Weighing Out Options in a Tough Economy - Layoff or Furlough

Discover the differences between layoffs & furloughs in a tough economy, with insights into current layoff trends & alternatives.

March 6, 2023
Press the button to generate random icebreaker questions.
There are 300 more icebreaker questions at the bottom of the article
How would you describe your job to a five year old?
What season would you be?
What is a weird food you have tried? Would you eat it again?
What is your favorite holiday tradition?
Would you go in the mother-ship with aliens if they landed on Earth tomorrow?
What is your favorite season?
Do prefer working from home or the office?
What is your earliest memory of this job?
What is the best thing you have bought so far this year?
What is the earliest book you remember?
If you had to move to another country, which one would you choose?
You are the best criminal mastermind in the world. What crime would you commit if you knew you would get away with it?
What is your favorite movie genre to watch?
What was the last thing you ate?
What person from history would you add to Mount Rushmore?
What is a weird fact you know?
What is your favorite part of working from home?
Were the Spice Girls a good team?
Imagine you can instantly learn any language. Which would you choose?
If you could live in any state, which state would you pick?
Which fictional team is the best team of all time?
What did you want to be when you grew up?
What do you usually eat for a quick lunch?
What simple food will you never eat?
Show us the weirdest thing you have in the room with you right now.
Would you rather stay at a hotel or an AirBNB?
What is your favorite movie genre to watch?
Are you more productive in the morning or at night?
Who is someone in your community that makes a difference?
Who was your most unique pet?
Choose one famous person from history you want on your team during a zombie apocalypse.
What is a good way to give back to the community?
Which song could you listen to over and over again?
Is Hugh Grant funny?
What is your favorite thing to eat for breakfast?
Would you want to have an imaginary friend today? Did you have one as a child?
What actor or actress would you want to play you in the movie about your life?
What is the best super power?
What is your New Years resolution?
You can only eat one food again for the rest of your life. What is it?
What is the best work holiday?
What is the first gift you remember receiving?
Would you rather join Metallica or Backstreet Boys?
What is the best example of a community you have seen?
What is an easy way to do something nice for someone?
Show us your phone background and tell the story behind why you picked this image.
What was your first job?
Pick any band to play at your funeral.
If you could have an unlimited supply of one thing for the rest of your life, what would you pick?
Which superpower would you give to your arch enemy?
What is the most obscure superpower you would want?
What emoji best describes how you are feeling right now?
If you could live in any country, which country would you pick?
Would you rather live in a city or a town?
What is your favorite holiday?
What is something you accomplished as part of a team?
What is your standard office lunch?
What is your most used phone app?
What is your favorite season?
Have you ever won something as a team?
Imagine you are a professional baseball player. What is your introduction song?
Beach holiday or ski trip?
Have you ever been to a funny comedy show?
Would you rather live at the North Pole or the South Pole?
What is your favorite song to sing?
If you could live in any state, which state would you pick?
Imagine you could teleport anywhere. Where would you go right now?
What is the most unusual job you have heard of?
What was the last thing you ate?
You can visit any fictional time or place. Which would you pick?
What do your family and friends think you do all day?
What movie do you wish you could watch again for the first time?
Show us your most-used emoji.
What was the most unique style or fashion trend you ever embraced?
What movie defined your generation?
You are stranded on a remote desert island. Are you alone or with your worst enemy?
What is your favorite knock-knock joke?
Have you ever told someone Santa is not real?
Do you know how to speak more than one language?
On a scale of 1 – 10, how much of a team player are you?
What is your #1 recommendation in this city?
What is your favorite holiday?
What bucket list item do you most want to check off in the next six months?
What is your favorite mythical creature?
What was the first way you made money?
If you could be great at any Olympic sport, which would it be?
Which song could you listen to over and over again?
When did you start liking/hating mushrooms?
Where is your favorite vacation spot?
Do you take your PTO all at one time, or another way?
Which show do you remember most from your childhood?
Which beverage goes best with pizza?
Would you want to have a personal assistant follow you around everywhere and do what you asked of them?
Have you ever met your idol?
What did you want to be when you grew up?
Would you rather live 100 years in the past or 100 years in the future?
What is your hobby?
When you are alone in the car, what volume is the music at?
Imagine you no longer have to work. How would you spend a Tuesday?
What is your favorite type of sandwich?

In 2022, employers announced plans to cut 363,824 jobs

As the global economy continues to face challenges, many companies are left with tough decisions about their workforce. In particular, the question of whether to lay off employees or furlough them has become a critical issue for many companies. 

This article will discuss what furlough means and explain the differences between layoffs and furloughs. We will also explore why a company might furlough or lay off employees and examine the current layoff trend across industries.

What does furlough mean?

A furlough is a mandatory but temporary leave of absence without pay. Essentially, it indicates that an individual is still employed but is not actively working or earning a wage.
Employees may be able to keep their health insurance coverage while on furlough, but they usually do not earn vacation time or other perks.

Layoffs and furloughs are both methods that companies use to cut labor costs, but they differ in significant ways. 

Unlike the definition of furlough, layoffs aren't temporary — they are permanent terminations of work. When a company lays off an employee, the termination is typically permanent, and the individual must reapply for the job if a new position becomes available. In contrast, when a company furloughs an employee, the expectation is that the employee will eventually return to work when business picks up.

Why furlough employees?

A company may choose to furlough employees as a cost-saving measure during economic uncertainty or when facing a temporary downturn, especially if there's hope that the company will make it out of the slump. 

Furloughs allow a company to retain its skilled workforce and avoid the costs associated with rehiring and training new employees. Additionally, furloughs may help maintain morale and lessen the danger of negative publicity connected with mass layoffs.

How long is a furlough?

The length of a furlough can vary, depending on the company's specific circumstances. Depending on the company's needs and financial situation, furloughs may be for a few weeks or several months. It can also happen more than once. 

Overall, the average furlough length is three weeks. But in some cases, furloughs may be extended or made permanent if the company's situation does not improve.

Is being furloughed the same as being unemployed?

Being furloughed is not the same as being unemployed. When a person is unemployed, they are no longer employed by that company and are typically actively seeking new employment. On the other hand, Furloughed employees are still employed by the firm, and their job may still be waiting for them when they return from furlough.

From the above, a furlough seems to be a gentler way to let employees go during an economic downturn, and as such, it should be popular amongst companies. However, recently, we've witnessed some of the largest employers of labor lay off thousands of employees to survive. Most of these layoffs have come from the tech space, with companies like Cisco and Stripe cutting their workforce in the thousands.

In December 2022, the tech industry saw 16,193 layoffs, making it the largest sector in terms of layoffs. Overall, tech firms slashed more than 97,000 jobs in 2022, an increase of 649% over the previous year's 13,000 job cuts, according to outplacement firm, Challenger, Gray & Christmas.

Significant tech layoffs include Microsoft's 10,000 jobs cut in January and Google's 6% layoff of both pandemic-hired and veteran employees via email.

Will layoffs spread beyond the tech industry?

The trend of layoffs is not limited to any specific industry but is widespread across various sectors. During the pandemic, the hospitality, travel, and entertainment industries were hit particularly hard, with many companies implementing mass layoffs to reduce costs and stay afloat.

However, layoffs are not exclusive to these industries; companies in other sectors have also implemented massive layoffs, especially in light of this year's possible economic recession.

Other sectors also experiencing layoffs include the automotive industry, which has been hit by the global chip shortage, interest rate hikes, and global supply chain concerns. As a result, many companies have been forced to shut down production in underutilized branches or reduce output temporarily. 

Ford, for instance, announced in 2022 that they plan to cut about 3,000 jobs. And according to a company email addressed to staff, this will impact both paid employees and contract workers. Other auto giants joining the layoff train include Stellantis and Rivian.

In fact, Challenger reports indicate that the automobile industry shed 31,000 jobs last year, the second-highest industry number in the United States.

The retail industry is also seeing layoffs, with major companies like Shopify and Amazon announcing significant job cuts in recent years.

Are widespread layoffs coming?

While it's difficult to predict the future with certainty, there are indications that the layoffs may continue in 2023. 

According to the survey by ResumeBuilder, 61% of business leaders predict layoffs in their businesses in 2023. Moreover, 57% of company owners who believe layoffs are probable expect that 30% or more of their workers will be laid off by 2023.

"The overall economy is still creating jobs, though employers appear to be actively planning for a downturn. Hiring has slowed as companies take a cautious approach entering 2023," opines Andrew Challenger, senior vice president of Challenger, Gray & Christmas.

The potential for layoffs in 2023 remains high, with many business leaders and owners anticipating workforce reductions in the coming year. While the overall economy is still growing, there is a cautious approach among employers as they prepare for potential economic uncertainty. As the year progresses, it will be necessary for both businesses and employees to remain vigilant and adaptable to changing circumstances in the job market.

Layoff or furloughs: Which is better for a distressed company?

The answer to this question depends on the specific circumstances of the company. 

Furloughs may be a better option if the company is experiencing a temporary downturn and wants to retain its skilled workforce. Furloughs allow companies to avoid the costs of rehiring and training new employees and maintain morale within the workforce. It also helps them hit the ground running when the business stabilizes. 

However, if the company is experiencing a long-term decline or restructuring, layoffs may be a more viable option to reduce costs and streamline operations.

For organizations struggling or taking measures during a terrible economy, the decision between layoffs and furloughs should be based on a detailed review of the company's financial status and long-term goals. 

Furloughs may help a company retain its skilled workforce during a temporary downturn but may not be enough to address long-term financial issues. On the other hand, layoffs may be a more practical solution in addressing long-term financial issues but may come at the cost of losing skilled employees.

During the pandemic, many companies opted to furlough employees instead of laying them off to keep their workforce intact while weathering the economic downturn. For instance, Disney furloughed tens of thousands of employees in 2020, offering health benefits and other support during the furlough period. 

In contrast, companies like Meta and Google have recently announced layoffs as part of restructuring efforts. Meta announced layoffs of 11000 employees in November, citing declining revenue and unfavorable market forecasts. Other prominent layoffs include Musk's 3,700 Twitter employee cut, about half the staff, offering them Musk also offered them three months of severance.

These differences in approach reflect companies' varying circumstances, with some needing to make more drastic cuts to address long-term financial issues.

How to handle mass layoffs 

If layoffs are unavoidable, employers must carefully consider how to choose the workers who will be let go. They must also document the company's business justifications for the decisions and the standards used to select which workers (or what groups of workers) will be affected by the layoff.

Companies considering layoffs must follow their current employee policies as well as federal and state regulations requiring employers to provide employees early notice of closure.

However, in any scenario, your employees bear the brunt of a layoff or furlough. The likelihood of acquiring a new health issue increases by 83% for healthy workers without pre-existing diseases in the first 15 to 18 months following a layoff. Some of the most common conditions include arthritis, hypertension, and cardiovascular diseases.

Employers must consider ways to maintain the trust they have earned from their staff. You can emphasize that the choice has nothing to do with the abilities of the impacted employees and help laid-off employees apply for unemployment benefits. Or help cover certain dismissal costs.

Alternatives to layoffs and furloughs

Before making the drastic decision to lay off your employees, you must analyze your alternatives and make fair judgments for your employees and your organization.

Other alternatives to layoffs and furloughs include:

  • Reductions in employee 401(k) match
  • Delays in paying retirement benefits
  • Salary cuts
  • Cutting Work Hours and Pay in Proportion
  • Relocating staff to busier departments

An astute company will ordinarily explore the mentioned options before cutting its employee size and losing vital employees to rivals.

Layoff or furlough: You decide

In conclusion, the decision between layoffs and furloughs depends on a company's specific circumstances and long-term goals. While layoffs have become more prevalent across various industries, furloughs may still be a viable option for some companies experiencing temporary downturns. It is essential for companies to consider the impact of their decisions on employees and their communities and offer support during these challenging times.

Browse our Free Employee Recognition Guide

Get the foundational knowledge on creating an employee recognition program that boosts employee engagement and helps them feel valued.

Explore Guide

Frequently Asked Questions

Is Assembly SOC 2 compliant?

Yes, at Assembly, security is a top priority. Each quarter, we have ongoing security work that is everyone’s responsibility. While we maintain a strong security posture, it was important for us to prove to our customers that we do everything we claim to do. This led us to pursue a SOC 2 Type II report that would provide evidence of our compliance with industry gold-standard security practice.

What's the ROI for employee recognition?

There is study after study showing that employee recognition leads to increased engagement. This in return creates an environment where employees are happier and more motivated which increase productivity and reduces voluntary turnover significantly. In order to filled critical roles, companies tend to spend nearly twice the value of an annual salary. Assembly is an investment in your employees that supports your bottom line.

Does Assembly offer longer-term contracts?

Yes, we will offer contracts for companies with longer-term agreements to help larger customers have more certainty around future costs.

The minimum agreement term is a 12-month subscription.

Does Assembly offer onboarding support?

We do and for FREE! Any new customer needing further support to get started with Assembly to ensure you're set up for success can request custom onboarding support. Improving your employee experience is about much more than just using our amazing software; it’s about transforming your business to create a workplace that people love. That’s much easier to do with the personal support and advice from our passionate people experts.

Is there a free version of Assembly?

Yes. We offer a completely free plan for up to 50 team members. This plan is intended for teams or organizations that are looking to get started with an employee engagement tool. Keep in mind, this plan is limited in features.

All customers can open an Assembly account for free and get started without a credit card. Then you can change plans as necessary.

How much do rewards cost?

At the time of redemption (when your employees exchange their points for a paid reward) you'll pay face value. If a reward is a $10 Amazon gift card, your cost will be $10. All paid rewards are billed for on a monthly basis.

The good news is that you don't have to pay for rewards upfront because we only charge you when points are redeemed, not when they're earned.

Does Assembly offer discounts?

We offer discounts or educational or charitable organizations. In order to secure a discount, you'll first need to book a demo with a customer support specialist.

For all other organizations, we are willing to consider longer-term agreements in exchange for discounts. To set up annual plans or longer, you will need to book a demo with a customer support specialist.

How do I cancel my plan if needed?

If you're on a month to month plan, you can go here and cancel anytime. If you're having concerns or need help setting up your account for success, you can always book a demo with a customer support specialist.

If you're on a longer-term custom plan, you'll need to reach out to your customer support specialist to cancel your account or email us at support@joinassembly.com.

What customizations are available?

Great question! You can customize your core values to match your organization's to boost and track alignment. You can change your currency from the 🏆 emoji (our default) to any emoji of your choice. You can swap our logo for your own. You can also set up company culture rewards such as, "Lunch with the CEO," "Buy a book on us," and so much more!

Who can give or receive recognition?

While we recommend a peer to peer set up where anyone in your organization can give or receive recognition, you can set up Assembly however you want. If you need to limit the people who can give or receive recognition, that's perfectly fine and can be done from your Admin, here.

What integrations are available?

Assembly connects to the tools your employees use every day to offer an easy, seamless experience with minimal change management.  

Assembly has integrations with HCM/HRIS systems like ADP, Google, Office 365, and Slack. We also integrate with communication tools like Slack and Teams so you and your employees can access Assembly wherever they work now.

What's your average adoption rate?

That depends on the company's permissions set up. That said, over 90% of the employees on Assembly's platform are recognized on a monthly basis. That means nearly every employee across all of our customers are receiving regular recognition from their peers, managers, or leadership. We're extremely proud of this.

Must rewards be set up to use Assembly?

They are not required. You can use Assembly without having rewards set up. However, we don't recommend it if you intend to have a high adoption and usage rate. You can always keep the costs down by offering internal culture rewards that are fulfilled by you internally.

Are points required to use Assembly?

No, you can remove allowances from anyone or everyone. It's up to you but we do recommend using points whether they're worth a real dollar value or not. Companies that use points have a much higher engagement rate even if those points don't exchange for real dollars.

Could find the answer you are looking for?

Please schedule time with an expert and we will help you to get all your questions answered