Especially because salaries often represent a business’ biggest expense, cutting costs without cutting staff can prove challenging. Job-sharing, reduced hours and sabbaticals can all help keep employees on board during a long recession. The strategy of instituting sabbaticals in lieu of layoffs is being adopted by companies not only in the U.S., but also in the UK and India.
Note these recently announced examples:
- Powell’s Books, one of the U.S.’s largest independent booksellers, has asked employees to scale back their hours or take sabbaticals to cope with disappointing sales.
- Casino gaming company, Melco Crown Entertainment, has done the same.
- General Motor’s UK-arm, Vauxhall, is offering between 2- and 9-month sabbaticals on 30 percent salary to its plant workers.
- Infosys, an IT company in India, has provided an option to employees to go on a sabbatical and work for NGO’s (non-governmental organizations) for a year. For an employee to qualify, he or she should be with Infosys for at least 2 years. Employees will be paid 50% salary during this time and the rest can be recovered from the NGO’s they are working with.
- Another India-based IT company, Satyam, has also implemented a sabbatical option for employees.
Why offer sabbaticals instead of just letting them go? When business cycles back, companies won’t have to pay the exorbitant expenses of recruiting and training new people (thought to cost 3-times salary per person). Companies that hold on to their workers will be in much better shape than companies that have undergone large-scale layoffs.
The use of sabbaticals during an economic downturn isn’t new. Wharton management professor Peter Cappelli cites Cisco Systems using them in 2001, after the tech bubble and before 9/11, as an example. Cisco allowed employees to take sabbaticals while they were paid one-third their salary. “The reason was that at one-third pay, you couldn’t survive forever, but it was enough money that you wouldn’t necessarily be looking for another job” in the meantime, Cappelli says. Cisco saved both money and talent.
2 Responses (add yours)
I think one industry that would seriously benefit from sabbatical programs is the restaurant/hospitality business. Burn out is extremely high, and by offering employees the option to “take a break” could certainly benefit both parties.
Continuing the Discussion
[...] Jaguar Land Rover offered staff three-month sabbaticals on 80% pay, and 300 employees accepted. Honda announced it would halt production for two months from February. And General Motor’s UK-arm Vauxhall has offered nine-month sabbaticals on 30% pay. [...]