A furlough is either a voluntary or involuntary unpaid leave of absence from employment. While not all furlough programs are the same, Dr. John Sullivan, a professor of management at San Francisco State University, warns that you may run into some problems. Here are some issues to watch for:
- Although they are designed to save money, most furloughs save a lot less money than actual layoffs would because, during furloughs, employees receive either a reduced wage or no wage, but their employee benefits, equipment costs, office costs, etc., continue.
- The workload doesn’t decrease; rather, employees have to do the same amount of work in less time.
- Both the talk of furloughs and their actual execution is always a major distraction to employees.
- Reduced staffing levels anger customers and can hurt your brand image.
- If your organization requires continuous innovation in order to compete in a fast-moving environment, the disruption and uncertainty that a furlough may bring can be distracting.
- The uncertainty of this short-term solution is likely to cause most of your employees to go into “job search mode.” Some of this may be on company time, further decreasing productivity.
- Your recruiting efforts may be challenged because most furloughs are publicized, which could cause potential candidates to think twice about joining the organization.
- Furloughs can be challenged or stalled by lawsuits from unions and others that feel that they were “legally promised” a certain amount of pay per year.
Source: CCH HR Ideas and Trends, No. 699, June 3, 2009.