Some firms fear details about job cuts will trigger bad publicity, but others are embracing openness.
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June 12, 2009
Computer maker Dell's refusal to disclose how many employees it laid off at its Winston-Salem plant this spring triggered a full-blown controversy.
City officials were upset because in 2004 they offered $20 million in incentives to lure Dell's manufacturing plant to Winston-Salem. Some of that incentive money depends in part on the number of jobs created. With an unknown number of job cuts, the officials lacked an up-to-date employee tally.
Mayor Allen Joines complained the company's stance was “not acceptable to our community.”
Although the criticism aimed at Dell's secrecy was unusual, it's not uncommon for companies to be tight-lipped about job cuts.
Some won't even acknowledge that layoffs have occurred. Others provide company-wide layoff numbers but balk at providing specific numbers for individual sites.
Labor and public relations experts say some companies don't want to discuss layoffs because they fear they will be perceived as struggling or because they're cutting jobs at one site at the same time they're seeking incentives elsewhere. Others may be leery of questions about efforts to shift jobs overseas.
“They don't like the bad publicity,” said Ross Eisenbrey, vice president of the labor-leaning Economic Policy Institute in Washington. “It gives them a black eye in the community if they are cutting the work force.”
No-comment or little-comment layoffs have become more evident in light of the waves of recession-induced job cuts.
Even though signs of stability are popping up on the economic front, job losses remain high. An estimated 532,000 workers were cut from U.S. payrolls in May, little better than the 545,000 in April, according to the business services company Automatic Data Processing.
Although the federal Worker Adjustment and Retraining Notification Act requires companies to disclose significant job cuts, the act has plenty of loopholes and lacks enforcement teeth. One government study found that two-thirds of the companies that should have reported layoffs didn't do so, Eisenbrey said.
Privately owned companies, accustomed to keeping information about their business to themselves, are less likely to be up front about layoffs than publicly traded ones, said John Challenger, CEO of the outplacement company Challenger, Gray & Christmas.
Lenovo, the Chinese computer maker, is among the companies that have decided that secrecy isn't the best policy.
When Lenovo cut jobs at one of its world headquarters in Morrisville in January, it spelled out that it was eliminating 250 jobs – but that the net reduction was 100 after accounting for shifting a call center from Toronto. The company pointed to the latter as a demonstration of its continued commitment to North Carolina.
“We feel it is better to be up front about the number of employees involved, so that the different audiences affected know where we stand and where they stand,” said spokesman Ray Gorman.
Ben Rosen, a professor at UNC Chapel Hill's Kenan-Flagler Business School, said some firms think transparency is a good policy. “If we are proactive and disclose what we're doing and why we're doing it,' he said, “we can control how it is reported better.”
IBM often doesn't disclose layoffs or even confirm that they have occurred. The company employs more than 10,000 at its Research Triangle Park campus and has had gone through several rounds of local layoffs recently. “IBM… complies with all legal requirements in the U.S. for job notification,” spokesman Doug Shelton said. “With acquisitions, divestitures, movement across businesses units, hiring and reductions, our population is constantly changing.”
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