With lay-offs for the third quarter totaling 287,142 the largest number since 2005, it’s a perfect time to revisit the discussion of work life flexibility as an alternative downsizing strategy. A number of the top 100 CFOs surveyed as part of the CFO Perspectives on Work Life Flexibility study co-sponsored by Work+Life Fit and BDO Seidman, LLP used strategic flexibility to reduce their workforce without severing ties with employees:
“Approximately a third (38%) of CFOs report that their organizations had reduced their workforce in recent years. While employee lay-offs were most common, almost a third (30%) of CFOs innovatively used flexibility as a workforce reduction strategy that allowed them to stay connected to employees through contract project-based work (24%), reduced hours with full-benefits (3%) and sabbaticals with full benefits (3%).”
As I wrote in an earlier posting on the subject, more companies are using flexibility to creatively downsize, because they recognize that it will be very expensive to rehire when the business cycle improves. Read the comment posted by the Sigma Group, an award-winning New Jersey-based advertising agency that describes how they have used work life flexibility to match talent with cycles of their business.
While it might be better to have a job at a reduced schedule or on a project-basis than no job at all, this use of flexibility as a way to manage the workforce injects a level of uncertainty into the lives of employees that hasn’t existed previously. This means that individuals need to prepare for this potential reality. To that end, fee-only financial planner, Michael Haubrich (http://www.toyourwealth.com/) recommends that everyone have what he calls a “Career Asset Working Capital Fund.” This money is earmarked for the unique financial requirements of career transitions or job status changes including:
1. Skill set maintenance and development:
Use the fund to keep your skills up to date in your current or desired profession beyond any training programs your employer may offer. For example, keep your information systems skills current since they become outdated every two years.
2. Schedule, employment status, or salary changes:
As innovative employers use work life flexibility to stay connected to employees they would have to otherwise cut during tough economic times, this fund can supplement a pay cut from a reduced schedule or a status shift to working as a project contractor.
3. Job changes:
According to the Department of Labor, new workers face nine different job changes over the course of their careers. Those changes may include lags in employment--nearly 20 percent of jobless Americans have been out of work for at least 27 weeks. Last year Salary.com reported that 60 percent of job hunters were not just looking for a new job, they wanted a new career. Yet, the Reinvention Institute reports a career reinvention takes an average three to five years to complete.
4. Career sabbaticals and FMLA:
Only four percent of employers today offer paid sabbaticals, but that may change as employers begin to see them as a way to downsize but stay connected. And even with the Family and Medical Leave Act, jobs may be protected, but salary is not.
When the economy experiences a downturn, work life flexibility provides employers with an opportunity to move beyond the “all or nothing” downsizing solutions that have been the norm for decades. But with this more flexible approach to workforce management, comes a greater degree of uncertainty and inconsistency for which individual employees need to prepare fnancially.
What do you think? Is more flexibility in the way organizations downsize a good thing? And if so, how should individual employees prepare themselves?