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Corporate Responsibility: No-Layoff Policies - Executive Leadership Articles

Corporate Responsibility: No-Layoff Policies

Executive Leadership Articles

Corporate Responsibility: No-Layoff Policies

Every organization goes through lean times, when costs must be reduced to match an ebb in cashflow. In extraordinarily rough periods, firms find it necessary to lay their workers off, a quick fix for serious problems. It seems that layoffs are a necessary evil, one of those unfortunate, last-resort measures in a world where survival of the fittest is the law of the jungle. "It's not personal: it's just business" is the catchall disclaimer when people's livelihoods are at stake. We accept that in this world, all parties are free to break off the agreement as they see fit.

Yet at their fundamental roots, employment agreements are partnerships, and partnerships come with an understanding that each party works in the best interest of all, or else the partnerships fail. At the moment of hiring, an employee is presumably in need (or want) of a new arrangement, while the employer is in need of expertise, skill, and service. We acknowledge that circumstances will change the terms of the arrangement, but the general agreement is that if the employee does his or her job well, he or she can count on the firm to hold up its end of the deal. Layoffs, even in the best of situations and especially in non-volatile fields, seem like a breaching of the trust between employer and employee. This is a gross oversimplification, but few would disagree that a layoff is painful and unfair.

As we have discussed many times, companies looking toward a more responsible approach consider the importance of stakeholders beyond stockholders, paying mind to communities, the environment, and its own employees. This is not charity: it's an understanding that it's in an organization's best interest to want the best for its employees, for their families, and for their families' communities. We call the employment agreement a partnership, but even as a partnership, it is weighted heavily in favor of the employer. Corporate responsibility attempts to use that leverage for the employee's benefit and well-being, rather than as threat or bargaining device.

To that end, some firms, large and small, public and private, have established formal no-layoff policies, while others have gone decades with no layoffs as a matter of principle even in the absence of official policy. There are clear drawbacks to such policies, such as the elimination of an effective treatment in desperate times. Nobody wants to amputate a limb, but sometimes to save the body it becomes necessary. Yet the payoffs can contribute, long-term, to the bottom line and beyond, by way of employee retention and loyalty. No-layoff policies force organizations to be more creative in their problem-solving, working ahead of the wave to deal with bad times while their threat seems a dot on the horizon. They also make it easier to bring in good talent and to select for good people, something that cannot be overlooked as a symptom of a healthy firm.

One American ecommerce company with 200 employees has taken the no-layoff policy a step further: its chief executive officer instituted a no-firing policy. Once someone becomes an employee of the company, he or she cannot be fired. Management works with employees to make them better at their jobs, and if it becomes absolutely necessary to part ways, employees are reassigned to the job of looking for a new job, with the resources of the office at their disposal, including letters of appropriate recommendation. The result is very careful hiring, with a mindset of bringing someone in forever, like a member of the family, not to mention fierce company loyalty and increased job satisfaction. The cynic might argue that this is essentially still a firing policy, but how many companies keep their employees on the payroll until they find suitable employment elsewhere? If the policy somehow falls short of its purest intentions, it still manages to value its people as the assets they are. It's stylish for companies to say that their people are their greatest assets, but here's a firm that demonstrates it while also reaping the benefits of such an approach.

It's a dog-eat-dog world out there, and "it's only business" has come to mean that the dog with the fiercest bite survives the longest, companies who embrace the responsibility of taking care of their employees even in the darkest times are demonstrating that it doesn't have to be this way.


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