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Alternatives to Layoffs

In: Business and Management

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Alternatives to Layoffs

The Great Recession of 2007-2009 had unemployment rates increase from 5.0 percent in December 2007 to 9.5 percent in June 2000. California saw some of the highest unemployment rates in the country at over 10 percent. This included one of the highest mass layoff events in history. There were 3,059 layoff actions in February 2009 involving 326,392 workers according to the U.S. Bureau of Labor Statistics.

With this recent history of mass layoffs business, government, educators, and even students have started to take a closer look at layoffs. An article in Newsweek (The Case Against Layoffs: They Often Backfire) illustrates how layoffs often backfire on businesses and can actually incur big costs due to severance, outplacement, toll on morale, and productivity. Studies have also shown that there are negative stock returns after companies announced layoffs. The article continues to say “a study of 122 companies found that downsizing reduced subsequent profitability and that the negative consequences of downsizing were particularly evident”. Also, when a layoff is announced companies often lose their best employees. These are the top performers who weren’t going to be laid off, but feel insecure with their current employer so they look for a more stable situation.

Layoffs are not reliable in cost cutting, they are not good for employees, they are not good for employers, and they are not good for the economy and society. Other methods to layoffs need to be examined and considered. Many companies have found success using strategies such as cross-training, California’s Employee Training Panel (ETP), hiring freezes, and furloughs.

Cross-Training is a great way to avoid layoffs says Maturi (2013). A company that has cross-trained employees can easily find someone to fill in when there is a temporary loss of an employee which can

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