Unpaid Furloughs Instead of Pink Slips

How both employees and employers can benefit

DIVERSITYmandisgruntledNEWAt the quarterly faculty/staff assembly at Stillman College last August, several employees expressed concern about potential layoffs. “I said I would do whatever was necessary to ensure that everyone could keep their jobs,” said Ernest McNealy, president of the Tuscaloosa, Alabama-based HBCU, who thinks of his employees as family. After consulting with staff managers and human resources, McNealy concluded that furloughs were a better option than layoffs and decided that all of the non-teaching employees would have to participate, including himself.

When an employee is furloughed, he/she is required to take a day off without pay. Although furloughs don’t always save as much money as layoffs, they prevent employers from terminating members of a skilled and valuable workforce. With the number of unemployed in the U.S. reaching 14.5 million in May, news that a company will require its employees to take time off without pay may be inconvenient, but compared to a pink slip it is welcome news to most.

Nathaniel Alston, a former national president and a founder of the National Association of African Americans in Human Resources, thinks that furloughs create less dissension than pay cuts and that employees feel like furloughs are temporary. “‘Furlough’ even sounds better than ‘pay cut,’” says Alston, CEO of the Horizons Group, a Maryland-based human resources consulting firm. With a pay cut, he explains, employees are left with the feeling that they’ll never get their previous salary back.

Stillman College designated two furlough days in March, and employees will also be furloughed for two days near the July 4 holiday weekend. This strategy will allow the school to dramatically reduce its energy consumption and the campus will be closed for several days during the hottest time of the year. McNealy anticipates that the July furlough will save $500,000. The furloughs along with other cost-saving methods (utilities abatement and reduced travel) will allow the school to fill a $1 million shortfall.

Take note of Alston’s advice to employers and employees on how to smoothly and effectively implement a furlough program.

ADVICE TO EMPLOYERS

Communicate. Explain to your employees that after calculating all of the options, a furlough is the best decision. McNealy and Stillman College’s chief financial officer spoke with the chairs of the academic departments and staff managers to keep the HBCU’s workforce apprised of the college’s financial situation.

Define the terms of the furlough and make sure that employees have an opportunity to ask questions. “Involve your senior human resources person and the head of the company,” says Alston. “Tell them that instead of laying off 50 people, we are going to furlough 200 people but everyone will keep their jobs, and tell them how we’re going to accomplish that.”

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