A Truly Human Furlough: An Alternative to a Reduction-In-Force
by Outside-In Team Member, Kelly Hocutt
I recently posted one of my talent management takeaways from reading Leaders Eat Last by Simon Sinek, whose first TEDx Talk on “How Great Leaders Inspire Action” is the 3rd most viewed video on TED.com. Here is another one of my takeaways, inspired by the story in Leaders Eat Last called “Eating Last is Repaid with Loyalty and Hard Work” (Chapter 8, page 68).
First, I’ll summarize the story: Barry-Wehmiller is an American manufacturing company that suffered like many other companies when the stock market crashed in 2008. After an immediate 30% drop in orders, CEO Bob Chapman and his team faced the “uncomfortable reality that they could not afford to keep all of their employees.” Layoffs seemed to be the obvious next step. However, Chapman refused to layoff any members of his team, and instead implemented a mandatory furlough program. Every employee (including Chapman) was required to take four weeks of unpaid vacation time. The program helped turn the company around and today Barry-Wehmiller continues to operate under its culture of Truly Human Leadership.
As a talent management company, we help companies through rough times like Barry-Wehmiller experienced. When company performance suffers, change – in some form – needs to be made. While layoffs for many companies may be inevitable, this story reminds us that when it comes to running a company, we can’t look at our talent as the most expensive line item in our operation expense. Instead, our talent is made up of people. People who have both feelings and bills to pay. People who have made commitments and who we as employers have asked to remain loyal to us. People that are truly human, just like the leaders of any company.
Many leaders may feel like Chapman, who came to see his company as family. “We would never dream of getting rid of one of our children in hard times,” he says. “If anything, the whole family would come together, maybe suffer together, but ultimately work through the hard times together.” Thus Chapman sought out a family and team-oriented approach. Instead of selecting a group of people to suffer through a reduction-in-force when the company was going through hard times, Chapman found a way to spread out the pain. When Chapman announced the program, he said, “It is better that we all suffer a little, so that none of us has to suffer a lot.”
Simon sums up what happened next: “The protection Chapman offered his people had a massive impact. Unlike in a company that announces layoffs, sending everyone into self-preservation mode, at Barry-Wehmiller the people spontaneously, and completely on their own, set out to do more for each other. Those who could afford the time off, traded with those who could afford it less. Though they were under no obligation to do so, they took off more unpaid time than required just to help someone else out. The overwhelming feeling across the company was one of gratitude for the security they had been given. I suspect in other companies that face hard times, most of the people would also rather lose a month’s pay than lose their job.”
So, if you are a company or talent management leader, remember this story. Hold on to it for a time when your company is going through a rough period and layoffs seem to be the most obvious next step. Remember that people are truly human and when approached with honesty and respect, most people would rather suffer a little so that no one on the team has to suffer a lot. How will you spread the suffering? And if a reduction-in-force is unavoidable, how will you treat people in a truly human way through their transition?