Phl 320 - Re-Organization and Layoff: Decision Making Evaluation Paper

Re-organization and Layoff: Decision Making Evaluation Paper

Learning Team B

PHL/320

February 2, 2015

University of Phoenix

Re-organization and Layoff: Decision and Evaluation Paper

Managing a company's finances can be very challenging and companies that find it difficult to conquer this challenge, experience a downturn, a decline in business, and when this occurs the need to find solutions to alleviate their financial issues becomes crucial. One solution that companies seem to implement and re-visit is layoffs but employers that are sensitive to the employees needs try to avoid this option by exploring other alternatives such as furloughs or transferring employees into new positions within the company.

Furloughs

The difference between layoffs and furloughs is furloughs always has a return date. Workers who have been commissioned to furlough do not get paid while they are off of work. However, they will still receive their work benefits, like health insurance but managers typically overestimate the savings they will achieve and fail to understand that even bad recessions usually end more quickly than people expect and as David Cote shows with the statement that follows, "We wanted to be ready for recovery as soon as it came, whether it was soft or V-shaped, and furloughs were one way of positioning us for any outcome". (David Cote, 2013). This statement proves that furloughs prepares a company for serious downturn or whatever may occur as a result of their poor financial health.

Transferring

A company that must cut hours can also consider moving employees to other positions that are more needed or that are vacant. The transferring of employees would be a better solution than layoffs for both parties. Employees would gain knowledge within their new role and the company will still be able to hold on to employees that will become essentially more valuable to the company. Most companies prefer to have people that can be flexible and learn all aspects of the departments in the business so exercising the option of transferring employees to new departments is a win-win that alleviates the need for layoffs.

The Middle Income Customer

Avoiding layoffs will benefit the employee and the middle income customer, who are one in the same. It is a known fact that consumer spending accounts for 70 percent of economic activity (New York Times, 2013) and when an employee is laid off and forced to depend on unemployment benefits, spending decreases significantly. Statistics show that the disparity between the rich and the middle class has increased significantly and is being attributed to the wave of layoffs in