- Many companies turn to layoffs to reduce costs, yet some purposefully refrain from making cuts.
- CEOs of companies that have never done layoffs told BI they think the approach is good for business.
- When workers aren’t worried about getting cut, they expect to have better careers — and often do.
When the pandemic hit, friends at other companies began calling Melanie Dulbecco to ask whether she planned to lay off workers.
“It’s the very last thing we would do,” she told them.
Dulbecco has spent decades running Torani, a maker of flavored syrups used in coffee and other beverages.
Stay-at-home mandates presented a crisis for the company whose bottles line the shelves of innumerable cafés.
“We were ready to breathe into a paper bag,” Dulbecco told Business Insider.
Instead, company leaders gathered to sketch out how big the blow to sales might be — and how to keep workers safe. The team then set a goal that might only amount to a nice-to-have at other companies: save the business without cutting a single employee.
Layoffs are so commonplace, even outside recessions and life-bending health emergencies, that companies like Torani are among a rarefied few that have never pink-slipped workers en masse.
Such employers are a study in the cultural tailwinds that can spin up when companies eschew broad-based job cuts.
‘Grow, baby, grow’
One of Torani’s values, and Dulbecco’s mantra, is “grow, baby, grow.” Yet, she said, it’s not just about sales; it’s also about employees’ well-being. That’s been good for business, Dulbecco said.
When she became Torani’s CEO in 1991, annual revenue was less than $1 million. This year, the company’s centennial, Dulbecco expects sales to top $600 million.
The grocer Publix is also a member of the no-RIF club. The Florida-based chain is the country’s largest employee-owned company, with more than 255,000 workers.
One of them is Alec Jones. The 26-year-old has served as a cashier and a bagger and, lately, has been spending more time in the produce department at a Publix in Bonita Springs, Florida. Jones has been with the company for a decade, while many of his friends who work elsewhere have moved from job to job, he said.
“I’ve been having fun,” Jones told BI. He said he feels more secure in his role, knowing that there would have to be a good reason to get fired.
A Publix spokesperson told BI that the company provides clear expectations, mentorship, and training to its associates to help them achieve their best.
The no-layoff bounce
For companies that avoid layoffs, the payoff can be big, said Darryl B. Rice, an associate professor of management at Miami University. He left a career in finance and moved into academia after watching banking colleagues lose their jobs amid the 2008 financial crisis.
He found that organizations that forgo layoffs create a sense of psychological safety that allows workers to thrive.
“Employees believe they are more likely to have career success,” Rice told BI. That, in turn, makes it more likely they will do so, he said.
Layoffs, by contrast, tend to pierce that sense of safety and exact a “tremendous” cost in terms of workers’ productivity and trust in leadership, said Wayne Cascio, a distinguished professor of management emeritus at the University of Colorado Denver.
When organizations start making cuts, those left standing often spend time doing things like sprucing up their résumés, Cascio told BI. Then, in the year that follows, the workers most likely to leave are the “good performers” because they tend to have more options, he said.
“There’s an old saying: ‘The first casualty in a downsizing is employee morale,'” Cascio said.
A subsequent casualty can be an employer’s reputation with prospective employees, Rice said.
Millennial and Gen Z workers, in particular, have watched parents and grandparents get laid off at various points. That means, Rice said, there’s often little sense that an employer would trade profits for people if the business soured.
Not having to think about cuts
Yet worker loyalty can grow when an organization hangs tight to its employees during a crisis.
That’s what the window and door maker Marvin did during the 2008 global financial crisis — the deepest economic pothole in generations and one that emanated from the housing market.
As a result, the company saw an unprecedented drop in demand for its products. To make up for lost sales, Marvin temporarily cut full-time workers to 32 hours a week. For three years, the family-owned business also suspended a profit-sharing program, Paul Marvin, the company’s chair and fourth-generation CEO, told BI.
During those lean years, “there was no money made,” he said. That was the case for the Marvin family and the company’s workers, Marvin said.
For more than a century, the manufacturer has been a mainstay in Warroad, Minnesota, a city of about 2,000 people along the Canadian border.
Laying off workers would change a place like Warroad forever, Marvin said. The company’s long-term goal is to provide meaningful jobs in its hometown and beyond, he said. That matters more, Marvin added, than something like an annual dividend.
He said many employers are quick to say workers are their most valuable asset.
Yet, “When it comes time to back that up, it’s like, ‘Did you really mean that? Because it’s the first thing you’re cutting,'” Marvin said.
He said treating the company’s 8,000-plus workers fairly — and the gratitude that results from successful efforts to save jobs in tough times — benefits the business far beyond even a protracted slump in sales.
As at Marvin, workers’ tenures at Torani are often measured in decades rather than years.
Francisco Santos joined the San Leandro, California, company in 2002 and has risen to become a team lead for its first manufacturing shift each weekday. Despite his 4 a.m. start time, the 65-year-old isn’t ready to give up working at a place where the support for employees is unlike anything he’s experienced elsewhere.
For Santos, that includes not having to worry about himself and his colleagues when he hears about other employers laying off workers.
“You don’t have to think about that,” Santos said.
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