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In hard times, 'furloughed' better than 'forced out'

Posted March 12, 2009

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— Cost-cutting measures at the North Carolina Biotechnology Center started with keeping some lights on and shutting down computer monitors when employees were away from their desks.

Then, there were bigger adjustments – like fewer face-to-face meetings to save on travel.

Norris Tolson, 'Furloughed' better than 'forced out'

Now, the center is trimming its state-funded budget by 9 percent, to $18 million.

"We have been struggling for ways to do it without layoffs because we are a small staff,” Norris Tolson, the company's chief executive officer, said.

Eight-one people work there. Their mission is to create jobs in the biotech industry by recruiting companies to North Carolina.

To save jobs, Tolson asked workers to come up with money-saving suggestions.

"One of the ideas that surfaced was why don't we have a one-day-a-month furlough without pay?" he said. "And we looked at it, and it was a pretty neat idea."

As North Carolina's unemployment rate sits at its highest in 26 years – in January it jumped to 9.7 percent, up 4.7 percentage points from a year ago – the word "furlough" is becoming more of a buzz word. More and more companies, local governments and other organizations are considering it, if they haven't already implemented it.

Last month, for example, Roanoke Rapids decided to require city employees to take anywhere from two to five days of unpaid leave to help close a $664,000 budget shortfall.

In June, Spring Lake asked town employees to take six days of unpaid leave to save approximately $78,000.

The University of North Carolina system is among other entities considering the option.

Tolson says every employee at North Carolina Biotechnology Center, including himself, will take a day per month without pay until next March.

Workers say that in the bad economy, the furlough is a small sacrifice.

That "buy-in" is important, says Clint Davidson, former vice president of human resources at Duke University and a lecturer at North Carolina State University's College of Management.

"The hope is there will be growth and the need to bring people back," he said, "so taking steps that keep people attached to the organization and feeling good about this particular process increases the likelihood that when business upticks again and hiring increases, that the people impacted by this were treated fairly, compassionately, responsibly, and will have an interest in returning full force to the organization they were a part of."

The North Carolina Biotechnology Center hopes to create about 75,000 new jobs in the next 10 years through the investments it makes, Tolson said. The state has already invested $1 billion to develop the biotech industry over the past decade. Revenues from the state's biotech sector total about $28 billion a year.

"We recognize (that) once talent is out the door in a layoff, you don't get it back," Tolson said.

11 Comments

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  • Transient Entity Mar 13, 2009

    I'm with SS67. I would rather see furloughs than full fledged layoffs. I wouldn't be happy with a furlough but I would take it if the other option was to be laid off.

  • SS67 Mar 13, 2009

    I work for the state and if it came down to a week without pay vs. someone else losing their job completely, I would do it in a heartbeat.

  • Beachnut Mar 13, 2009

    As someone who's company has effectively used furloughs in the recent downturn, I can tell you unequivocally that they work-- at least in the private sector. No one likes it, but people still have their jobs, and we all get the chance to fight another day.

    Fortunatly, now I see that the State of NC doesn't need to furlough anyone to save our government. They are simply not going to hire the people they were planning to add at some future date. Pretty neat! I only wish that approach worked in the private sector as well. We must have some real geniuses working in our government!

  • spinnerdunn Mar 13, 2009

    Thank you for leading by example. I hope our state government seriously considers furloughs before putting hundreds, if not thousands, of people out of work and into the unemployment line.

  • White Eagle Mar 13, 2009

    I'm not an economist nor a business owner but wouldn't it be better to have everyone only work 7 hrs a day company wide? You may have to shuffle when people start work in the morning so you still have people available to deal with the work flow and customers but the company would/should still be viable, the worker would still get a paycheck (slightly reduced), and they may still have benefits. Isn't that better then putting people out of work (and on unemployment), and possibly losing benefits? Everyone shares the pain and hopefully the company will still be viable.

  • protestthis Mar 13, 2009

    public sector or private sector - if they shut out 1/2 the workforce and told me to pick up that other 50% - overtime or not - i'd tell them to stuff it. We are employee's NOT Slaves.

  • 4DukeTillDeath Mar 13, 2009

    For the past few months we have had to take a week off unpaid. Really hurts the wallet and screws up your vacation time if you use any of that to cover those days. An unemployment check for me is $150 less than a regular check. Atleast I still have a job though.

  • ncmike Mar 12, 2009

    Treet, sadly, they are right. he vast majority of public companies are instead laying off and the remaining workers are told to do what it takes to make up for those cut - even if it means working double shift and weekends on the same salary - and we do it without complaining just to keep the paycheck. Furloughing is the exception, not the rule.

  • jse830fcnawa030klgmvnnaw+ Mar 12, 2009

    spenrounds and whatelseisnew, both of your comments are way out of track. Many companies are instituting furloughing instead of pure layoffs. One reason is exactly what Tolsen said, that once the talent is laid off, you really cannot replace that talent immediately when you need to. The institutional knowledge and experience make a big difference between an employee and a new hire. Of course, this assumes the employee is a productive staff for the company or government agency.

    For example, Eaton Corporation established a 1-week per quarter furlough corporate-wide. Everyone, from the CEO down, has to take a week off without pay. Whole plants have been shutdown for a week. During this week outage, these employees qualify for unemployment, and the company assists in processing the paperwork. So basically the employees are unemployed for 4 weeks in the entire year, but the employees return to work with a smaller paycheck. This time period may increase if the economic recession worsens.

  • whatelseisnew Mar 12, 2009

    Get a clue. Cut your staff by 50 percent. Tell the remaining staff if they want to continue, they need to produce the same amount of results. This is what private sector does. It can be done. I have been through it.

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