Managing in Troubled Times Case Study

Managing Downturn without Downsizing (B): Innovative Job Saving Schemes

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Abstract:
This case study is a sequel to Managing Downturn without Downsizing (A): US Financial Crisis and Layoffs. The main objective of this case study is to analyse the practicality of innovative job saving schemes arising out of the recession triggered by US Financial Crisis (2008). Analysts predict that the worst is yet to be seen in the labour market as companies are sacking countless employees. Since December 2007, a total of 4.4 million people had lost their jobs in the US and unemployment rate touched 8.1% in February 2009, the highest since 1983. Such large-scale layoffs are not only affecting the global economy but also the productivity of companies by affecting the employee morale. A sense of fear, uncertainty and insecurity prevails in the workplace. However, few companies like Southwest Airlines, Hypertherm Inc. and Nucor have had a no-layoff policy for a very long time and did not downsize during the current economic crisis as well. Can companies affected by the US Financial Crisis adopt such job saving schemes instead of layoffs? Do job saving schemes deliver their true purpose or contribute further in decreasing employee morale?

Pedagogical Objectives:

• To understand the impact of layoffs on existing employees and how talented employees can be retained
• To debate on the ways and means for the displaced employees to carry on their normal life and to examine the options left out for displaced employees
• To understand the various innovative job saving schemes and to explore new job saving schemes if any.

Keywords : Downsizing, Employee Morale, Labour market, US Financial Crisis, Severance package, Job saving schemes, Talent Management, Retained Employee, Displaced Employee, Hypertherm Inc., Southwest Airlines, Cisco, Furlough

Contents:

• Economic Downturn and Uneconomic Downsize?
• Layoffs and the Employee Morale Catastrophe
• Innovative Job Saving Schemes: More is Left on the Table?