. Winterberg

Abstract

This note describes the practice of employee furloughs (also known as work sharing or short-time work) including their regulatory frameworks in different countries and the business and ethical implications of their use.

Keywords: work sharing; furloughs; temporary layoff; short time work; Employee Relationship Management; Job Cuts and Outsourcing;

Language: English

Format: Print

9 pages

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Citation:

Sucher, Sandra J., and Susan J. Winterberg. "Furloughs: An Alternative to Layoffs for Economic Downturns." Harvard Business School Background Note 314-097, February 2014.

About the Author

Sandra J. Sucher

MBA Class of 1966 Professor of Management Practice

General Management

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Article | Harvard Business Review | May–June 2018

Layoffs That Don't Break Your Company: Better Approaches to Workforce Transition

Sandra J. Sucher and Shalene Gupta

Today layoffs have become companies’ default response to the challenges created by advances in technology and global competition. Yet research shows that job cuts rarely help senior leaders achieve their goals. Too often, they’re done for short-term gain, but the cost savings are overshadowed by bad publicity, loss of knowledge, weakened engagement, higher voluntary turnover, and lower innovation, which hurt profits in the long run. This article looks at better ways to handle changing workforce needs that make sparing use of staff reductions and ensure that if they do happen, the process feels fair and the affected parties have a soft landing. Most successful approaches begin with a philosophy that spells out a firm’s commitments and priorities, establish methods for exploring layoff alternatives (such as furloughs, retraining, and reassignments), and determine options for three scenarios: a healthy present, short-term volatility, and an uncertain future. As firms like AT&T, Michelin, Honeywell, and Nokia have learned, thoughtful planning helps organizations address workforce transitions and cope with a shifting economic landscape far better than layoffs do.

Keywords: Job Cuts and Outsourcing; Organizational Change and Adaptation; Employees; Transition; Strategic Planning;

Citation:
Sucher, Sandra J., and Shalene Gupta. "Layoffs That Don't Break Your Company: Better Approaches to Workforce Transition." Harvard Business Review 96, no. 3 (May–June 2018): 122–129. View Details

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Furloughs: An Alternative to Layoffs for Economic Downturns

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