May 07, 2009

Are Furloughs a Good Idea for Small Business?

Dovetailing with last week's post on cutting costs by doing everything short of layoffs -- such as cutting salaries, shortening the work week, and eliminating nonessential benefits -- is the idea of putting employees on furlough. However, according to a recent article in the New York Times last week, furloughs can end up costing more money than they save, because you still have to pay out benefits to furloughed employees and overhead on their work space and equipment. Plus, productivity and morale both suffer. Think twice, and read this article, before you try a temporary furlough.