COVID-19 Roundtable Discussion: Furloughs

April 6, 2020

Furloughs and Disruptions

At the end of the April 2nd Virtual Session, several members asked to reconvene on April 3rd to dive deeper into furloughs: What are other companies doing? How they are making decisions on furloughs?

This recap is from a conversation on April 3, 2020. Approaches discussed may have already changed in this fluid environment. Because of the sensitive nature of this topic, member and
company names have been omitted.

Getting the Communications Right

  • Leading from the top: Any move that takes money from employees’ pockets amid a crisis must be communicated with empathy and respect. Each member company that has enacted
    furloughs has also publicly announced cuts to CEO, board and executive pay. Several members reported that their CEOs are leading virtual townhalls regularly, taking pay and furlough questions directly from employees.
  • Demonstrating an “all out” effort: As one member stated, it is critical that employees see pay cuts and furloughs as measures of last resort. Employees need to see messaging around cuts to discretionary spending, capital projects, IT, etc., before they’re forced to make sacrifices to their livelihoods.
  • “We’re in this together:” It is the message leaders are uniformly trying to send, but its undeniable that pay disruption means something completely different to an executive than it does to a frontline worker. Messages that do resonate enable employees to proactively contribute to the common good, like one member company’s popular new policy that allows workers in France to donate the value of RTT days to hospitals and healthcare providers.
  • Speeding up messaging and ensuring its right: As one member put it, “We’ve reduced our communications review process from four days to four hours. Now I want it down to two hours.” Another member shared that every message going out is scrubbed for “tone” and “vocabulary.” A third member company has added in a new governance layer to communications normally delegated to regional managers to ensure consistency across the
  • Remote separations: No easy answer here other than to avoid lay-offs via Zoom if at all possible. One member in the deeply impacted hospitality industry shared that leaders and managers held individual conversations with every associate over the course of four days, ensuring that employees heard workforce plans directly from the company before reading anything in news reports.
  • Defining what furloughs mean: Messaging to employees must be specific, detailing exactly what any furlough or pay reduction means in terms of specific benefits programs, incentive
    plans and other non-cash forms of compensation.

Navigating the Regulatory Challenges

  • No “one-stop shop:” Compliance teams are working around the clock in the face of rapidly shifting rules and regulations. No one has a “go-to” resource to track everything—as legislative bodies in different countries continue to enact new rules to help companies and employees.
  •  Some helpful vendors: Ernst & Young, Mercer and Baker McKenzie were each recommended by at least one member on the call, as everyone tries to get a handle on what the rules and policies are in specific markets.

What Some Affected Companies are Doing Now

  • Member company with a large impacted unit (industrial):
    o All employees in North America have been furloughed for two weeks, stretched across the rest of the second quarter (one day per week for 10 weeks).
    o All executives have taken a 10% pay cut.
    o Nothing in Europe, yet, but work councils are actively engaged.
  • Member company whose primary business line is impacted (industrial):
    o CEO and c-suite have publicly announced a 20% cut in pay for 2020.
    o Top 100 senior managers have almost uniformly volunteered to take the 20% cut
    o Mandatory furloughs in the U.S. (one week per month over the next few months).
    o Voluntary furloughs in other markets (1 day per week, over 10 weeks).
    o Quickly identifying what is possible to encourage or ask employees to do in specific markets, especially in Europe, and ensuring “volunteerism” is well documented where needed.
  • Member company whose primary business line is impacted (hospitality): CEO and Board have publicly forgone pay for the remainder of 2020

Thank You

Thank you to all who participated for your energy and enthusiasm! We will have more discussions and send out surveys and resources on specific topics concerning COVID-19.

If your team is dealing with similar issues or have questions you’d like answered please fill out the form below!

COVID-19 Roundtable Discussion: Furloughs

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