Pella Prefers People

Times are tough, and organizations are having to cut back.  Some are taking the traditional approach of whacking heads without realizing the full value of the brain in those heads.  Some, like Toyota, are spending vast sums of cash to stash even more knowledge into those brains.  However even Toyota may have to come to grips with fundamental cash flow realities if this downturn remains as severe as it is now.  That will be, sad pun not intended, a head-turner.

Some organizations are taking a different tact.  One of them is Pella, one of our favorite lean companies.

Like many companies, Pella is looking to cut expenses because of the economic downturn. But instead of laying off more workers, the Iowa manufacturer of windows and doors is instituting a four-day workweek for about a third of its 3,900 employees. Chris Simpson, a senior vice-president at the company, acknowledges it's an unconventional move. But Pella believes the economy could turn around faster than most people expect, and it doesn't want to be caught short of experienced workers.

Even government is getting in the act.

In Atlanta, Mayor Shirley Franklin is cutting the hours and pay of 4,600 employees by 10% because the city is facing a $50 million budget shortfall. Franklin says that if she were to lay off more workers instead of slashing hours, "you'd have to eliminate major functions of the government. It's not just jobs we've saved, it's services."

California is trying the same thing by requiring workers to take two days off per month, but of course unions are now suing Schwarzenegger over that executive mandate.  With only 70 days of cash left in the bank, I guess we can let them work those two days.  We'll just mothball some firetrucks and classrooms instead... geesh stop being so self-centered already.

Other organizations are letting people take more vacation over the holidays, chewing up that accrual that finds its way onto the books.

Many American tech companies are shutting down for a few extra days over the holidays. For the first time, PC maker Dell is allowing employees to take up to five days without pay during the quarter ending in January.

Earlier this year many organizations went to four day work weeks in order to conserve fuel by eliminating one day of commute.  Originally it was a shift from 8 to 10 hour days to maintain a 40 hour week.  Now that's being cut to four days of 8 hours.  With both forces pushing toward a four day work week, that may soon become the norm. 

But is a reduction in hours really a good thing?  Perhaps initially.

Most employees prefer a reduction in hours to being laid off. But workers say there are costs either way. Pella employee Connie Davis says she plans to cut back on certain groceries when the four-day workweek takes effect in January. "Like anyone who's counting the pennies, I will tighten my belt a little bit," she says.

And that's the problem.  Shorter weeks with fewer hours still hurt financially.  It may be a short-term strategy to hold onto valuable knowledge, but maintaining it for more than a month or two may not be the best policy.   Most people are willing to chip in for a while, but at some point the pain of the masses may outweigh the pain of the few, and tough decisions should be made. 

A couple weeks ago we asked if a no layoff policy was really wise.  The conclusion seemed to be that a "no layoff due to lean", perhaps coupled with a "no layoff if the next quarter looks profitable", is good policy.  Sometimes, as an absolute last resort, tough decisions need to be made to preserve the business that supports the rest of the people. 

But let's still applaud the organization, like Pella, that realize that it's an absolute last resort and also involves the shedding of valuable brains and knowledge.  Not a knee-jerk reaction to reduce the cost of just a pair of hands.

Comments

[Tom]

Having had the good fortune to have participated in some improvement events at Pella I can say without question that they value their people, so its no surprise to me that they're trying to do everything they can to hang on to their most valuable assets.

[IBR]

You mention “Many American tech companies are shutting down for a few extra days over the holidays. For the first time, PC maker Dell is allowing employees to take up to five days without pay during the quarter ending in January”. Dell in Ireland will migrate all production of computer systems for customers in Europe, the Middle East and Africa (EMEA) from Limerick to its Polish facility and third-party manufacturing partners over the next year

[Scott Sorheim]

Yea Pella! I used to work there, still live in the town, and still work on projects with them. Respect for people has been part of their culture since they were founded in 1926. They have established an admirable precedent in this regard. When you consider the industry they're in right now it's more impressive.

[Paul]

Losing 10%-20% of hours beats the alternative hands down. Unemployment is no where near able to cover costs, including benefits such as health care. Don't dismiss it until there is a better alternative.