Furloughs

Living in the capital city, I hear a lot about what the state government is doing about the current economic downturn. Here in the heart of the city, many of my neighbors and friends are state employees. Recently, the state has put most of their staff on a two-day-a-month furlough. In the past, many employers furloughed workers when needed. But in recent years, furloughs have been replaced by lay-offs and reductions-in-force. Furloughs can be a great solution for handling a slowdown, allowing you the ability to bring your staff back to full-time hours once the economy picks up.

Yesterday the Wall Street Journal had an article about how furloughs are being used. In the article by Dana Mattioli and Sara Murray, they discuss how companies are furloughing staff.

While many companies still choose to lay-off employees, a furlough can allow the employees to stay on as regular, salaried employees with the same benefits and wages. With the state's furlough, the employees are working two less days a month, which in effect is a 10% reduction in pay. While many people are moaning about bringing home less money, the other option is cutting staff. Most employees don't want to potentially be the 10% of staff laid-off.

Saving money monthly in wages is an attractive option for many employers, and the ability to end the furlough when times are better allows the staff to stay whole. This also allows you to eliminate new recruitment efforts when times improve, allowing management and human resources to focus on other issues.