Committing $100 million to keep paying salaries, Booz Allen Hamilton joins Salesforce.com, Verizon and large banks in avoiding layoffs.
Chief Executive Horacio Rozanski told employees Wednesday that Booz Allen Hamilton Inc. would set aside at least $100 million to guarantee their jobs over the next three months as the Covid-19 pandemic rocks the world economy.
Bank of America Corp., Citigroup Inc. and Morgan Stanley have also pledged to keep their workforces intact through the downturn. Salesforce.com CEO Mark Benioff is challenging all company CEOs to commit to 90 days without broad layoffs.
While retailers, movie theaters and restaurant chains are furloughing hundreds of thousands of employees as revenue dries up, other employers are still able to do business with social distancing and have the cash flow available to retain workers. Some are choosing to go even further by publicly committing to keeping headcount steady because it reassures workers, provides stability for their communities and ensures they’re ready to resume normal operations eventually.
“This is a national and a global emergency, and everyone needs to step up in the way that they can and do their part,” Rozanski said in an interview ahead of a companywide call announcing the job guarantee. Booz will also provide paid leave for employees with relevant expertise who volunteer in the pandemic response. “I think this is what will make Booz Allen come out of this stronger and better,” he said. “It’s not easy, and there’s challenges, but it’s ultimately the right thing to do across the board.”
Goldman Sachs Group Inc. economists predict the U.S. economy will shrink an annualized 34% in the second quarter, with unemployment reaching 15%. The number of Americans seeking unemployment benefits may set a record for a second straight week when data is released Thursday, following last week’s report of 3.28 million filings. Economists nearly universally agree the pandemic will throw the world into recession, but they are becoming less convinced about the potential for a strong snapback in growth.
The decisions by CEOs at companies such as General Motors Co. and BP Plc to keep paying their workers in the shrinking economy are in stark contrast to service sector and retail giants such as Marriott International Inc., Macy’s Inc., JC Penney Corp. and Urban Outfitters Inc. A Bloomberg tally suggests major retailers have already trimmed more than 600,000 jobs, and millions more in cuts may be looming.
“Those companies that have invested and valued their employees will be able to quickly transition and get back to normal once this is over,” said Alison Omens, chief strategy officer at JUST Capital, a research group that’s tracking how U.S. workers are faring during the pandemic. “There’s no greater example than the current crisis to show the differences between how companies are treating their employees.” Omens cited Target Corp. as an example of a good corporate citizen because it had moved quickly to provide comprehensive employee policies such as paid sick leave as well as raising wages.