In tough economic times, too many companies turn to the quick fix of laying people off. Michael W. Rude, global HR chief at Stryker, a medical technology company in Michigan, says, “From our perspective, any kind of layoff is a sign of mismanagement.” (BusinessWeek, “Is Optimism a Competitive Advantage,” August 13, 2009)

The alternative to laying people off is engaging them in finding solutions that avoid layoffs. In my first book, The Baldrige Quality System (Wiley, 1992), I told a story I heard from Frank Caplan, a Washington consultant:

“When I was a kid we lived in Bethlehem, Pennsylvania. My grandfather and uncles worked in the steel plants there. During the Depression, Bethlehem Steel got its employees together in large groups and said, “It looks to us like this depression is going to be a long-term proposition. We’re afraid the economy as a whole is in trouble. We want you to help us think very carefully about how to deal with each other and the company in these circumstances.”

“I remember my grandfather talking about this at the dinner table that night. He said, ‘We decided that those of us who had the most seniority will only work two or three days a week if times get really bad, so the rest of the people can be kept on the payroll.’”

Times got bad. Steel companies let people go to the degree, Caplan remembers, that “one out of three people on Pittsburgh’s streets was a laid-off steel worker.” But nobody got laid off by Bethlehem Steel.

Stryker found a similar solution to a rapid decline in orders at one of its manufacturing units, transferring 30 engineers from that division to another unit to keep from laying anyone off.

Engagement in both units soared. In an upcoming post, I’ll talk about another point this BusinessWeek article makes: “The link between a company’s employee engagement and its bottom line is real: the more engaged the workers, the higher the sales and profits.”

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