Is Forced Time Off the Right Cost-Savings Solution for Your Company?

As more and more employers are looking for ways to save money in today’s economic crisis, many are reaching a decision to implement an “unpaid time-off” program. There are pros and cons to this decision – from both the employer and employee perspective. If your company is considering such a program, the article below will be worth your time and consideration. The questions asked will help you evaluate if ‘forced time off’ is a viable solution for your firm, or not worth the potential risks.

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Is Forced Time Off Fair?

March 16, 2009 , Tom Davenport, Harvard Business Publishing

One of the common approaches to dealing with this recession is for companies to ask — well, tell — employees to take time off without pay, a day every week or two. This 10 or 20% haircut is supposed to indicate that “we’re all in this together,” and that it’s better for everyone to suffer a little than to lay some people off.

While I have some sympathies with this philosophy, I’m not sure it’s either fair or wise. On the issue of fairness, if such a policy had been instituted in 1969, it might have been very fair. But in 2009 there is much less of a relationship between hours on the clock and work actually done, at least for knowledge workers. How many of you reading this post actually work only 40 hours a week? How many of you only work on official workdays? Today, most people have a continuous mixture of work and non-work activities, and it will be difficult for any knowledge worker to stop working for a day every week or fortnight. I might suggest that this is exactly what the employer wants, but that would be a cynical remark.

There is also the issue of whether the forced haircut is wise. I have problems with its wisdom in two respects. One involves the fundamental principle that all employees are equally valuable. It’s nice to pretend that they are, but we all know they’re not. Giving all employees a haircut may lead the most valuable ones to look elsewhere. There was a column in a recent Boston Globe about treating all employees (at Boston’s Beth Israel hospital) alike with regard to cuts. It’s heartwarming, but if it leads to an across-the-board haircut, might some of the best employees leave for wealthier hospitals across town?

The other potential problem is that employees, given an involuntary time chop, may look elsewhere to fill the void. They’ll freelance, e-lance, or moonlight to replace the lost income. This could lead to a variety of negative scenarios for the employer/barber who originally chopped their time. The employee might find the freelance employer more desirable, and jump ship altogether for full-time employment there. Or he might end up doing a bit of his freelance work while ostensibly on the clock for the 80% or 90% employer. I’m not saying that 10 or 20% haircuts for everyone are necessarily a bad idea. I do think, however, that they are hardly a no-brainer either. The inclination to share the pain is admirable, but it could open the door to a host of problems.

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