Downsizing with dignity

As the US economy continues to sputter and the number of layoffs in the tech sector continues to rise, a growing cadre of companies appear to be taking a gentler and, in some cases, more progressive approach to layoffs.

          Bill Baker, a former systems engineer for Commerce One in Harmony Park, Michigan, wasn't surprised when he got laid off in late April. In fact, just a week earlier, a human resources representative at the e-commerce service provider asked him for his resume‚ and forwarded it to client Ford Motor, where his two superiors had recently moved hoping to avoid the same fate.

          Baker collected a month's severance pay after he was let go, even though he'd only been there four months. Commerce One also set him up with the outplacement firm Spherion, which helped him buff up his resume‚ and hone interviewing and salary negotiation skills.

          The assistance paid off. Within weeks, Baker was working as a network engineer for J&D Technology Group, an IT consultancy in nearby Clinton Township. Thanks to a different tax structure and commute, Baker now earns about $US4000 more. Still, he's got nothing but good things to say about Commerce One.

          "I don't know if I'd go back to the same office, but I'd go back to work for them," he says.

          Commerce One executives declined to be interviewed for the story. But as the economy continues to sputter and the number of layoffs in the tech sector continues to rise, Commerce One and a growing cadre of other companies appear to be taking a gentler and, in some cases, more progressive approach to layoffs. Outplacement, sometimes for an unlimited period of time, and incentive pay for returning employees are just a few of the tools companies are using to cushion the blow to workers and, potentially, to themselves.

          "We find that particularly in the technology business they want to create an alumni group that would want to come back to work for them," says Robert Morgan, president of Spherion's human capital consulting division.

          "They know at some point that the economy is going to turn and they are going to either rehire these people or they are going to be customers or partners or references in other organizations that are going to impact their business."

          Morgan says the intensely competitive hiring environment in the technology sector of just a year or two ago has contributed to the approach some companies have taken.

          "A lot of these companies have good employee-friendly skills and built environments where keeping employees happy was important," he says. "They have applied the same skills so they can have happy alumni."

          Still, that doesn't mean everybody is happy with the way they have been let go.

          John Chu, of Basking Ridge, New Jersey, spent 23 years working for Lucent Technologies and predecessor Western Electric as a network manager in New England, and more recently doing network support in the marketing division from an office in nearby Warren, New Jersey.

          Chu, who just turned 50, was among a first wave of about 10,500 Lucent employees let go in January. Chu "retired" on what he called a discounted Lucent pension, about $US400 per month less than the full amount, which in either case wouldn't be enough for him to live on. His quarrel with Lucent was that employees who were released in a subsequent voluntary layoff were offered incentives that he wasn't offered.

          "They added five years to your age and service, which for me would have undiscounted my pension," he says. "So it's worth a lot of money."

          Lucent spokesman William Price says the downturn and changing business conditions dictated different approaches to the layoffs. Unfortunately for Chu, he was one of the 4% of employees let go in the initial layoff for whom the later incentives would have made the difference between a partial and full pension.

          Through voluntary reductions, attrition and layoffs, Lucent shrank from about 155,000 employees to 87,000 in the past year, according to Price. Price didn't know how many of those reductions might have involved IT-related positions.

          Continuing education

          Charles Schwab & Co, which has laid off about 2000 people in the past few months and will have reduced its workforce by nearly 25% by year-end through attrition and other means, is offering rehiring bonuses of $US7500 to anyone who returns to work for the company within 18 months of being let go. In addition, the Schwab Family Foundation has put $US109 million toward educational assistance for laid-off employees, who can receive up to $US10,000 per year for two years to return to school, according to company spokesman Greg Gable.

          "They were designed to make the transition as easy for folks as possible," Gable says of the benefits. "But it's also an effort that looks inward. The people who remain want to see that the company did as much as it could to soften the blow."

          Spherion's Morgan says that kind of approach can be good for morale during otherwise difficult times.

          "For those left behind it will help them decide whether they want to stay or not," Morgan says. "People are thinking, 'If this ever happens to me, how am I going to be treated?'"

          Unfortunately for Mary Stipe, network manager for an Ohio tool and dye manufacturer, she knew the answer to that question. Last March, Stipe was let go after nearly three years on the job. Stipe says she received no severance pay, no outplacement and certainly no offer of a Schwab-like hire-back bonus or educational benefits.

          "They called me in and said, 'Bye, don't let the door hit you on the butt on the way out,'" she says. "It was kind of ugly except for the fact that I had seen them do it before."

          Duffy is a freelance writer in Haydenville, Massachusetts. He can be reached at

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