Business

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

Posted March 12, 2009 6:15 p.m. EDT
Updated March 12, 2009 6:44 p.m. EDT

— 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.



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.