Chief Executive Horacio Rozanski told employees Wednesday that Booz Allen Hamilton Inc. would set aside at least $100 million to guarantee their jobs over the next three months as the Covid-19 pandemic rocks the world economy.
Bank of America Corp., Citigroup Inc. and Morgan Stanley have also pledged to keep their workforces intact through the downturn. Salesforce.com CEO Mark Benioff is challenging all company CEOs to commit to 90 days without broad layoffs.
While retailers, movie theaters and restaurant chains are furloughing hundreds of thousands of employees as revenue dries up, other employers are still able to do business with social distancing and have the cash flow available to retain workers. Some are choosing to go even further by publicly committing to keeping headcount steady because it reassures workers, provides stability for their communities and ensures they’re ready to resume normal operations eventually.
“This is a national and a global emergency, and everyone needs to step up in the way that they can and do their part,” Rozanski said in an interview ahead of a companywide call announcing the job guarantee. Booz will also provide paid leave for employees with relevant expertise who volunteer in the pandemic response. “I think this is what will make Booz Allen come out of this stronger and better,” he said. “It’s not easy, and there’s challenges, but it’s ultimately the right thing to do across the board.”
Goldman Sachs Group Inc. economists predict the U.S. economy will shrink an annualized 34% in the second quarter, with unemployment reaching 15%. The number of Americans seeking unemployment benefits may set a record for a second straight week when data is released Thursday, following last week’s report of 3.28 million filings. Economists nearly universally agree the pandemic will throw the world into recession, but they are becoming less convinced about the potential for a strong snapback in growth.
The decisions by CEOs at companies such as General Motors Co. and BP Plc to keep paying their workers in the shrinking economy are in stark contrast to service sector and retail giants such as Marriott International Inc., Macy’s Inc., JC Penney Corp. and Urban Outfitters Inc. A Bloomberg tally suggests major retailers have already trimmed more than 600,000 jobs, and millions more in cuts may be looming.
“Those companies that have invested and valued their employees will be able to quickly transition and get back to normal once this is over,” said Alison Omens, chief strategy officer at JUST Capital, a research group that’s tracking how U.S. workers are faring during the pandemic. “There’s no greater example than the current crisis to show the differences between how companies are treating their employees.” Omens cited Target Corp. as an example of a good corporate citizen because it had moved quickly to provide comprehensive employee policies such as paid sick leave as well as raising wages.
Salesforce is pledging to its workforce Ohana not to conduct any significant lay offs over the next 90 days. We wil… twitter.com/i/web/status/1…
Booz is cutting costs and taking advantage of savings such as reduced travel to defray the impact of the job protection fund, Rozanski said, adding that federal aid under stimulus measures could be used to extend the job protection if the pandemic interruptions last into July. The company will also set aside about $10 million to support charitable relief causes in the outbreak and offer pro-bono consulting.
Rozanski said that over all, Booz is trying to protect the health of employees, maintain support for active contracts — many of which involve national security and health infrastructure — and sustain corporate financial health as best as possible.
“It’s essential to stand by employees, as well as suppliers and customers, during times like this,”' said Cheryl Smith, a money manager at Trillium Asset Management in Boston.
When initially assessing its 120,000 U.S. workers in February, Verizon Communications Inc. estimated that about 45,000 could work from home, HR chief Christine Pambianchi said in an interview. Then as cities, states and the federal government closed businesses and told most people to remain at home, the company broadened its thinking.
“We now have 115,000 people working from home, in jobs that were not enabled to work at home, that previously were things we never would have considered to be something that folks could do from home,” she said.
One adaptation has been to let employees take service vehicles home, so they don’t have to be dispatched from a central location with a concentration of people, Pambianchi said. Call centers are virtually distributed to workers’ homes, and about 10,000 people who would work in stores that are shuttered are being retrained to do jobs such as customer support by phone. Workers who must go out are being paid a premium. Those include technicians and a few store employees who are taking turns staffing the 30% of locations that remain open to support essential communications.
Because this disruption is based on a virus, not an underlying problem with the economy such as in the last recession, she said Verizon’s focus is on getting through 10 to 15 weeks of a “pause”—and being ready to quickly resume operations when officials give the all-clear to return to work. Many other employers who have invested in hiring and retaining high-skilled workers in recent years are thinking along the same lines, trying to keep their workforces intact to avoid the expense of rehiring.
Bank of America Corp. said it won’t cut any jobs this year as a result of the coronavirus, and it even hired 2,000 people in March, according to a company memo seen by Bloomberg. General Motors CEO Mary Barra is deferring 20% of the pay of white-collar workers into 2021 to save some labor cost this year without cutting their jobs. GM also put 6,500 employees, many of them engineers who work at plants, on leave with 75% of their pay until production resumes.
CEO Bernard Looney said the energy giant BP will cut costs but has agreed not to eliminate workers over the next three months—even though demand for oil has plunged and analysts see a grim outlook for oil companies.
Washington’s $2 trillion stimulus measure includes bailouts, loans and tax breaks to companies that keep paying workers despite a decline in revenue. Some of the companies shedding workers are continuing to provide health coverage, and that cost may be tax deductible as well.
The stimulus also was crafted to discourage dismissing workers. Delta Air Lines Inc. and United Airlines Holdings Inc. told their combined 187,000 employees last week that if they accept government loans, the companies won’t impose furloughs or pay cuts before Sept. 30.
Employers’ decisions now will have long-term implications, said Sandra Sucher, a professor of management practice at Harvard Business School, who does research on layoffs, restructuring and global workforce change. She said that job cuts can take a subtle toll on a business.
“Layoffs in normal recessionary times have a series of quite negative effects inside companies,” Sucher said. “They tend to create performance gaps and attitude problems with people who are survivors, who aren’t laid off. I think companies are looking at a world of hurt if they go down this path and are expecting people to come back and help them.”
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