No-layoff policies crumble in this climate

Until recently, Enterprise Rent-A-Car Co. prided itself on a 51-year history of never laying off a U.S. employee. When competitors slashed fleets and shuttered branches after the Sept. 11 attacks, Enterprise kept hiring.

This fall, though, the nation’s largest car-rental agency said it would dismiss 1,000 of its 75,000 employees, as Americans curtailed driving and flying.

“These types of declines are unprecedented,” says Patrick Farrell, Enterprise’s vice president of corporate responsibility.

The deepening recession is prompting layoffs at long-established employers that avoided job cuts in previous downturns. These layoffs demonstrate both the severity of the current recession and the continued erosion of workplace norms that once shielded many U.S. workers from permanent job loss.

Several of these employers are in hard-hit industries. Employment in the car rental and leasing sector, for example, fell 3.3 percent in October from a year earlier, according to the U.S. Bureau of Labor Statistics.

Some workplace experts say such layoffs show that the stigma associated with permanent job cuts – unthinkable to many employers three decades ago – continues to decline. They say companies find it easier to let go of workers when rivals and other employers also are eliminating jobs.

“Companies really respond to these things based on what they think they ought to be doing,” says Peter Cappelli, director of the Center for Human Resources at the University of Pennsylvania’s Wharton School. “They watch what their competitors do and listen to what the investment community tells them.”

Kevin Hallock, a professor at Cornell University’s School of Industrial and Labor Relations, says as layoffs become more common, managers may find it easier to discount the human and business costs. He recalls a group of senior executives who broke into tears after announcing their company’s first layoffs. When Hallock returned to the company six months later, the same executives were discussing another round of job cuts in “the starkest economic terms.”

“It was a really difficult thing for them the first time,” he says. But “they got over that hump.”

Many of the employers conducting their first layoffs say they first tried other ways to cut costs, such as freezing salaries or drumming up work for idle employees.

Enterprise managed to grow through past recessions. Its business, based largely on referrals from insurance companies, was mostly immune to volatility in airport traffic. But the 2007 acquisition of rival Vanguard Car Rental Group Inc., parent of the Alamo and National brands, increased Enterprise’s stake in the airport rental market and added 10,000 employees, leaving the company more vulnerable to economic factors heading into 2008.