Attrition cuts with less pain

As workers leave, many aren't replaced

Staff WriterMay 8, 2011 

  • 1. The action or process of gradually reducing the strength or effectiveness of someone or something through sustained attack or pressure.

    2. The gradual reduction of a workforce by employees' leaving and not being replaced rather than by their being laid off.

    Source: dictionary.com

During the first three months of the year, Progress Energy had a net loss of about 65 employees.

For the Raleigh-based utility, that's good progress.

The company is planning a multibillion-dollar merger with its Charlotte neighbor, Duke Energy, a deal that's expected to close this year. The combined utility won't need as many workers and officials at both companies have said they will consider various options to reduce headcount - potentially by hundreds of workers - including early retirement buyouts and perhaps some layoffs.

But to minimize the pain later, Progress is first using a friendlier tool for trimming staff: attrition.

When workers leave, either to retire or take other jobs, most are not being replaced.

"To refill a full-time position requires senior executive approval, and the bar is very high," spokesman Mike Hughes said.

That's a common refrain from employers across the country that are still reeling from the recession. Existing staff continue to be asked to do more with less, and take over the responsibilities of departing colleagues.

In this region, state agencies, universities and businesses of all sizes continue to embrace attrition to cut personnel costs before resorting to layoffs.

"It's certainly a much more merciful way of doing things," said Benson Rosen, a professor of organizational behavior at UNC-Chapel Hill's Kenan-Flagler business school. "It reduces anxiety on employees," compared with layoffs.

Still, attrition has its limits. For starters, it requires a long time and careful planning. Most companies can use employment statistics to predict how many might leave in coming months or years, but others don't have that leeway.

"Some companies in dire straits can't afford to wait for natural attrition to take place," Rosen said. "They have to be more draconian."

A tough economy and tight job market also can diminish the number of people who jump ship.

Losing essential workers

Another challenge is that using attrition reduces the control employers have over who leaves.

With layoffs or buyouts, they can slash as needed. With attrition, they risk losing top workers who find better jobs.

In some cases, employers may discover they have to rehire to fill a crucial position or retain a key skill. That negates any benefit of creating a vacancy, and could lead to even higher costs after adding in hiring and training expenses.

Attrition is in full force across state government, the largest employer in the Triangle.

Most agencies are now under a hiring freeze directed by Gov. Bev Perdue in December. The order was a way of cutting costs this year and as lawmakers look ahead to a bigger budget hole for the next fiscal year.

At the N.C. Department of Health and Human Services, that means a vacant position can only be filled if it's determined to be critical to the agency's core function or in an area of direct patient care, spokeswoman Renee McCoy said. Other state agencies have similar policies.

DHHS has about 17,000 employees and nearly 1,700 vacant positions.

For Progress and Duke, the long process of winning shareholder and regulatory approvals for their union is allowing the companies to use attrition.

Duke officials declined to comment on exactly howmany people have left the Charlotte utility since the deal was announced in January.

"Our headcount is down for the first quarter," Duke CEO Jim Rogers said in a phone interview last week. "The important point is that we are trying not to replace people so that we can minimize the number of people that are put at risk when we combine the two companies."

Spreading workload

Progress is using attrition in areas with the greatest likelihood of redundancies with Duke, including communications, audit services, human resources and information technology, Hughes said. In some cases, the company is using contract employees to help with the workload.

And Progress is filling jobs that come open in "vital operational areas" such as power-plant operators and line workers, he said.

Progress employs 10,700 people companywide. That includes 5,600 across North Carolina, with 3,000 in Wake County.

Progress hasn't set a target for how many people it hopes will leave this year, "but certainly we expect that the numbers of employees will continue to drop a little at a time as employees make decisions based on their unique personal and professional circumstances," Hughes said.

Staff writer John Murawski contributed to this report.

alan.wolf@newsobserver.com or 919-829-4572

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