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Avoiding Business Cycle–Based Layoffs

The advisability of laying off workers during economic downturns has been
questioned by some companies and management scholars.73 Although the
no-layoff policies of such companies as Southwest Airlines and Lincoln
Electric are well known, there have been other examples from
contemporary experience such as in Germany when a financially strapped
shipbuilding company loaned 68 skilled workers to Daimler-Benz for one
year. Another example is provided by the Sony Corporation. Sony’s refusal
to lay off employees in its San Diego plant after a decline in sales paid off
in increased employee commitment and increased performance in following
years.74 As Akio Morita, the chairman of Sony, has stated: American
management treats workers as just a tool to make money. You know,
when the economy is booming, they hire more workers, and [when] the
recession comes, they lay off the workers. But, you know, recession is not
caused by the workers.75 Other leading U.S. companies that have offered
employment guarantees in the past have included Johnson Wax, Nucor
Corporation, Worthington Industries, Hewlett-Packard, and Hallmark.76
Hewlett-Packard has stated that a central concept in its culture and human
resource philosophy is the sharing of responsibilities in economic upturns and
downturns. When orders at some of its manufacturing plants were lower than
expected, employees were allowed to voluntarily go on leave without pay but
with continued benefits and a guarantee of getting their jobs back after their
return. After conditions deteriorated further, almost the entire nonsales
workforce was furloughed two days per month without pay. Senior management
were not furloughed and continued to work full schedules, but their pay was
reduced by 10 percent.77