No More Drastic Cuts at Intel A Case Study

When economic conditions sour and companies have to cut back, personnel is usually the first target. Yet it is possible to make layoffs a last resort rather than a first line of defense. Despite the fact that business has slowed significantly, chip-maker Intel Corporation has managed to avoid layoffs altogether this time around.

In the late 1980s, the company went through painful cuts. With recent financial troubles, Intel spokesperson Gail Dundas says, the company was determined to change the way it reduced its workforce. It did have to close a manufacturing facility in Puerto Rico this past summer and let go 5,000 employees, but it has managed to avoid other layoffs by continually pruning the organization.

Although the company offers a kind of early retirement package to select employees, its workforce is young (largely 25- to 45-year-olds) and often doesn’t want to opt out early. That’s why in 1990, during the last recession, Intel established a redeployment program that allows talented people who might otherwise be laid off to find other jobs, either at Intel or elsewhere. People in the program receive a full salary and benefits for two to four months and decide how best to network and look for other work. Those in the redeployment program often meet with management for advice and referrals, as they search for contacts at other companies. Intel provides career counseling and skills training. Laid-off employees can also take temporary positions within the company or work on a per-project basis.

Because the program is ongoing, it has become a part of Intel’s culture. “It’s not secretive, and no one is embarrassed to say they are in redeployment. Often, business units within Intel change direction or focus, and we have all these bright, highly skilled workers who can be reassigned,” Dundas says.

Intel has taken a strategic approach, she says. “We hire the best, so for us, human capital is as important as our investment in R&D.” The company no longer has to make drastic cuts all at once, since it continually trims its workforce. Dundas says she wonders about companies such as Charles Schwab, which offers a bonus for each rehire, and Cisco, which recently gave laid-off employees the option of working for a year at a charitable organization at one-third of their salary.

The question Dundas poses is this: “What do they do the rest of the time?”

Workforce, November 2001, p. 52 — Subscribe Now!