How Torani has gone almost a century without layoffs

At a time when layoffs are dominating headlines, it may be hard to believe that an almost century-old company has yet to downsize its workforce. But flavored syrup manufacturer Torani has done just that.

Founded in 1925, Torani has never had to reduce its staff through layoffs—be it on a small or large scale. Not during the Great Depression (though, at the time, it was a two-person operation), not during the Great Recession, and not during the Covid-19 pandemic. During these periods, US unemployment reached 24.9%, 10%, and 13%, respectively.

Melanie Dulbecco, Torani’s CEO, attributes the company’s track record of zero layoffs to its low turnover and high tenure. “Our voluntary turnover last year was 4.2%,” she told HR Brew, compared to that of the manufacturing industry as a whole, which is currently 36%. Torani’s average tenure hit 6.3 years in October 2023, more than 50% higher than the national average.

Going almost a century without conducting layoffs might seem like catching lightning in a bottle, but Dulbecco, who has led the 350-employee, California-based company for almost 33 years, believes employers can avoid layoffs, even in difficult situations.

Getting it done. Torani prioritizes “hiring on the curve, not ahead of the curve,” Dulbecco said. In other words, it doesn’t hire for the sake of hiring.

“Certain industries—like maybe even the tech industry—hire as many people as they can, and if they don’t need those people, will lay them off,” she said.

Torani also considers organizational growth and change, and whether those factors merit new hires. From there, the company strives to foster a collaborative environment, where employees receive mentoring and coaching, and are on track for career growth within the organization.

“Everyone says [they can’t exist without layoffs] but if you stop and think about the underlying reasons we make these choices, then there are ways to avoid that,” she said. “You have to think about the whole system.”

The right steps. When faced with difficult financial situations, organizations should pause and think about their employees, Dulbecco said. It may sound like an obvious first step, but she said it isn’t how business leaders are trained to think.

“We are trained to focus on the bottom line, without understanding what actually drives it,” she said. “So, in a moment of extreme challenge, pause and consider the non-financials.”

The second step to avoiding layoffs, Dulbecco said, is to perform a deep financial analysis. At Torani, this involves reviewing the company’s financial strategy to see where it could save money—without considering layoffs.

This step also entails worst-case scenario planning, considering, for example, what might happen if revenue dropped by 20% or even 50%, and how the organization could scale back so its people are protected. By doing this, Dulbecco said organizations can be proactive, rather than reactive, in the face of a challenge.

“When we do our financial planning we decide what our budgets will be, we will determine what we will cut back, and then we track it week by week and month by month,” she said.

How the strategy works. In April 2020, shortly after the onset of the Covid-19 pandemic, Dulbecco said Torani’s business dipped by 20%, an outcome for which the organization had planned. To avoid layoffs, Torani made other concessions, cutting travel budgets (an unnecessary expense at the time) and reducing marketing expenses. The company dug through contracts to see what could be terminated or paused without penalties, and made clear to investors that it would be cutting back on or not paying dividends, and that if anyone had to take a pay cut, it would be executives.

What Torani didn’t expect was how quickly things would turn around. In May 2020, Dulbecco said Torani’s business began to pick up as its customers reopened. By the end of the year, Torani revenue had increased 15% YOY.

“What makes us really proud is making it through moments of challenge and difficulty by putting people first and keeping people together,” Dulbecco said. “So, when it came to the Great Recession or Covid and the shut down of our customers, the first thing that we did is pull together as an executive team and say, ‘Okay, how do we make it through this challenge…and how do we keep everyone employed?’”