How to lay off an employee: “Attached Unemployment”
Just saw this terrific article on NPR about Katie Tyler, founder and president of Tyler 2 Construction, who lays off her employees in a different way.
I can’t imagine this would be appropriate or acceptable in a large company, but for the thousands of small companies who are faced with downsizing, this looks like a win-win.
Two elements of “attached unemployment,” from the article, are:
- “The company files weekly unemployment claims for the people it has laid off. That way, their benefit checks come faster and with less hassle.”
- The company still pays health insurance for the laid-off worker.
Clearly the employer is hoping to retain talent, and get these workers back to employment when the economy changes, or when they start to pick up business or win contracts, etc.
When I worked at my last software company the managers (board members) wanted us to layoff the talented people we had on staff. They were in the janitorial industry, and when they needed they could reduce workforce and rehire at the drop of a hat – afterall, how much training did it take to learn to clean a toilet or sink?
Software developers are different – you do not want to lose someone who’s been with you for years because they know stuff that might take years for others to learn (undocumented features, etc.). Or, they have a more intimate relationship with the customer, or understanding of the industry…
Sure, all of this *can* be learned by someone else (a new hire), but it makes a lot of sense to develop the relationship (can I suggest “loyalty?”) with your existing talent so that you don’t have to spend a ton of money getting the new person up to speed?
I think there’s something in the idea of creating this loyalty – we had it decades ago, but it’s gone away as neither employees nor employers have the same level of loyalty towards one another as there was many years ago.
I think there could, and should, be… it would just look different than it used to. More on that later.
If you enjoyed this post, please consider to leave a comment or subscribe to the feed and get future articles delivered to your feed reader.
Hi th...
You’re right. The look of loyalty is changing. Maybe it’s that loyalty is seen as more of a relationship than a right. We see less that we are “owed” anything but feel that we have a relationship with our employer. In all honesty, loyalty is a two way street.
… neither employees nor employers have the same level of loyalty towards one another as there was many years ago …:
as a consultant I see it from the outside:
I think it started when companies went out of bounds with executive greed, which became quite insensitive:
salary spans of 1:200 are unhealthy, and executive salaries became the major profit drain in mid size to large corporations.
The larger a corporation is, the lower the profit margin becomes. The executive payroll is a significant factor in reducing that profit (halfs, quarters it).
Even small companies, I know a couple of cases, where the ‘CEO’ (publicly held, OTCBB stock) takes out 20% of revenue (not of profit!), paying himself 333k out of 1.7M revenue; executive raises ins spite of dwindling business (which is performance failure of the P/L responsible parties!).
Then come stock holders and cry for cost reduction, and the reduction was starting at the base:
reducing health care benefits may have started it, and roving layoffs to sanitize corporate numbers – reducing further corporate profit. Like if you would own a cuise ship, and sell engine parts to by diamonds for the captain!
So in the employment world, there is a clear cause: employer gratitude melted away, replaced by outrageous greed, treating employees like commodities.
I do know that companies who did not follow this trend, are doing just fine, I work with some good examples, which are rare, though.
And this typical roving layoff thing is just passing the payroll to the tax payer and to the other UI payors, without siginificant penalty for the company who shifts payroll out to ’society’.
How outrageous that is I see in the eduction ‘business’, where normal schools are now starting the practice of laying off teachers before vacation, and hire them back afterwards: no shred of loyalty: outrageous greed (the 6 figure school superintendent’s salary is not reduced during vacation time, and this highest, outrageously inappropriate payroll position accounts for a significant part of expenses in some school districts).
All across the board: unwillingness to admit failure and still giving executive raises while ’selling the engine’, thus crippling a corporation – to look good for stockholders and ‘fantasy money’ stock values.
I kind of think like the socialism/communism world broke down because of personal greed of the ‘ruling classes’, this behavior may lead to a breakdown of the ‘capitalist system’ as we know it. I am watching curiously on the sidelines where all this is going.
There was a time when corporations built employee housing. My dad worked for a large bank, they built large apartment buildings for employees, we moved into a large place, company subsided.
In medieval times the Fugger in Germany started this.
Now we are at below the real property limit (which is about 30k/year, the ‘real’ limit where you cannot have a car, home, etc and no public transportation grid is available even to go to work in most places (except in the core of large metropolitan areas).
And health care cutting, layoff and hire back as needed: quite a change, this cut throat behavior might bring this system down.
j