A furlough is either a voluntary or involuntary unpaid leave of absence from employment. While not all furlough programs are the same, Dr. John Sullivan, a professor of management at San Francisco State University, warns that you may run into some problems. Here are some issues to watch for:

1. Although they are designed to save money, most furloughs save a lot less money than actual layoffs would because, during furloughs, employees receive either a reduced wage or no wage, but their employee benefits, equipment costs, office costs, etc., continue.
2. The workload doesn’t decrease; rather, employees have to do the same amount of work in less time.
3. Both the talk of furloughs and their actual execution is always a major distraction to employees.
4. Reduced staffing levels anger customers and can hurt your brand image.
5. If your organization requires continuous innovation in order to compete in a fast-moving environment, the disruption and uncertainty that a furlough may bring can be distracting.
6. The uncertainty of this short-term solution is likely to cause most of your employees to go into “job search mode.” Some of this may be on company time, further decreasing productivity.
7. Your recruiting efforts may be challenged because most furloughs are publicized, which could cause potential candidates to think twice about joining the organization.
8. Furloughs can be challenged or stalled by lawsuits from unions and others that feel that they were “legally promised” a certain amount of pay per year.

Source: CCH HR Ideas and Trends, No. 699, June 3, 2009.