Will the Furloughs of '09 Trigger a Fundamental Shift in the Employment Relationship?

In her post The Slippery Slope of This Recession's Talent Management Practices, Harvard Business blogger Tammy Erickson talks about how recessions prompt changes in the way we do things - but that this rarely happens in a deliberate manner or with a full appreciation of the consequences.

As Erickson points out, the recession of 1981 brought the concept of a "layoff" into widespread use.  The 1991 recession drove many individuals into contract employment - a status many hung on to even after "permanent" jobs became plentiful again.  Now, our current recession has ushered in the return to furloughs.

Consider the following statistics:

• A Towers Perrin study, conducted earlier this year, found that 40% of employers had either implemented or were considering a mandatory furlough, 32% a reduced workweek.

• A Hewitt Associates survey, conducted in April 2009, found that 44% of employers had either implemented or were considering a reduced workweek or involuntary furlough.

• A Watson Wyatt study, also completed in April 2009, found that 21% had implemented or were expecting to implement a mandatory furlough, 26% a reduced workweek.

Erickson's point: That this practice, though it may inflict less pain and hardship than would have occurred with a layoff, is irrevocably changing the relationship between employers and employees.  From her post:

But the idea of furloughs, particularly for managers and professionals, is planting the seed of a new way of looking at work in our minds. Suddenly companies have asked us to work, say, 32 hours a week rather than 40. Hmmm. What does that really mean? Most of us were never working 40 hours - we might have been working 50 or maybe even 60. We were answering emails at odd hours, writing in the early hours, calling Singapore at night. Does this mean that we should now work 20% less than we were before . . . or does it mean we should work literally 32 hours?

For many, I believe the conclusion will be that we should work the hours specified by the company and perhaps do other things - start new businesses on the side perhaps, sell stuff on eBay, take another job, go back to school, whatever - with the other time.

In this shift, companies will lose far more than the number of hours they think they've cut back. Companies will lose that sense of total dedication - the sense that what I produce on my own time is theirs, that I have a responsibility to answer emails whenever they arrive or participate in odd-hour phone calls.

I agree.  As was true with its predecessors, the consequences of this recession and the actions it has prompted by employers will be with us long into the future ... and in ways we may not appreciate for some time to come.

Comments

[E James (Jim) Brennan]

Don't see this as a fundamental shift but more as an accelerated continuation or increase in the steady erosion that has occurred over the last few decades. Wrote about it decades ago, in "The Failure of Corporate Reward Systems".

Actually, this current corporate employer response mode seems far "kinder" than the callous ax-swinging of the "re-engineering" era and earlier more brutal times of economic crisis.

Previous downturns gave birth to the outplacement industry, which is conspicously absent today, as far as I can see. Companies today seem somewhat (a) more sensitive to morale, (b) more aware of the value of their human talent, (c) more reluctant to cut people totally adrift and (d) more willing to ask ALL employees to take a slight cut to save SOME people their jobs. The disproportionately higher value health benefits have today may have a lot to do with this "new" trend, because it is literally impossible for an uninsured to replace existing corporate health care policies.

That said, I agree that the long-term effects will merely further destroy whatever weak faint vestiges of "Company loyalty" that still survive. Reciprocal dynamics rule. We're teaching folk about trust, devotion, dedication and teamwork... their presence and their absence.

[Ann Bares]

Jim:

Good points all. Yes - reciprocal dynamics rule (much to the surprise of some employers)!

I, too, noticed the absence (or perhaps the invisibility?) of the outplacement industry during this past year and its actions. Interesting to hypothesize on what that's about ....

Thanks for the comment!

[Carroll Lachnit]

Great post, Ann. Outplacement isn't dead, though I doubt it's as popular as it once was. Here are a couple recent Workforce Management stories about outplacement, circa 2009:

Outplacement as a benefit: http://www.workforce.com/archive/feature/26/19/34/index.php

Recruiters & outplacement: http://www.workforce.com/archive/feature/26/23/87/index.php

[Ann Bares]

Carroll:

Thanks for stopping by ... and for sharing the info and links on outplacement!

[Paul Glover]

A loss of trust because the Social Contract between Employer and Employees has been broken by the current recession? This concept is way behind the reality of the workplace. The Social Contract was breached in the 1980s - and there has been no trust between Employer and Employee since then. Time for Employers to accept the reality of the world as it is and not as they want it to be and stop bemoaing the loss of trust and loyalty. The WorkQuake(tm) of the Knowledge Economy has created a workforce of Free Agents who are not committed to the organization but to themselves and their Work Team Members. Want a dedicated productive Work Force? Then answer the question every Employee poses every day they show up for work: What Is In It For Me?

[Ann Bares]

Paul:

I was in the workforce and consulting during the '80s, so am aware of what happened. Rather than an utter evaporation of trust at that point, as you suggest, my exerience would suggest it has been an incremental movement with its own ups and down - and this recession has pushed us further down along the spectrum toward free agency. Just my point of view. Thanks for the comments!