Collecting and Analyzing Business Functions and Processes involved in Mass Layoffs

1. Collecting and Analyzing Business Functions and Processes involved in Mass Layoffs Sharon P. Brown COST Expert Meeting Methods for studying firm restructuring and the impact on workers Leuven, Belgium April 28, 2011

2. Presentation • A brief review of the MLS program • A discussion of mass layoff statistics, especially business functions and processes, reported in the United States through December 2010. • What do the data tell us about the economy • What do the data tell us about the actions of firms in the recession

3. The Mass Layoff Statistics Program • MLS identifies plant closings and mass layoffs in establishments with 50 or more workers where at least 50 initial claims for unemployment insurance (UI) were filed in a 5-week period. • Administrative data on firms and on people filing for unemployment benefits define the economic event, and an employer interview provides key information on the layoff not available from administrative data. • MLS measures relatively large layoffs in relatively large firms when there is more permanent dislocation of affected workers—more than 30 days. • The program issues monthly and quarterly news releases with timely and detailed information to assist in determining the need for employment and training services and to provide public and private researchers who study trends in labor markets and industries.

4. Key MLS Specifications • Coverage • Administrative statistics: all establishments subject to Unemployment Insurance • Employer interview: all establishments in private nonfarm industries, meeting 50 employee size and UI claims requirements • Employer interview content • Length of layoff • Total number of separated workers • Open/close status • Recall expectations • Economic reasons, including Business demand, Organizational changes, Financial issues, and Seasonal • Movement of work—outsourcing, offshoring, domestic relocation • Business function involved in the layoff

5. Key MLS Specifications • Employer interview • Participation is voluntary and BLS pledges confidentiality of the responses. • Trained State analysts conduct survey and code or enter responses . • Telephone interviewing is used. • The interview is structured. • Employers are not given response options in advance of the telephone interview. • Typical respondent is in personnel. Analysts may go to higher management. • Although the employer interview component is subject to nonsampling error, outright refusals to participate have stayed well below 5.0 percent of all events. • Item nonresponse is not a significant issue.

6. Collection of Business Functions and Classification into Business Processes • Business functions are collected through an open-ended question. Response options are not provided in advance and are limited to those embedded in the question. • Question 7: • Regarding the workers who were laid off, what was their main role or function within the company? For example, were they in manufacturing, sales, personnel, computer support or something else? _____________________________________________ (Probe: In addition to (function mentioned), were any of the employees affected by the layoff mainly involved in other activities of the firm such as clerical support, warehousing, or sales?) • Main:___________________ • The categorization of a business function into a business process hinges on the relationship of the function to the industry of the establishment. • Key categorization: whether the function is categorized as “operations,” that is, it corresponds to the production process that is the basis for the NAICS classification or the activity most directly associated with it.

7. Business Processes Identified in the MLS Program Core Processes Strategic management Procurement, logistics, distribution Operations Product and/or service development Marketing, sales, customer accounts Customer and after-sales service Support Processes General management and firm infrastructure Human resource management Technology and process development

8. Classification of Business Processes with selected Business Functions Core Processes of the firm • Strategic management: activities carried out at the highest managerial levels, including formation, implementation, and evaluation of cross-functional decisions that enable the organization to achieve long-term objectives. • Business function examples: coordinating activities, setting project strategy, identifying new investments, acquisitions, and divestments • Procurement, logistics, distribution: activities associated with obtaining and storing inputs, and storing and transporting finished products to customers. • Business function examples: Buying, distributing, loading, shipping, warehousing • Operations: those activities that transform inputs into final outputs, either goods or services. (In most cases, the function under operations correspond to the production process that is the basis for the establishment’s NAICS classification or the activity most directly associated with it.) • Function examples: Producing goods, providing services, assembling products, fabricating components, conducting QA/QC, direct managing

9. Classification of Business Processes with selected Business Functions Core Processes of the firm--continued • Product and/or service development: activities associated with bringing a new, redesigned, or improved product or service to market. • Business function examples: Analyzing markets, researching, designing or developing the product/service, testing • Marketing, sales, customer accounts: activities to inform existing or potential buyers including promotion, advertising, telemarketing, selling, retail management. • Other business function examples: Billing, conducting market research, coordinating media relations, branding, merchandizing • Customer and after-sales service: support services to customers after purchase of a good or service, including training, help desks, call centers, and customer support for guarantees and warranties. • Other business function examples: Installing products, customer relations, maintaining and repairing products

10. Classification of Business Processes with selected Business Functions Support Processes of the firm • General management and firm infrastructure: activities related to corporate governance (which includes legal, finance, planning, public affairs, and government relations), accounting, building maintenance and services, general management, and administrative support. • Other business function examples: Cafeteria services, clerical support, security • Human resource management: activities associated with recruiting, hiring, training, compensating, and dismissing personnel. • Technology and process development: activities related to maintenance, automation, design/redesign of equipment, hardware, software, procedures, and technical knowledge. • Other business function examples: Computer systems development, computer systems maintenance and repair, managing data, data processing, providing Internet web services, development and testing software, providing software and IT services, designing processes

11. BLS Publication of Business Functions and Processes • Three key tables are now regular supplements to the quarterly Extended Mass Layoffs release • “Selected business functions involved in nonseasonal extended mass layoff events, selected quarters,” • “Business processes involved in extended mass layoff events, by reason for layoff, selected quarters,” • “Business processes involved in nonseasonal extended mass layoff events, by industry grouping, selected quarters.” • Information on the MLS program is available at: http://www.bls.gov/mls/ • More information on the development, testing, and introduction of Business Functions and Business Processes is contained in the article Business Processes and Business Functions: a new way of looking at employment : http://www.bls.gov/opub/mlr/2008/12/art3exc.htm

12. Analyzing the Economy with MLS Data • The MLS program provides significant series of statistics to analyze the economy. • Monthly MLS data begin in April 1995 • Quarterly MLS data begin in second quarter 1995 • Business functions using standardized functions begin in January 2008 • Business processes begin in January 2007 • The official recession, December 2007-June 2009, was determined by the National Bureau of Economic Research • Recessions so identified typically have 2+ quarters of declining GDP. • Employment is considered but unemployment is not. Weekly initial claims are considered too noisy and the TUR is a lagging indicator.

13. Chart 1. Monthly mass layoff events, seasonally adjusted, April 1995-December 2010 Source: US Bureau of Labor Statistics, MLS Program

14. Chart 2. Monthly mass layoff initial claims, seasonally adjusted, April 1995-December 2010 Total

15. Chart 3. Selected economic reasons cited by employers in extended mass layoffs Source: US Bureau of Labor Statistics, MLS Program

16. Chart 4. Selected layoff experiences of private nonfarm employers in the MLS program Source: US Bureau of Labor Statistics, MLS Program

17. Source: US Bureau of Labor Statistics, MLS and QCEW Programs

18. Analysis of Business Functions and Business Processes • For MLS analysis of business functions and processes, the recession and the following period are divided into three-calendar-quarter segments. • The following tables are used: • 1: Selected business functions involved in nonseasonal extended mass layoff events, 2008-2010 • 2: Business processes involved in extended mass layoff events, by reason for layoff, 2007-2010 • 3: Number of business processes affected in nonseasonal extended mass layoffs, 2007-2010

19. *Excludes events for which contact was unsuccessful or the employer refused to participate. **Only includes standard selected business functions. Nonstandard business functions are not included. Source: US Bureau of Labor Statistics, MLS Program

20. Analysis of business functions involved in nonseasonal layoffs • Producing goods/providing services functions accounted for the largest general grouping of functions, especially as the main function. • Such functions as accounting services, facility management, and financial management show up more often as secondary functions. • Quality assurance/quality control and first line supervision accounted for 10.6 of all secondary function reported over the 3 years. Post recession, this proportion rose to 11.4 percent. • Secondary functions involved in general management and firm infrastructure reached a peak of 25 percent of all functions in the latter half of the recession. • Secondary functions reported for customer and after service sales have actually risen as a percent of all secondary functions in the post-recession period. This is particularly true for customer service. • Functions related to marketing, sales and customer accounts were focused in selling, with selling as the main factor reported about 2 times as often than secondary. • Under technology and process development, the function reported most often was software and IT services, as a secondary function in layoffs.

21. Source: US Bureau of Labor Statistics, MLS Program

22. Source: US Bureau of Labor Statistics, MLS Program

23. Source: US Bureau of Labor Statistics, MLS Program

24. Contact Information • For information and data on the MLS program • Patrick Carey, MLS Branch Chief Carey.Patrick@BLS.GOV • To request access to MLS microdata for research purposes • Mark Lowenstein, Employment Research and Program Development Lowenstein.Mark@BLS.GOV • For information on this presentation • Sharon Brown sharonpbrown@verizon.net