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Identifying Business Functions and Business Processes Involved in Mass Layoffs in the United States


... Mass Layoff Statistics ... to the concept of Business Function involved in the layoff. ... collection began with all layoff events for the 1st quarter ... – PowerPoint PPT presentation

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Title: Identifying Business Functions and Business Processes Involved in Mass Layoffs in the United States

Identifying Business Functions and Business
Processes Involved in Mass Layoffs in the United
  • Sharon P. Brown
  • Bureau of Labor Statistics
  • WORKS Expert Workshop
  • Leuven, Belgium
  • March 13, 2008

Identifying Business Functions and Business
Processes involved in Mass Layoffs
  • The BLS Mass Layoff Statistics program
  • BLS focus on Business Function and Process
  • Classification of Business Functions and Business
  • MLS experiences in collecting Business Functions
    and coding Business Processes
  • Summary remarks

The BLS Mass Layoff Statistics (MLS) 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
  • MLS focuses on large establishmentsthose
    employing 50 or more workers.
  • Private nonfarm firms of 50 or more and covered
    for UI are in scope.
  • Covered employment accounts for about 98 percent
    of all wage and salary employment.
  • Establishments of 50 or more less than 5 percent
    of establishments but more than 50 percent of
  • MLS focuses on mass layoffsidentified by the
    filing of 50 claims in a 5-week period.
  • MLS focuses on permanent layoffs--those lasting
    at least 31 daysas determined in the employer
  • Less than 40 percent of MLS layoffs identified
    solely by UI claims filing in the 5-week period
    involve layoffs of 31 or more days.

The MLS program--continued
  • The employer interview provides important
    information on the nature of the layoff not
    available from administrative data.
  • Length of layoff--more than 30 days determines an
    extended mass layoff.
  • Other basic information includes economic reason
    for layoff, total number of separated workers,
    open/close status.
  • The employer interview provides BLS with the
    ability to add questions that can shed light on
    current events in the labor market.
  • Movement of work questions and, since 2007,
    Business Function.
  • ?MLS measures relatively large layoffs in
    relatively large firms when there is more
    permanent dislocation of affected workers.
  • ?The program issues monthly and quarterly news
    releases with timely and detailed information to
    assist dislocated worker professionals in
    determining the need for employment and training
    services and to provide public and private
    researchers who study trends in labor markets and

MLS survey approach and reliability
  • Establishments all UI-covered establishments
    are subject to MLS specifications.
  • MLS employer interview survey all private
    nonfarm establishments meeting MLS specifications
    on size and claims filings.
  • Participation in the MLS employer interview is
  • BLS pledges confidentiality of the responses.
  • MLS employer interview is conducted by trained
    State analysts, who code or enter responses
    provided by the employer.
  • Telephone interviewing is used.
  • The interview is structured, but certain
    flexibility is allowed.
  • Employers are not given a questionnaire with
    response options in advance of the telephone
  • The typical respondent is in the personnel area,
    although for the movement of work and Business
    Function questions, analysts have been referred
    to higher management.
  • Although the employer interview component is
    subject to nonsampling error, outright refusals
    to participate in the interview have stayed well
    below 5.0 percent of all events.
  • Item nonresponse is not a significant issue.

BLS focus on Business Function and Process
  • In 2004, interest in identifying the effects of
    offshoring led to the introduction of movement of
    work questions in MLS that measure job loss
    associated with geographic shifts (domestic and
    overseas relocations) and contractual actions
    (outsourcing). This then led to the concept of
    Business Function involved in the layoff.
  • Offshoring studies and newspaper articles focused
    primarily on activities that were neither
    occupations nor industry groups. These
    activities could/did operate within any
    establishment, regardless of industry, and often
    involved multiple occupations.
  • Outsourcing of ICT and related services in the
    EU, Huws/Dahlmann
  • Examples of activities call centers, customer
    services, data processing, financial functions,
    human resources
  • Ongoing research brought BLS to Business
    Functions and the activities of the firm as a
    more viable data element for collection and a
    more relevant item of interest for the MLS
  • ?Business decisions are often based on a
    consideration of the firms Business Functions
    and are reflected in employment actions such as

BLS focus on Business Function and Process
Feasibility Study
  • In June 2006, a proposal was developed to collect
    information on Business Function involved in the
  • Business Function is defined as an activity
    that a firm performs in order to produce its
    product or achieve its objective.
  • A feasibility study was conducted in September
    and October 2006 in which 11 States tested the
    collection of business function.
  • Goals of feasibility test
  • Are we finding the right person to answer the
  • Is the person understanding the question?
  • Is the response provided a business function?
  • A structured interview approach was used, with
    the Business Function response obtained through
    an open-ended question.
  • Employers were not given the questionnaire with
    response options in advance of the interview.
  • During the interview, employers were not provided
    with Business Function responses beyond those
    imbedded in the question.

BLS focus on Business Function and Process
Feasibility Study
  • Findings
  • The new question on Business Function seemed to
    work well.
  • Knowledgeable respondents were found.
  • Relatively few respondents had difficulty
    answering the question.
  • In January 2007, the collection of Business
    Function involved in mass layoffs and plant
    closings was implemented nationwide.
  • Categorization of Business Functions into
    higher-level Business Processes was introduced in
  • Business Processes describe the full range of
    activities a firm engages in to conduct its
  • Qualitative analysis of the Business Function
    collection and coding of Business Process is

Business Functions and Business Processes
Models of firm activities
  • Once the feasibility study corroborated that
    employers can provide Business Functions involved
    in their layoff decisions, efforts turned to
    developing a higher-level categorization for
    Business Functions that would accommodate the
    multitude of functions collected and also support
    economic analysis.
  • There is no current acknowledged standard for
    defining Business Processes or the Business
    Functions within these processes. However, there
    are models of firm activities such as those of
    Tim Sturgeon and Gary Gereffi (Global Value Chain
    Initiative) and Michael Porter.
  • For the MLS program, BLS identified a set of
    Business Processes that is
  • consistent with the academic studies and current
  • reflects comments on the BLS business function
    proposal and the results of the feasibility
    study, and
  • appears to fit the actual data collection.

Business Processes in a Firm
  • Core Processes
  • 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

Core Processes of the firm
  • Procurement, logistics, distribution activities
    associated with obtaining and storing inputs, and
    storing and transporting finished products to
  • 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 establishments NAICS
    classification or the activity most directly
    associated with it.)
  • Business Function examples Producing goods,
    providing services, assembling products,
    fabricating components, conducting QA/QC, direct

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
  • Other Business Function examples Installing
    products, customer relations, maintaining and
    repairing products

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

MLS experiences in collecting Business Function
  • Business Function collection began with all
    layoff events for the 1st quarter of 2007.
    Analysts were provided with the Business Process
    classification, examples of Business Functions
    that could be reported under each (except for
    Operations), and actual Business Functions
    collected in the Feasibility Test.
  • Business Process categorization did not begin
    until the 2nd Quarter, to keep the initial focus
    on Business Function.
  • Once the Business Function collection was
    adequately established, the analysts were
    directed to categorize the Business Functions
    they collected into Business Processes.
  • Guidance on Business Process classification was
    developed to assist analysts in understanding
  • Key categorizationOperationshinges on the
    relationship of the Business Function to the
  • A Business Function that is Operations for one
    establishment can be correctly classified as a
    different Business Process for another.
  • All collection was done manually.

Selected MLS employer interview questions
  • Based on our unemployment insurance claims
    records, we believe that you may have had a
    (layoff/reduction in staff) during (month). Is
    that true?
  • Yes
  • Valid No (Probe Do you know why these
    unemployment claims were filed against your
    company?) Enter explanation. End interview.)
  • Dont know (Ask for another contact) --
  • When did that layoff begin? _____When did you
    stop laying off workers? ___________
  • Were workers laid off for more than 30 days?
    Yes? No ?
  • About how many workers were laid off for more
    than 30 days? (Probe If big gap between number
    of initial claims and number of separations)
    Number __________________ ? Dont Know/INA
  • What was the primary reason for the job cutbacks?
    ? Dont Know/INA Primary_______________
  • What kind of business is conducted at the
    worksite that experienced the layoffs?
    (Probe What product do you manufacture or what
    service do you provide at that location?)
    Industry ________________ ? Dont Know/INA
  • To determine whether a layoff occurred.
  • For data editing purposes.
  • To establish the permanent criteria. .
  • To obtain the total number of workers affected.
  • To obtain the economic reasons for layoff.
  • To verify the industry code.

Experiences in collecting Business Function
  • The employer interview was not adversely affected
    by the Business Function question.
  • Refusals were 4.4 percent, 2.6 percent, and 3.4
    percent respectively.
  • Responses of does not know Business Function
    were quite low, indicating that the right person
    was being interviewed.
  • Unable to contact reports were relatively high
    and likely reflects the program requirement to
    wait 31 days before attempting contact.
  • These may be closures.

Experiences in collecting Business Function
  • Literal reporting of the employer responses to
    the Business Function question was required,
    resulting in many variations of a given function.
    Also, in a number of situations, overly detailed
    functions were collected. In some cases, this
    reflected attempts to address responses that were
  • Guidance was provided to analysts in an attempt
    to standardize terms and the degree of detail
  • In the second and third quarters, about 75
    percent of all Business Functions collected were
    associated with terms used 10 or more times.

Experiences in collecting Business Function
  • Variations of a Business Function
  • Clerical, Answer phones, Clerical staff, Clerical
    support, and Front-office clerical all are
    encompassed by Clerical support.
  • Overly detailed Business Functions
  • Dining room service, bussing tables, dish
    washing, hosting/hostessing, waiting
    tables/serving all are encompassed by Food
  • Building maintenance, Facility services, Grounds
    keeping, Janitorial services, Landscaping,
    Repairing all are covered by Facility
    maintenance services.
  • Problematic industry activities some issues
    related to responses of occupations, while some
    were related to the industry itself.
  • Construction detailed activities represented by
    Construction activities.
  • (Any industry) manufacturing, processing,
    producing use Producing goods

Experiences in coding Business Process
  • The key categorization for Business
    Processesdetermining whether the Function is
    Operations for the establishmenthinges on the
    relationship of the Function to the industry of
    the establishment. In MLS, the industry
    identified for the firm may not relate to the
    work being done at the layoff worksite. This
    relates to how the firm reports for Unemployment
    Insurance purposes.
  • Main Business Process is determined based on the
    largest number of jobs affected by the layoff.
  • Secondary Business Processes are particularly
    important in the case of closures.

Total, Main, and Secondary Business Processes
involved in extended mass layoffs, first through
third quarters 2007
  • Core Business Processes dominated in the
    reporting of layoff activity, and Operations
    accounted for the majority of Main Processes.
  • Once the Main Process was identified, there was a
    greater likelihood that Support Processes would
    be involved.

Brief analysis of Business Functions and
Processes involved in layoff events
  • For the first three quarters of 2007, the MLS
    program reported 3,463 extended layoff events
    involving the separation of 640,990 workers.
  • During this period, employers in 3,463 layoff
    events provided a total of 5,769 Business
    Functions involved.
  • A single Process was identified in 64 percent of
    the events. This may reflect early collection
    issues in the event of closures. One process may
    reflect multiple Functions, e.g., producing good
    and the management of that Function.
  • Core Business Processes dominated and accounted
    for 98 percent of the Main Process involved in
    the layoff.
  • Secondary Business Processes were typically
    Support Processes although Procurement,
    logistics, distribution, Customer and after-sales
    service, and Marketing, sales, account management
    were also important.
  • More Processes were reported involved in layoffs
    when the economic reason was organizational
    changes and financial reasons. The highest
    proportions of Technology and process development
    and Human resource management as secondary
    Processes were associated with these reasons for
  • When work was sent out of the US, Operations was
    cited slightly more than for domestic

Business Functions reported in extended layoff
events, third quarter 2007
  • 74 Clerical support
  • 50 General management
  • 49 Administrative support
  • 30 Management
  • 9 Business management
  • 42 Human resources
  • 39 Customer service
  • 3 Call center
  • 33 Selling
  • 14 Sales
  • 6 Retail sales
  • 12 Marketing
  • 12 Supervisionfirst line or
  • direct
  • 145 Manufacturing
  • 170 Construction activities
  • 85 Producing goods
  • 52 Facility maintenance services
  • 49 Real estate services
  • 34 Educational services
  • 34 Food services
  • 21 Accounting services
  • 20 Entertainment services
  • 18 Engineering services
  • 14 Financial services
  • 14 Social services
  • 10 Conference services
  • 10 Contracted services
  • 5 Housekeeping services
  • 4 Cafeteria services
  • 8 Providing services

Brief analysis of Business Functions and
Processes involved in layoff events
  • Looking at 3rd quarter data on Business Functions
    reported by employers, Functions associated with
    producing goods and providing services dominated.
  • By this time, Functions associated with real
    estate appeared in response to the real
    estate/mortgage industry issues.
  • Other Functions more difficult to categorize also
  • Mortgage banking Loan adjusting Bank services
  • Mortgage banking services Loan
    authorizing Banking services
  • Mortgage brokering Loan counseling Mortgage
  • Mortgage lending service Loan interviewing Banki
  • Mortgage processing Home mortgage loans Lending
  • Mortgaging Processing loans
  • Business Functions and Business Processes each
    offer a different perspective on the job loss
    associated with a closure or layoff.
  • Looking at the Business Functions, one sees the
    activity that is the focus of change. However,
    new Functions must be addressed.
  • Looking at the Business Processes, one sees
    actions more from the perspective of the company
    and the decisions it makes. However, in order to
    accurately see the corporate decisions, one
    must have the full picture of corporate

Summary Remarks
  • The MLS program collection of Business Function
    benefits by having the layoff event as the
  • The collection also benefits by having the
    establishment respondent typically located in
    Human Resources or in a management capacity, and
    not in payroll.
  • The open-ended question on Business Function
  • Further automation of the collection is very
  • Further standardizing of Business Function terms
    is essential, but this must be done without
    compromising the collection.
  • More work on establishment is needed.
  • Is Business Function the better unit of analysis,
    and what does that mean for the program?
  • Additional qualitative analysis of the Business
    Function collection and the coding to Business
    Process continues, leading to publication.
  • Send comments on Business Functions and Business
    Processes to
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