Of its german business units in 2008 and 2009 by 2010

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Unformatted text preview: stainable, both during and afforming product line. Building flexibility into the strategic ter crises. Nearly two-thirds of companies with flexibility workforce plan is thus critical to success in a volatile measures in place in 2009 planned to maintain these world. measures—which is approximately twice the number planning to rely on cutback measures in their longer-term strategic workforce plans. Rather than waiting to react to the next economic crisis, companies would be wise to imFlexibility Measures: A Longer Runway plement flexibility measures now as a sustainable apbut Greater Lift proach to building agility. Flexibility measures center on work organization such as streamlined processes, flattened hierarchies, and outsourced work. (See Exhibit 12). Cutback Measures: Quick Results but Big Downside These measures may take months or years to implement—but they are clearly worth the investment. Surveyed executives described these measures as considerably more effective than the average. Flexible work time, with reduced compensation for reduced work hours, received high marks, with an effectiveness ranking 10 perC P A Workforce cutback measures such as layoffs or ending overtime pay are pervasive during times of crisis, particularly among lower-performing companies that need to reduce labor costs. During the recent recession, for example, nearly one-half of respondents laid off employees and Short-Time Work in Germany Using a Flexibility Measure to Avoid Layoffs Against all expectations, overall unemployment in Germany rose only slightly during the recent financial crisis, to a high of 8.3 percent in mid-2009. Companies were able to keep their experienced employees—and employees their jobs—because of economic stimulus packages from the government that funded so-called short-time work. Through this flexibility measure, companies reduce employees’ work hours, and their pay, instead of laying them off. While costly to the government, short-time work compensation is potentially less expensive than funding unemployment. Furthermore, particularly in the engineering sector, German companies that used this flexibility measure and, as a result, kept their workforce together are now in a good position to serve soaring demand in their markets. To soen the blow, either individuals or companies can apply for short-term allowance to local employment agencies—up to 67 percent of the forgone net wage for up to 24 months. Because of this benefit , employees even at hard-hit companies were less anxious about losing their jobs. Many used the drop in hours as an opportunity to improve their skills through training or certification courses. Exhibit 12. Flexibility Measures Tend to Be More Effective Actions performed in 2009 (%) Compensation and benefits Performance management is tightened 50 The profit-related component of compensation is increased Employees take time off to compensate for earlier overtime Flexible work time is set up: pay is re...
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