The first jobs to go

Employees are bracing for the next round of layoffs, but when the ax falls, who will be most at risk?

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By Jessica Dickler, CNNMoney.com staff writer

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NEW YORK (CNNMoney.com) -- With jobless claims and unemployment climbing, employees across the country are holding their breath, hoping to hang on to their positions and paychecks.

But widespread layoffs are all too common in an economic downturn. The economy has already lost over 600,000 jobs this year, and experts agree that there will be many more jobs lost in the months ahead.

When credit freezes up, businesses find it tougher to secure financing needed for daily operations, including payroll. That means that more companies will have to take a careful look at business operations in the current climate - and make some tough decisions.

That will likely involve cutting human capital. But which employees will be the first to go?

"From a job standpoint, we're in a recession. When the economy is in recession the chance of being laid off goes up," says John Challenger, chief executive of global outplacement firm Challenger, Gray & Christmas.

Employees with less time at the company are likely to feel more insecure than those who have many years under their belts. But experts say companies are more likely to target layoffs based on things like individual performance and salary.

In the midst of the current financial crisis, here are a few factors that can determine who gets laid off first:

Job performance: Gone are the days of last hired, first fired, Challenger said. Employers now are more focused on building a better and more efficient team.

When a workforce must be cut, "employers need to keep their best talent," Challenger said. "You want to keep the people that you think are your A-players."

Instead of cutting those that have been at the company for the least amount of time, companies now have sophisticated methods for evaluating performance. Management teams can better pinpoint the employees that are the most productive and do the highest quality of work, Challenger said, and retain those that help the business succeed.

And that doesn't just mean showing up on time and completing each task. In order to avoid a pink slip, "everybody who is employed should remind themselves how important it is to make themselves as valuable as possible," cautioned Bob Eubank, executive director of the Northeast Human Resources Association.

Salary: Productivity alone cannot necessarily keep you safe from the next round of layoffs. Employees at every level of an operation usually fall within a defined salary range, and those at the upper end could also be targeted.

"When companies cut back, they certainly look hard at people at the high end of the salary range," Challenger said.

In an effort to cut costs, highly paid individuals are more at risk simply because they are more expensive. "They really have to justify that they are worth that money," Challenger added.

Business need: Employers will also take a hard look at each division or department, to find areas that can be cut without sacrificing successful business operations. "As [companies] look to cut costs, they look to see where the expensive items are," according to John Dooney, manager of employment and HR strategy for The Society for Human Resource Management.

In tough times, it is not unusual to see companies slashing entire departments if they are not cost effective, or dismantling divisions that are costing more money than they're bringing in.

In many of those cases, all or most employees in the department will get pink slips, regardless of their length of service or loyalty, performance or salary. If possible, some companies will try to redeploy some workers to other areas within the company to maintain employee confidence and retain the top performers.  To top of page

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