Times are tough, and organizations are having to cut back. Some are taking the traditional approach of whacking heads without realizing the full value of the brain in those heads. Some, like Toyota, are spending vast sums of cash to stash even more knowledge into those brains. However even Toyota may have to come to grips with fundamental cash flow realities if this downturn remains as severe as it is now. That will be, sad pun not intended, a head-turner.
Some organizations are taking a different tact. One of them is Pella, one of our favorite lean companies.
economic downturn. But instead of laying off more workers, the Iowa
manufacturer of windows and doors is instituting a four-day workweek
for about a third of its 3,900 employees. Chris Simpson, a senior
vice-president at the company, acknowledges it's an unconventional
move. But Pella believes the economy could turn around faster than most
people expect, and it doesn't want to be caught short of experienced
Even government is getting in the act.
4,600 employees by 10% because the city is facing a $50 million budget
shortfall. Franklin says that if she were to lay off more workers
instead of slashing hours, "you'd have to eliminate major functions of
the government. It's not just jobs we've saved, it's services."
California is trying the same thing by requiring workers to take two days off per month, but of course unions are now suing Schwarzenegger over that executive mandate. With only 70 days of cash left in the bank, I guess we can let them work those two days. We'll just mothball some firetrucks and classrooms instead… geesh stop being so self-centered already.
Other organizations are letting people take more vacation over the holidays, chewing up that accrual that finds its way onto the books.
Earlier this year many organizations went to four day work weeks in order to conserve fuel by eliminating one day of commute. Originally it was a shift from 8 to 10 hour days to maintain a 40 hour week. Now that's being cut to four days of 8 hours. With both forces pushing toward a four day work week, that may soon become the norm.
But is a reduction in hours really a good thing? Perhaps initially.
workers say there are costs either way. Pella employee Connie Davis
says she plans to cut back on certain groceries when the four-day
workweek takes effect in January. "Like anyone who's counting the
pennies, I will tighten my belt a little bit," she says.
And that's the problem. Shorter weeks with fewer hours still hurt financially. It may be a short-term strategy to hold onto valuable knowledge, but maintaining it for more than a month or two may not be the best policy. Most people are willing to chip in for a while, but at some point the pain of the masses may outweigh the pain of the few, and tough decisions should be made.
A couple weeks ago we asked if a no layoff policy was really wise. The conclusion seemed to be that a "no layoff due to lean", perhaps coupled with a "no layoff if the next quarter looks profitable", is good policy. Sometimes, as an absolute last resort, tough decisions need to be made to preserve the business that supports the rest of the people.
But let's still applaud the organization, like Pella, that realize that it's an absolute last resort and also involves the shedding of valuable brains and knowledge. Not a knee-jerk reaction to reduce the cost of just a pair of hands.