2009 Archives

Small Businesses Work Hard to Prevent Layoffs

Companies Try Several Tactics to Avoid Cuts Such as Asking Workers to a Take Day Off Without Pay, Trimming Hours

Excerpt

The following is from the March 5, 2009, edition of The Wall Street Journal. Professor Mel Fugate of SMU's Cox School of Business provided expertise for this story.

March 12, 2009

 By RAYMUND FLANDEZ

At a time when the news is filled with large companies announcing major layoffs, some small businesses are determined to buck the trend.

For some companies, it's a matter of pride: They've never had a layoff and they don't want to start now.

But it's also a matter of necessity. For one thing, unlike big companies, small businesses rely on each individual employee much more to keep their companies running. In addition, many small companies use their history of never firing people as an essential tool to attract and retain workers.

This recession, however, is testing the no-layoff policy.

"Many companies previously known for avoiding layoffs during past downturns are forced to make extreme sacrifices to resist pink slips now," says Mel Fugate, assistant professor of management and organizations at the Cox School of Business at Southern Methodist University in Dallas.

Mr. Fugate adds that "how these concessions are identified and executed can make a significant difference in how well a company emerges when economic conditions improve." He says that, in general, "it is important for management -- and particularly executives and owners -- to share in the pain and the gain."

Management should be the first or at least among the first to sacrifice and make concessions, he says. Conversely, when the economy improves, management should reward those employees who were forced to make concessions. "Doing so will preserve employee commitment and performance not only in the new good times but also in future downturns."

Here's a closer look at how some companies have tried to avoid layoffs:

Read the full story.

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