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flexible work as alternatives to layoffs

There is a movement afoot to link organizations’ responses to the economic crisis to larger social goals, like sustainability and work family balance. Anytime we can get two valuable outcomes for one business decision, "that’s a good thing." Often, however, business decisions made for one reason have unintended repercussions.

Take the movement towards alternatives to layoffs, particularly alternatives that include reducing employees’ work hours either across the board or by employee choice. Reducing work hours may have the unintended consequence of reinforcing gender based discrimination in terms of compensation, authority, and career progress. In other words, they can be applied and interpreted in a sexist way. Let me explain:

Connecting to my earlier posts about authentic alternatives to layoffs , whether layoffs are patriotic, and whether layoffs are sensible economic policy, I’ve been learning a bit about some specific alternatives, like "Flexible Downsizing". The leading voice on flexible downsizing, Cali Yost Williams, has been writing about this technique at Fast Company and also at her blog. Last weekend, Yost Williams was quoted in a a New York Times article about how and why employers might downsize employees’ work weeks.

Why might workers want the alternative of reduced work-weeks?wayout sign w arrow.jpg

Of the many reasons an organization might try flexible downsizing as a layoff alternative is that there is a silver lining in this option for women, and men, who are parents. Mothers (and fathers) who accept reduced work weeks might find that this change in their work expectations allows them to ‘manage’ work and family fit more effectively. This holds for women who work in hourly jobs, where full-time is 40 hours a week, as well as women who work in salaried and managerial jobs, where full-time can mean up to 55 or 60 hours a week.

One of my mom-blog colleagues, The Mama Bee, raised some concerns about this article. The Mama Bee is concerned that women who chose to accept reduced work weeks will get pigeon-holed in the same way that women who mommy track are pigeonholed and often discriminated against. Pointing out that all of the people quoted and 3 of 4 experts in the NYT article were women, The Mama Bee draws our attention to the implicit expectation that down-timing, as a a layoff alternative, is somehow more relevant or appropriate for women than for men.

The Mama Bee notes:

The article suggests that these new part-time positions might offer good options for working mothers, many of whom are ambivalent about working full-time. I like the idea of women having more choices in the workplace; however, things get dicey when the motive is cost-cutting, rather than a true shift towards better work-life balance for employees. Managers may be more likely to cut back hours for women with children, who they perceive as desiring a less demanding schedule, or who they have already “mommy tracked.” (emphasis mine)

The Mama Bee is absolutely on target with her concerns. The logic that (1) women/mothers are more interested in balancing work and family, (2) that women/mothers are more interested in less than full-time, and (3) that reduced work week schedules are more appropriate for women is quite simply, sexist .  Moreover, research does show how individual women lose when they chose to reduce their work hours from full-time and/or to take a mommy track. There is no question that implicit and explicit sexism plays a part in creating a situation where women who work less than full-time are often less well compensated proportionally, and are assumed to be less than committed to their organization and their careers.

What is different right now?

empty offices.jpg In this economic environment, where many organizations are seeking to cut costs, down-timing occurs against a different context. Reducing workers hours and salaries to less than full-time is an effort to reduce costs while keep most everyone employed AND making it possible for the organization to gear back up as business improves. Reduced work weeks are a corporate coping mechanism. This corporate coping mechanism affects most/all employees — it is not a "choice" made by an individual woman to make her personal work-life fit more comfortable.

However — The reduced work week alternative is being ’sold’ as an opportunity for women/mothers (and some fathers) to have more time with their families. For employees who see this option as a chance to be with their families more by working fewer hours (and families that can afford it b/c the other partner retains his or her job and associated health benefits), a reduced work week feels like a positive "choice".

The idea that employees would be open to it as a positive choice is fine. In this situation, a reduced work week can be a win-win for organizations and families.

But here’s the challenge:

We know from empirical research that when an individual woman shifts to less than full-time work, her wage rate usually decreases, as does her rate of career advancement. In large part, this is because other people assume that this woman is less committed to her organization and to her job than a woman or man who continues to work full-time. Whether or not these assumptions have been ‘true’ about individual women before, they probably won’t be true in this current economy.

Collectively and individually as managers, we will need [click to continue…]

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Are Apologists for Layoffs Actually Just Bad Economists?

by cv harquail on February 26, 2009

Why Not?

Here’s a post in honor of my friend Ian Ayres, a law & economics scholar who celebrates a big birthday today. Ian is constantly challenging academics of all stripes to stretch their thinking by asking themselves hypothetical questions. His favorite rhetorical tactic always seems to include two words: Why Not? Ian eschews any line of thinking that keeps us engaged in the same old ways of solving problems. "Why not," Ian asks, "just think about it differently?" "Why not" come up with different way to look at the question, so that you can be inspired to find new ways to attack a problem?

Ian is so committed to this tactic that he literally (co-)wrote the book on it: "Why not?"

In honor of Ian, I’ll literally take a page from his book and use it to get a different insight into the problem of mass layoffs. Instead of thinking like a management expert and sticking with the management expert’s evidence-based argument against layoffs , "why not" think like an economist?

Why not think less like "Chainsaw Al" Dunlop, and more like John Maynard Keynes?

(n.b. For those non-management types out there, "Chainsaw Al", born Albert John Dunlop, is a professional corporate downsizer. His other nickname? "Rambo in Pinstripes".)

What happens if we think about layoffs the way Keynes might?keynes

If we take the perspective of an economist like Keynes, we can see more easily a subtle market dynamic triggered by mass corporate layoffs. This feature becomes prominent only in  situations like the one we’re in now, where so many organizations seem to want to shore up their stock price by laying off workers. And, you can see this feature of layoffs only if you think like an economist.

What does an economist like Keynes see when looking at mass corporate layoffs? S/he sees that:

Corporate layoffs during a national recession trigger a business & organizational-level cycle that contributes to The Paradox of Thrift.

The Paradox of Thrift

The gist of Keynes’s Paradox of Thrift is that, if individuals save money during a recession, there is not enough money being spent by these individuals collectively to power an economic recovery. The private virtue of an individual saving his or her money becomes a public problem when everyone does it. What seems good for the individual is actually bad for the collective.

What we’ve got right now, with organizations left and right laying off their employees to cut costs, is a corporate-level situation analogous to the individual vs. collective dynamic in Keynes’s Paradox of Thrift. Instead of the ‘private virtue’ of individuals being thrifty, the ‘private virtue’ of corporations is prioritizing the company’s stock price. Ultimately, the public problem is the same– not enough spending by organizations to fuel a collective economic recovery.

Adding insult to injury, while thrifty individuals build a balance in their savings accounts, corporations that execute large layoffs don’t get much of a bump in share priceespecially over the long term even in the best of times. In these current times, it’s hard to believe that executives’ actions are having much of a positive impact on share price at all. [[Think about it... Exactly how many CEOs made bad decisions on Monday, and exactly what did these CEOs "do", that caused the Dow to plunge on Tuesday? But I digress ...]]

How to address The Corporate Paradox of Thrift?

Instead of taking for granted the myths about mass layoffs as a cost-saving strategy, organizations should look for and experiment with alternatives. For reducing payroll costs, consider "’flexible downsizing", across the board paycuts, and restructured benefits packages.

Organizations could also look for actions analogous to the ’saving while spending’ recommendations for thrift-minded individuals to help the collective avoid The Paradox of Thrift. Specifically, organizations should look for ways to invest now (by keeping their workers employed) and then focusing these workers on cutting costs by improving work processes.

Any of these alternatives avoids the "Us versus ‘Used to be Us’ " dynamic, where the status quo is sustained for some, while all costs are born by the rest. For example:

As Cisco announced yesterday, "Instead of major workforce reductions to control costs, Cisco is focusing on reducing expenses by $1 billion by the end of fiscal year 2009." (Alas, that’s in addition to laying off 5,000 workers. More on that tomorrow.) Unfortunately, this "cost cutting" is to be achieved by deferring spending and canceling business trips … not by improving Cisco’s overall processes. Still, it’s a step in the right direction and should save some jobs.  For more examples, check out Cali Yost’s Downsizing Flexibility Champions: Alternatives to Layoffs Honor Roll over at FastCompany.

It’s complicated.

I’m not an economist, and I don’t play one online, so I don’t know the full extent of macro-economic issues that are triggered by mass layoffs … and what complexities await us if many organizations choose the same alternatives to layoffs. Certainly, nation-wide wage cuts may lead to "debt deflation", and improving processes that require cash investment now to reduce costs over the longer term may lead organizations to take on too much debt (if corporations can find anyone to lend to them). It’s a complicated picture.

Or is it really that complicated?

Why not . .. take a look at this (now infamous) chart and ask, is this really our best of bad alternatives?

Why not … see these mass layoffs as being caused by a callous lack of creativity, rather than as the "inevitable" result of executives making ‘hard’ choices?

jobsrecessions

Why not … conclude that apologists for layoffs are actually just bad economists?

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Are Layoffs Unpatriotic?

February 25, 2009

A few weeks ago, Steven H. Korman published a provocative Open Letter to CEOs in the NYTimes and the Philadelphia Inquirer. Asking other CEOs to avoid layoffs, Korman urged corporate executives to focus less on protecting stock price, profits, and the short term, and focus more on protecting the people who are working [...]

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