As the economic crisis caused by the coronavirus pandemic stretches on, some associations may need to furlough employees. HR experts explain what this step means and offer some guidance on how to furlough properly.
Measures taken to slow the spread of the coronavirus have been devastating to the economy, and especially to associations that rely heavily on revenue from in-person events. As meetings have ground to a halt, many associations are considering some tough decisions about how to survive financially.
One such consideration is whether to furlough employees. I spoke with two human resources experts about the furlough process, what it means, and how to go about it.
Dawn Taylor, president and CEO of Pinnacle Talent Acquisition (PTA), said companies should first understand that furloughs are different from terminations or layoffs.
“A termination is a firing for cause or reorganization, while a layoff or RIF [reduction in force] signals to employees or the community that the business has to cut cost indefinitely,” Taylor said. “A furlough says we just need to save some money so that whatever storm is brewing will pass. We will then come back and operate the way we did before.”
Furloughing employees indicates you plan to be able to bring them back. Furloughs should be short-term prospects. “Three to four months, that is probably your sweet spot,” Taylor said. “When you start going out five, six, seven months, we should throw that into a RIF category.”
THE PROCESS
Organizations considering furloughs should consult with senior staff, including financial staff, as well as their legal counsel. Decisions about which staff will be furloughed should be based on defined criteria, to avoid any claims of bias, especially for protected classes like race or gender.
“The selection criteria should be designed to identify the employee traits that will be instrumental in moving the company forward,” said Deborah White, SPHR, SHRM-SCP, vice president of PTA. “It’s important so you can prove that it is not discriminatory practices, that there are business reasons for the staff that are chosen,” such as job classification or job knowledge.
Before furloughing, consider some less drastic options first. “It doesn’t have to mean all or nothing,” White says. “You can start with fewer hours or fewer days per week.”
If the organization can afford it, staff can often keep their benefits during the furlough period, Taylor said.
COMMUNICATION
If an organization knows it will have to furlough, it’s important that leaders be open and honest about the situation. “They should absolutely talk about [it] and communicate with employees” before furloughing begins, Taylor said. Information about the departments or job classes likely to be affected should be shared as soon as a furloughing plan is cemented.
The senior teams should explain what is happening and allow for discussion. “They should use plain language, not legalese,” Taylor said. “They need to be extremely honest and give employees a chance to ask questions.”
After furlough decisions have been finalized, employees should be notified in writing and via video or phone in today’s environment (in ordinary circumstances, face to face is best). “They need to have one-on-one conversations,” Taylor said.
This is important in a furlough because typically the organization wants that person back.
“There has to be a level of trust between the employer and employee,” Taylor said. “If you’re saying, I want my organization, when this storm is over, to go back to the way it was, you need to make them feel like you want them back.”
MORALE
Furloughing can hurt employee morale, so organizations need to assist the staff who remain. “Don’t forget the people who are left behind,” White said. “Remind them that this is for a specific time, and we will keep you posted.”
Taylor agreed. “You are furloughing their friends, their confidantes. You now have to watch out for morale,” she said. “How are you going to keep them productive? How are you going to keep them from thinking every day, ‘Is there going to be another round?’”
Any resources the organization has access to should be shared with those who are furloughed and not furloughed. “Those could be employee assistance programs or meditation apps,” White said.
