DECA Human Resources Management Practice Exam

Under what circumstance might an employer implement a furlough?

1. When they have an excess of qualified candidates

2. When revenue falls short or projects are over budget

3. When new employees are hired in large numbers

4. When there is a company expansion

The correct answer is: When revenue falls short or projects are over budget

An employer might implement a furlough when revenue falls short or when projects are over budget. This strategic decision is usually made in response to financial difficulties that prevent a company from maintaining its current workforce without incurring significant losses. By placing employees on furlough, the employer can temporarily reduce labor costs while keeping the workforce intact, intending to bring back employees once the financial situation improves. This approach allows the business to retain its skilled workforce and minimize the potential disruption that would come from layoffs, which can be more challenging to reverse when the economy rebounds or when projects stabilize. Other scenarios, such as having an excess of qualified candidates or hiring new employees in large numbers, would not typically lead to a furlough situation, as they involve either workforce surplus or expansion rather than financial restraint. Similarly, company expansion would likely necessitate hiring or retaining employees rather than furloughing them, as the focus would be on growth rather than cost-cutting.