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What Are the Advantages and Disadvantages of Furloughs?

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Question: What Are the Advantages and Disadvantages of Furloughs?
Furloughs are mandatory time off work with no pay. Generally implemented by employers as a cost saving measure, there are advantages and disadvantages to the use of furloughs as an alternative to layoffs. These are the advantages and disadvantages of furloughs.
Answer:

Advantages of Furloughs

  • The employer avoids layoffs for a period of time so employees have jobs.
  • The employer saves compensation costs.

Disadvantages of Furloughs

  • You are disadvantaging your best employees, the top performers you really need to rebuild your business, following the downturn.
  • Employers save money, but not as much as they think they will, because so many of an employer’s costs for benefits continue during furloughs.
  • The amount of work remains constant which makes returning workers feel overloaded and may affect the quality of their performance and products.
  • Customers may be unhappy talking to a variety of people rather than their usual contact, or because they are waiting longer for service.
  • The internal culture and relationships are often injured. Teamwork is affected by the loss of coworkers who are not at work. Projects take longer to move forward.
  • Employees experience stress from work expectations and fear that the furloughs will not solve the problems and that layoffs will come next. Gossip increases and work productivity decreases.
  • Given less time at work, more time catching up incomplete work, and workload increases because of missing coworkers, innovation and continuous improvement fall by the wayside.
  • You best employees may start job searching. All employees think about updating their resumes.

While the disadvantages appear to outweigh the advantages of furloughs, a cash-strapped business or organization, after weighing alternatives, may find furloughs appealing.

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