Section Onethat a central concept in its culture and human resource
philosophy is the sharing of responsibilities in economic upturns
and downturns. When orders at some of its manufacturing
plants were lower than expected, employees were allowed to
voluntarily go on leave without pay but with continued benefits
and a guarantee of getting their jobs back after their return.
After conditions deteriorated further, almost the entire nonsales
workforce was furloughed two days per month without pay.
Senior management were not furloughed and continued to
work full schedules, but their pay was reduced by 10 percent.^77
Alternatives to Layoffs
In contrast to periods of permanent structural change when a
downturn is expected to be of relatively short duration,
alternatives to layoffs are often feasible. When companies avoid
layoffs, they preserve their investments in employees’ skills and
are able to avoid the expense and delay of hiring and training
new employees once the recovery begins. When employees
change employers, there is some loss of productivity because, if
employed for more than a short time, they have acquired
specific skills that do not apply to the new employer. Although
layoffs are numerous, there is empirical evidence that firms
attempt to avoid layoffs, thereby preserving their investments
in human resources. A study of manufacturing firms found that
they retain approximately 8 percent more labor during