Compassionate Furlough

A case study on how to do it RIGHT!

What happens when the fallout from Covid-19 means you have to furlough at least 17% or 400 of your people? 

This is a true story about HOW a mid-sized regional accounting firm did it right. I doubt anyone would name an accounting firm as a first choice of those most likely to roll out furloughs humanely and with grace, and yet, here we are. The example from this wonderful company, in the southeastern region of the country, underscores in big BOLD letters how important it is to have a relational approach in all aspects of the decision making and communication that will impact the life of one’s employees, in this case, a furlough.

A Case Study in Compassionate Furlough

For this company, the compassion started before the furlough and carried throughout the process. The executive staff, starting with the CEO, made it a priority to treat all employees with dignity and provide them with the most up-to-date information as soon as possible. Here is how they did it. 

As soon as I know, you will know: Executive staff began by initiating frequent and transparent virtual communication with ALL staff from the beginning of the crisis through decision implementation. The CEO live streamed his communication twice a week from home and with his dog by his side. Normally these meetings of all staff happened only six times a year and are much more formal. He shared what the leadership knew and what they did not know and promised that, “As soon as I know, you will know.” Critically, the CEO and all leaders in the company told the truth and were impeccable with their word. The ramped up communication wasn’t for show. It was packed with clear information and realistic promises. 

Adjusting the message to the situation: As the situation evolved, so did the messages from the CEO. When it started looking very troubling, the message conveyed was clear – “affecting the jobs of our people is our last resort.” The messaging included empathy, and a belief that “We will emerge strong,” and, “Together we will weather this storm.” The leadership told staff they were looking deeply into all options for a response to this crisis and weighing each one carefully. When it became clear, the CEO told all staff that it was now unavoidable - they would experience some pain.

Not exempting themselves from the cost-saving measures: Leadership looked at multiple options to stop the financial bleeding and decisions were multi-layered: pay cuts, furloughs, no bonuses, freezing 401K contributions, write offs, and any other cost savings they could identify. They included:
 

• All Partners in the firm took a substantive pay cut before anyone was furloughed.
• No furloughs were performance related; instead, every unit and department was carefully analyzed for revenue generation opportunities. Non-revenue generating administrative areas were to be impacted the most. 
• They considered who was making the least money vs. those making the most money. This resulted in lowest paid staff being impacted 5% less than the middle range staff who were impacted 5% less again as the highest paid staff.
• They split furloughs between people where possible, including Vice Presidents, so those members would experience only 6 weeks of the 12 week furlough. 
• This entire process was transparent and shared with all staff.
• They acted quickly so employees could take full advantage of the new Federal and State unemployment opportunities.

When it came time to announce the difficult decision to the staff it was done in a way that all businesses—struggling or not—should take note of. 

Quick, reliable, accessible communication: Everyone was alerted that the “decision” call with the CEO was happening on a specific Wednesday at 1p.m. His broken heart was obvious for everyone to see. He told everyone that this was an announcement he had dearly wanted to prevent and explained the firm’s financial realities.  He shared that all Partners had already taken a pay cut and that none of the decisions were performance related. 

The CEO said that they were making the decisions quickly to allow people to take advantage of the available government unemployment subsidies. At the close of the meeting, he told them that everyone affected would receive a call from their leader within the hour. Within 60 minutes, all 400 employees who were being furloughed, for any period of time, heard personally from their leader. 

They were told exactly what was happening to and for them. They received information about what to do and how to do it and could ask questions and get answers. Between the announcement and implementation, there were three webinars to explain the unemployment benefits process, logistics and protocols of leaving the office behind, how to keep connected with your colleagues –and told they would not be doing any work once furloughed.

Addressing the psychological impact: Staff were urged to give their furloughed colleagues time to themselves to take it in, and were encouraged to communicate and offer support to each other within their teams. ‘Survivor guilt’ was evident with some staff, and team leaders were expected to address it. 

Generosity and good will (or putting your money where your mouth is): Unexpected by the staff, the firm’s Partners collected substantial personal funds together and ensured that every single furloughed employee received, within a week, a check at their home. It was substantial enough to make a big difference during the gap before unemployment checks would arrive.

Calling for employee feedback. The company conducted three employee surveys throughout the communication and decision process. Many people were in denial for some time and surprised when they were furloughed. There was high satisfaction with the way the company was handling communications, and staff believed it was a fair process. There was some job satisfaction drop off after the announcement, but not much. 

Why would furloughed employees still feel good will towards their company? It turns out that it’s all about the HOW not so much the WHAT. They experienced:
 

• Consistent and transparent communication
• Authenticity and truth telling from the leadership
• Humility and empathy demonstrated by leadership
• Leadership keeping their promises
• Partners’ generosity, empathy, and care

Support within the company from webinars to HR to insisting they do NO work from home

The lessons learned here apply whether it is one person or hundreds or even thousands of people. It’s about the relationship between the employer and the employee. Leaders will want their best people to want to come back. At the very least, those employees will bolster the organization’s good will and reputation within their networks and the larger community. So, it makes really great business sense to do it RIGHT!