Friday, December 10, 2010

Paying Them to Stay

This is probably belated advice given the data that shows private sector employment is increasing, and job listings are rebounding. However, some companies are still struggling. In an economic downturn, if you're considering laying-off (furloughing) employees, consider a different option. Reduce their hours but pay them if they volunteer at a non-profit organization.

For one company I was at, we did this twice: in the early 2000's and last year. We learned about a similar idea in the business press from Cisco. We had gotten to the point of extreme frustration trying to figure out how to keep people coming to work and contributing. As a manufacturing company, there's only so many times you can clean and paint walls and work stations. We had done quite a bit of training. We decided to reduce people's schedules to 32 hours. If they volunteered at a non-profit organization, like a school, nursing home, etc. we would pay them up to 8 hours--only 4 hours the first time we did it. (Our one stipulation was that they couldn't volunteer to usher at or sing in the choir at church. We expected them to do that if they're so inclined.) For a high level of trust, the only required documentation was a signed slip by someone at the organization. It wasn't required that they do this. About 30-40% of the people took advantage of the program.

For this, the company won a Business Ethics Innovation Award.

We knew that the corporate coffers could afford to pay people, while 20% reduction in wages would have been detrimental to many of them. Plus it was easy for them to maintain benefits, and pay for their portion of health insurance, and maintained similar matching amounts to the 401(k) plan. There were many benefits of this program to the company:
  1. It retained our trained, skilled personnel.
  2. We avoided having to recruit, hire and train new personnel when business rebounded.
  3. We garnered a lot of positive publicity, being featured in printed and televised media. Plus the non-profits were very appreciative of the extra manpower to get some projects done, like setting up for special events, reading in classes, reshelving books in the libraries, or covering extra hours if they served the public. More importantly perhaps, we generated a lot of word-of-mouth goodwill as employees, community leaders and non-profit members would share with their family, friends and neighbors what we were doing.
  4. Since our company was supportive of the community through programs like Junior Achievement, this program introduced people to the personal benefits of volunteering, learning how much you "get" when you "give". It was fairly easy to do this, since they weren't limited to off-work hours when it seems time is at a premium these days. We had employees who said they would continue volunteering after the program ended (and we returned them to full hours) because they had so much fun.
  5. It enforced our value of work-life balance, giving some parents a chance to interact with their children at school and see how the classrooms operate. Others with elderly parents had time to interact with staff, or contribute in a meaningful non-cash manner to the assisted-living or nursing home facilities.
  6. We were able to work with flexible scheduling so that we had sufficient staff to meet customers' needs at all times, because we weren't shutting down on a single day. We stayed open all five business days.
  7. When people were at work, they were busy, productive and left feeling like they had earned their wages.
  8. We generated long-term engagement and loyalty among the staff. They knew we were committed to them and they would commit to us. The first program became part of the "legendary stories" that are told to new employees by the old-timers around the water cooler. That as business levels cooled, the people who were here through the first program could reassure the newer employees and reduce the stress.
  9. By reducing the stress, we maintained high productivity levels as business demand cycled up and down. Employees were not distracted, wondering if lay-offs were going to happen.
  10. We became known as an "employer of choice" in the area for anyone seeking employment and that increased the "quality" of the candidates when we were hiring.
  11. We avoided expenses and special requirements on cash because we retained employees. Instead, we didn't have to pay out severance payments, vacation payouts, vested pension-type benefits, etc. Additionally, we avoided future, increased expenses like unemployment insurance premiums.
We were fortunate in that we didn't have to face any worker compensation challenges because no one was injured while they were volunteering.

There may be other reasons to do this. The biggest hurdle for management is to work through the concept of paying people to do nothing for the company. Except that they are being paid to volunteer and we created the "soft" benefits above, it's hard to calculate the ROI on this program. The tangible benefits were pretty miniscule. The intangibles were tremendous.

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