South-Western - Management  
Strategies: Radical Sabbaticals
Topic Managing Human Resource Systems
Key Words layoffs, downsizing
News Story

In 1981, when Lincoln Electric saw sales drop, it instituted a program that encouraged employees to pursue an alternate career within the company, rather than laying them off. Virgin Atlantic offered unpaid leaves of 3-6 months to 600 staffers who kept their travel benefits on Virgin flights during their time off. Cisco Systems Inc. developed a one-year Community Fellowship Program as an alternative to layoffs. It placed 81 employees with non-profit organizations in need of technology help, and the employees continued to receive 1/3 of their salaries and full benefits for a period of time.

Small companies have also begun experimenting with ways to retain their employees. When Tweezerman Corp. found sales down 25%, it first froze hiring, then began cross-training of employees. Some executives agreed to salary cuts, and finally the company was forced to institute wage and salary freezes.

Lonely Planet let employees opt for sabbaticals or shortened workweeks to avoid layoffs during a slump. It also cut costs where possible. More than 100 employees took advantage of extended leave at 15% pay, but it wasn't enough and the company eventually had to layoff 15% of its staff. The company learned how to run a more efficient operation in the process.


The decision to layoff employees is one of the most difficult a manager will make. If the strategies discussed in this article fail, what are some ways a manager can make the process go more smoothly?

Source Thea Singer, "Strategies: Radical Sabbaticals," Inc. Magazine August 1, 2002.
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