Some Companies Stay Firm To No-Layoffs Pledge

Although unemployment is rising, some companies are looking into alternatives to the chopping block. Four-day work weeks and pay cuts are being considered. Some companies such as Southwest Airlines have kept their no-layoff policy intact.

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It may not seem like it, but there are companies out there doing everything possible to avoid layoffs. NPR's Yuki Noguchi reports now on how some companies are going to great lengths to hang on to their workers.

YUKI NOGUCHI: The last year wasn't stellar for airlines. Many made bad bets on fuel, plus people cut back in general on travel. So, it wasn't surprising that carriers like United and American laid workers off. But Southwest did not and says it will not.

Mr. JEFF LAMB (Vice President, Human Resources, Southwest Airlines): There are a number of options that you can choose before you do that.

NOGUCHI: Jeff Lamb is vice president of human relations for Southwest. He says between early retirement, hiring freezes and retraining employees for new positions, the airline has never had to lay people off.

Mr. LAMB: We haven't done it in 37 years...

(Soundbite of laughter)

Mr. LAMB: So, it's kind of - the precedent certainly is, is that we're not going to use that as a means to cut costs.

NOGUCHI: Employees are generally an organization's largest expense. So, normally companies facing a dramatic slowdown have little choice but to crunch the numbers and decide how many positions have to go. According to a survey by consulting firm Watson Wyatt, 40 percent of companies have already laid off workers; these include Lehman Brothers, Alcoa, Dell and Circuit City. Another 23 percent of employers say they plan layoffs in the next year. Even companies that merge do so in part to save money on overhead, which includes people as well as their desks and office space, but in a handful of cases, companies decide it's a priority to avoid layoffs. So, they find creative solutions around the pink slip. Dick Couch is chief executive of a company called Hypertherm that makes metal-cutting machines. His company has kept its no-layoff promise for 40 years.

Mr. DICK COUCH (Founder and President, Hypertherm, Inc.): I started the policy for a bunch of reasons, but the primary one was fairness.

NOGUCHI: He says, Wall Street culture conditions investors to expect profits to increase every quarter with a kind of consistency that he says doesn't actually exist in the real world. Hypertherm is private, so it's easier to resist these pressures. So, in the early 1980s when business declined, Hypertherm had the flexibility to go to a four-day work week with reduced salaries.

Mr. COUCH: Then you're essentially saying to people, look, we're all going to share in the pain of this downturn together.

Mr. BILL COLEMAN (Chief Compensation Officer, Salary.com): There definitely seems to be more of a buzz around avoiding layoffs or not having layoffs.

NOGUCHI: That's Bill Coleman; he's chief compensation officer for Salary.com, a site that help companies track pay and performance reviews. He says, when they can, companies increasingly try things like forced shutdowns over the holidays, which can be more popular with employees.

Mr. COLEMAN: You know, a week of unpaid vacation versus a layoff...

(Soundbite of laughter)

Mr. COLEMAN: You know, what would you go for?

NOGUCHI: Laurie Bienstock is practice director for Watson Wyatt. Bienstock says avoiding layoffs sounds very humane, but it's not done out of pure corporate altruism either. It can save money because hiring new talent is three time more expensive than retaining veterans, and as baby boomers retire, an existing workforce becomes more valuable. Bienstock says sustaining the payroll even when it's painful has other benefits, too, like continuity with customer service.

Ms. LAURIE BIENSTOCK (Watson Wyatt Worldwide, Inc.): This is part of their looking at, how can we protect our employment brand as well as our consumer brand?

NOGUCHI: Melanie Holmes is vice president for Manpower, a temp agency that's seen a huge downturn in its business, and along with it has come some noticeable cuts.

Ms. MELANIE HOLMES (Vice President, World of Work Solutions, Manpower North America, Inc.): Things like travel, we don't cater internal meetings anymore; like, we don't order coffee and buns and things like that for internal meetings. If we have a meeting that goes over lunch, people go down to the cafeteria and get their own.

NOGUCHI: And all of these changes are just fine with Holmes. Even though Manpower had to do a few layoffs, it was a very small number of their 33,000-person workforce.

Ms. HOLMES: And I'm thankful every day that my badge works when I swing it by the door to come in this building.

NOGUCHI: If they were to freeze your 401k plan or say no raise for 2009, would you be OK with that?

Ms. HOLMES: Absolutely, positively, there is no question about it, because I've got a job.

NOGUCHI: And at a time when 7.2 percent of the employable population can't say that, that's payment enough. Yuki Noguchi, NPR News.

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