At least some employees agree that MRC's approach makes the company special. "This no-layoff policy is the best thing I've ever encountered in my life," says Gaetano Ragusa, a 52-year-old former Bronx taxi driver who rose to supervise eight people in the metals division before automation and stagnant sales led to the merger of his group with another. Ragusa now operates a numerically controlled saw in the ceramics division, a job that would normally be performed by a much lower paid production worker. The temporary assignment enables Ragusa to learn the latest ceramics-processing techniques. He says he is confident that it will lead to another excellent supervisory post when business improves.
Donna Griffin, 27, was first hired as a ceramics production worker and later moved to a job as a guard. She was then shifted to custodial work and finally was assigned to operate a Xerox 9500 copier full-time, replacing the company's outside printing service. She says she does not mind the transfers. "There are a lot of people out there without a job," she notes. At one point Griffin asked to be kept as a custodian rather than move back to a production job. "When the Xerox machine breaks down I wish I was cleaning toilets again," she jokes.
On the other hand, not all employees have accepted transfers happily. Three young production workers quit when they were shifted to custodial or guard jobs.
Although Weinig and his top executives spent long hours discussing whether to promise no layoffs, they acknowledge that their approach could fail. Garrett Pierce says he would have been more cautious if the decision had been his. "As a financial person, I would suggest, 'Never say never," he comments.
Pierce's cautious view actually has a parallel in the statements of the large corporations Weinig says he admires. Although Hewlett-Packard and IBM have no-layoff policies, neither makes as rigid a promise to its employees as MRC does. Hewlett-Packard says in a statement of corporate philosophy only that a key objective of the company is to "provide job security based on [employee] performance." IBM's policy, according to a spokesman, is to tell its employees that "We have a continuing objective of full employment." No-layoff policies have built morale at these companies not because of the strength with which the policies have been stated, but because of the consistency with which they have been applied over decades.IBM, for example, has provided full employment for its people since the Depression.
Today, many American businesspeople argue that the odds are against any no-layoff policy repaying a company as much as it costs, even over many years. Elliot Levine, a securities analyst with First Manhattan Co. in New York, suggests that the costs of a no-layoff policy are so high that benefits such as higher morale and lower spending for recruitment are unlikely to outweigh them. "It's going to take a lot of doing" to make up for $4 million in nonessential spending on employees this year, he declares. Most of the investment community seems only modestly impressed with MRC's long-term prospects. From a high of $36 in early 1981, the price of the stock recently dropped to $12 -- a decline that reduced the paper value of Weinig's 20% stock ownership by nearly $13 million.
Some critics argue that a no-layoff policy can be an excuse for managers to neglect the people who own the company. "You have a certain moral and legal obligation to the shareholders," says David L. Mitchell, president and CEO of $27 million-a-year Data I/O Corp. in Redmond, Wash. He suggests that the costs of a no-layoff policy could easily wind up harming "the core strengths of the company" for the benefit of junior production workers who have done little to build the company up. Although Data I/O is prosperous -- sales rose 15% and profits 10% in the most recent quarter as demand continued to be strong for its semiconductor memory programming devices -- it laid off 70 production workers early this year because new manufacturing quarters permitted greater efficiency. Eventually, 21 employees were rehired.
Mitchell also suggests that a no-layoff policy can be an excuse to flinch from dealing with serious problems. "If you've got a little spot of cancer forming and you go and have it removed, you might win yourself a longer life," Mitchell suggests. "When you have to fire people, you get a lump in your throat that almost makes it impossible to talk, but that's not a good reason for avoiding it."
Weinig himself sometimes fears he could be wasting his company's -- and thus his own -- money on the no-layoff policy. He admits that he sometimes doubts that the average employee believes his promise or perceives it as making MRC a special organization.
But Weinig promises to stick with his policy, and he argues that most other entrepreneurs should adopt a similar one. But there are many who can't, he acknowledges. Resort operators must hire mainly seasonal workers. Some entrepreneurs plan to sell their businesses soon after they start them. Other companies are too young and unstable to be able to promise their employees no layoffs.
But Weinig claims that a no-layoff policy will almost inevitably be adopted by the sort of person who is most likely to build a truly fine organization. He says that a deep understanding of employees' human worth demands it. "The guy who's going to build up a company -- he's got to have a commitment to the dignity of his workers," Weinig declares. "If a man says he's got a commitment to his workers and he isn't committed to not throwing them out on the street, then it's just plain lip service."
