Honeywell used furloughs instead of layoffs in 2008 and kept the skills

As the 2008-09 recession set in, orders at Honeywell were being cancelled and new ones were not being placed. Most big industrial companies reacted by cutting thousands of jobs to protect the quarter.

CEO David Cote made a different call. Honeywell asked employees to take unpaid furloughs instead of letting them go, accepting smaller targeted cuts for weak performers while keeping the trained worker base intact. He reasoned that a recession is temporary and that unemployment is expensive to rebuild from.

Cote said the logic was that the company's people and know-how were the asset it would need when the economy turned. Honeywell kept investing in product development and acquisitions through the downturn rather than freezing everything, a 'both now and later' approach.

The bet paid off. Honeywell came out of the recession positioned to grow, and its revenue and earnings climbed at a high-single-digit rate while some competitors that had gutted headcount struggled to ramp back up.

Honeywell kept its trained workforce and grew sales at a high-single-digit rate, then pulled away from rivals in the recovery.

Furloughs cut the wage bill without letting go of the trained people a recovery demands.

Hiring and training a fresh workforce after a downturn is slower and costlier than keeping the one you have.

It kept product and R&D investment going so Honeywell had new products when orders returned.

Managers kept incentivised to find the best people rather than simply cutting across the board.

Layoffs save cash but destroy training; furloughs cut cost while keeping the people you need once demand returns.

Honeywell emerged from the Great Recession leaner but not hollowed out, and it grew consistently through the 2010s. The episode became a case study Cote later used in his book and interviews about balancing short-term cost with long-term capability.