Ok, I admit it… I read the April 2009 edition of HR Magazine – well at least one article, and a look in the back to see what companies still use their HR Jobs section (which can't be a good use of recruitment dollars). The article that caught my attention was Cutting Hours Without Raising Hackles by Senior HR Mag Writer, Rita Zeidner. I'm always concerned when HR folks start talking about cutting expenses by cutting hours, primarily because it demonstrates very short term thinking without really understanding the cultural ramifications. Zeidner shows in her article that some of the benefits of cutting hours vs. layoffs are: smaller unemployment tax hit, spreads the pain amongst all staff, cuts your risk of discriminating against protected classes, could head off certain charges from the EEOC, etc.
I do see one positive, in that keeping your talent employed would have huge advantages when your business turns around. But in the words of Ricky Bobby "that's it, Chip"! To be an HR Pro who is also a Business Partner, we must recognize the bigger picture for our operations partners. So, let's look at what we miss when we make the decision to cut hours vs. layoffs:
1. For salaried workers, cutting hours now gives them an hourly working mentality. Think about it – you tell them you're going to cut 10% of their hours and 10% of their wages, and they instantly will know that is a half day a week. They then begin counting hours – where prior they probably worked more then 40 hours and never gave it a thought – You can now plan on no extra discretionary effort.
2. "Spreading the Pain" – I love that quote, basically because I'm a high performer and guess what I'm going to do while you spread pain. That's right – I will be working for your competition to kick your butt. Within HR, you need to have courage not to spread pain – but to reduce your staff by letting go of your lowest performers. Your high performers will respect you for it (and probably give more discretionary effort) and your middle performers will make sure they don't become low performers.
3. In terms of reducing risk, it is our job to help our organizations mitigate risk to the appropriate level – any time you leave someone on because you are attempting to reduce risk – you're making a poor business decision – especially if that person is not performing to standards.
4. Lastly, as savvy HR Pros, we need to build the ROI Value equation for our organizations and our workforce. Yes, we get some wage expense savings by cutting hours – but is it equal to the value output that person provided to the organization? If it is, you need to question why that person was on to begin with – for the most part every person in the organization should have a bottom-line impact that is greater than their salary and benefits (do you know what yours is as an HR Pro? – You should).
It is time to Raise some Hackles and as HR Pros demonstrate how to add value back to your organizations, and it is not by showing them you can manage and cut expenses better than every other department.