Monthly Labor Review • December 2008 51

Business Processes and Business Functions

Sharon P. Brown

Business Processes and Business Functions:

a new way of looking at employment

 A new BLS classification system used in conjunction with the Agency’s 

Mass Layoff Statistics program yields fresh information on business 

processes and functions affected by mass layoff events

Sharon P. Brown is 

Chief, Division of Local 

Area Unemployment 

Statistics, Office of 

Employment and 

Unemployment 

Statistics, Bureau of 

Labor Statistics. E-mail: 

brown.sharon@bls.gov

When employers decide to add or 

eliminate jobs, they are sometimes 

guided by larger choices to add or 

eliminate entire classes of activity—business 

functions—within the company. What may 

appear to be incremental hiring may in fact 

be the gradual buildup of a new business 

function, such as an in-house information 

technology development department. Or, instead, a mass layoff may stem from a decision 

to outsource a specific business function, such 

as human resources management, logistics, 

janitorial maintenance, or even manufacturing. Deciding which business functions to 

source to outside vendors and which to perform in-house is a critical part of corporate 

strategy, as companies seek to become more 

efficient and competitive or address changes 

in demand for outputs or supply of inputs.

In an attempt to shed more light on how 

workplaces and industries are changing, a 

classification system has been developed that 

describes basic business processes of the firm 

and the business functions that are associated 

with them. This system is now being used in 

the Mass Layoff Statistics (MLS) program to 

identify the functions and processes involved 

in job losses from extended mass layoffs. The 

system, which is now providing new information on the nature of this type of change in 

establishments and industries, can be applied 

equally to other measures of employment, 

including the current employment structure 

of a firm, organizational expansions and job 

growth, and the geographic location of outsourced work. Called Business Processes and 

Business Functions, the system is based on an 

approach that is a synthesis derived from existing literature, models of firms’ activities, current 

research on outsourcing and offshoring, the results of a feasibility study of business functions 

conducted by the BLS MLS program, and the 

ongoing collection of the relevant information 

throughout the Nation by the program.

Movement of work statistics 

Restructuring and outsourcing of business 

functions has long been part of the U.S. 

economic landscape. Companies continually 

identify strategies to cut costs, become more 

efficient, expand, and gain access to new 

markets, among other motivations. As the 

horizons for moving work have expanded, 

the offshoring of jobs has become an option that is available to a growing number 

of employers. Offshoring is often thought to 

affect only, or at least mainly, manufacturing 

jobs and production functions. In the early 

2000s, however, job losses in information 

technology and related areas emerged as an 

important indicator of ongoing change in 

industries. By 2004, stories on the offshoring 

of these business functions and the resultant 
Business Processes and Busiiness Functions

52 Monthly Labor Review • December 2008

job losses in the United States had become a regular topic 

of debate in the popular media.1

As greater attention was placed on a firm’s decision to outsource activities, stories also continued about corporate reorganizations and restructurings. These actions were occurring 

essentially for the same reasons that firms outsource and 

also involved processes and functions within the company. 

Companies were consolidating activities, eliminating layers 

of management, outsourcing some functions, and expanding 

others internally, to become more efficient and competitive 

and thereby improve the corporate bottom line.

In order to quantify the anecdotal information on 

offshoring and outsourcing, the BLS focused on the MLS 

program, in which monthly and quarterly statistics are 

collected on plant closings and mass layoffs involving at 

least 50 workers from businesses employing 50 or more.2 

A set of questions on the movement of work was added to 

the MLS employer interview to obtain the following data:

Job loss associated with outsourcing. The movement of 

work to a different company when that work was 

formerly conducted in-house by employees paid 

directly by the outsourcing company. The different 

company can be located inside or outside of the 

United States. The work may occur at a geographic 

location different from that of the outsourcing company, or it may remain on-site.

Job loss associated with offshoring. The movement of 

work from within the United States to a location 

outside of the Nation. Offshoring can occur either 

within the same company, when it involves the movement of work to a different location of that company 

outside of the United States, or to a different company altogether (called offshoring/outsourcing).

Statistics on outsourcing and offshoring have been collected by the MLS program since 2004. Job losses associated with the movement of work outside of the United 

States and that took place for reasons other than seasonal 

or vacation-related reasons averaged about 2.3 percent of 

all private nonfarm separations identified by the MLS program over the period 2004–07. Contrary to expectations, 

job losses associated with the movement of work were not 

concentrated in industries directly connected to computer 

and electronic products or information. Also, the majority 

of this layoff activity was associated with domestic relocation of work, mostly within the company.

If media reporting on offshoring correctly identified an 

emerging economic phenomenon, one implication of the 

•

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MLS statistics on offshoring job losses was that the action 

involved an activity or function not directly associated with 

the industry designation of the firm. That is, information 

technology jobs were being moved out of the country, but 

from firms with other industry designations. An additional impetus for studying business functions came from the 

high level of activity in domestic relocations. The single 

most reported reason for these relocations was reorganization within the company. Despite the details collected 

on the layoff, the employer interview questions did not 

reveal what was behind these actions and what, in fact, 

was the affected part of the company.

The traditional classification schemes for identifying industries (the North American Industrial Classification System, or NAICS) and for defining occupations (the Standard 

Occupational Classification system) are not reflective of the 

full range of activities of the firm. The industry classification 

approach is based on the primary activity of the establishment, as measured by the largest number of jobs performing 

that activity; other important direct and support activities 

that operate within the firm are not explicitly recognized. 

Hence, any change in employment is associated with the 

industry code determined by the main activity, even if the 

change in activity has nothing to do with it. Looking at the 

occupational classification reveals that the problem is that 

the system defines the firm’s workers, but lacks a direct tie to 

the firm’s internal organization and decisionmaking. Thus, 

both industry and occupation provide a limited picture of 

the dynamic nature of industrial organization and economic 

change.

As it became clear that companies were using internal 

organizational schemes in analyzing and implementing 

employment change that could—and did—involve any 

part of the corporate structure, a new classification system 

reflecting these components was needed in order to better 

understand the nature of changes in employment.

Describing a firm’s activities

Although Federal statistical programs have not collected 

statistics on business processes or functions, such data have 

been used in economic studies and, in recent years, have been 

mentioned in the popular press in stories on globalization, 

offshoring, and firm restructuring. Academic economists 

have described a firm’s activities theoretically and used the 

concept of business organization in firm and industry studies. Among such approaches is Michael Porter’s value chain, 

which divides a company’s technologically and economically distinct activities that it performs to do business into 

primary activities and support activities.3 Similarly, George 
Monthly Labor Review • December 2008 53

Yip has described the impact of global competition and 

technological improvements on the organization of firm 

activities and industries, and Timothy Sturgeon and Gary 

Gereffi, coorganizers of the Global Value Chains Initiative, 

have contributed to the discussion by identifying and distinguishing between core business processes and support 

activities, using an approach based on the classification 

scheme developed for the MLS program.4

Many offshoring studies and news accounts focused 

on activities such as software development and data 

processing, and relocations of call centers and customer 

services. One such report, prepared by Ursula Huws and 

Simone Dahlmann, described the following seven functions in which patterns of global outsourcing exist in the 

European Union: software development; data processing; 

sales; customer services; creative and content-generating 

functions, including research, development, and design; 

financial functions; and management, human resources, 

and training functions.5 These functions could not be 

viewed solely as industries or occupations, because they 

can, and do, operate within any establishment, irrespective of its industry classification, and they involve a range 

of occupations. Not only were studies and news accounts 

discussing offshoring in terms of business functions, but 

new companies were being created to provide these outsourced functions to employers.

Business Processes and Business Functions

In order to provide a standard classification approach for 

use in the MLS program, a set of eight business processes 

was identified that defines the full range of activities a firm 

engages in to conduct its business. Within these processes 

are business functions that describe in greater detail the 

specific activity that a firm performs in order to produce its 

product, provide its service, or otherwise achieve its objective. The processes begin with the procurement of inputs 

and end with those services provided after the sale of the 

good or service. The eight processes are grouped into core 

business processes and support business processes. Core 

business processes relate most directly to the basic business 

of the firm, with operations representing the key industry 

activity of the company. Support business processes facilitate core business processes.

Core business processes. Following are the five core business processes characterizing any firm:

Procurement, logistics, and distribution. Those activities associated with obtaining and storing inputs, •

and storing and transporting finished products to 

customers.

Operations. Those activities which transform inputs 

into final outputs, either goods or services.

Product or service development. Activities associated 

with bringing a new, improved, or redesigned product 

or service to market. Among these activities are research, marketing analysis, design, and engineering.

Marketing, sales, and customer accounts. Activities 

aimed at informing existing or potential buyers. 

These activities include promotion, advertising, telemarketing, selling, and retail management.

Customer and aftersales services. Support services 

provided to customers after they purchase the good 

or service. Such activities include training, help-desk 

services, call-center services, and customer support 

for guarantees and warranties.

Support business processes. Three support business processes characterize a firm:

General management and firm infrastructure. Corporate governance (legal, finance, planning, and public 

and government relations), accounting, building 

services, management, and administrative support.

Human resource management. Activities associated 

with recruiting, hiring, training, compensating, and 

dismissing personnel.

Technology and process development. Activities related 

to maintenance, automation, design or redesign of 

equipment, hardware, software, procedures, and 

technical knowledge.

The classification approach used in the MLS program 

differs slightly from the major models of a firm’s activities defined by Porter, on the one hand, and Sturgeon and 

Gereffi, on the other. The MLS approach identifies product 

or service development as a core business process, whereas 

Porter includes it under support activities. Also, the MLS

scheme includes procurement as a core business function, 

along with logistics and distribution. By contrast, in Porter’s 

value chain, procurement is a separate support activity. As 

regards the Sturgeon-Gereffi model, customer and aftersales 

service is categorized as a support activity, whereas the BLS

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Business Processes and Busiiness Functions

54 Monthly Labor Review • December 2008

scheme includes it as a core business process. Perhaps the 

most significant difference in the BLS and Sturgeon-Gereffi 

conceptual frameworks is the inclusion in the latter, but not 

the former, of strategic management as a core business process.6

 Although Sturgeon and Gereffi’s categorization is undoubtedly correct, its relevance to the collection of job losses 

associated with mass layoffs and plant closings is questionable. Those individuals making up strategic management in 

a firm would most likely not be unemployed and, therefore, 

filing for unemployment insurance in the event of a layoff 

or closing—a necessary action for identification by the MLS

program. Thus, although strategic management is a core business process for the company, it was not identified as a core 

business process in the BLS MLS approach.7

Exhibit 1 describes the full Business Processes and 

Business Functions system—including strategic management—with examples within each category. The functions 

are gathered from literature and from recent experience in 

collecting business functions in the MLS program and are 

not meant to be definitive or all inclusive. The term “business 

function” is distinct from both “industry” and “occupation” as 

a descriptor of the firm. For example, the business functions 

listed under the process procurement, logistics, and distribution

include such activities as buying, loading, and transporting. 

These activities are not analogous to industry designations 

or occupations: within a function, there can be a number of 

different occupations and a range of skill levels.

To properly classify a business function by the higher 

level process, it is essential to consider the industry of the 

employer. Business functions that are performed in order 

to directly transform inputs into final outputs are classified under the business process operations, which, in most 

cases, corresponds to the production process that is the 

basis for the establishment’s NAICS classification or the 

activity most directly associated with it. The specific business function (producing goods of a certain type or providing 

services of a certain type) depends on whether the establishment is classified as a goods-producing or service-producing establishment in NAICS. Examples of other business 

functions that are considered operations are the direct supervision of the activity, fabricating, and assembling.

It is important to note that a business function which 

falls into operations in one industry can be classified as a 

different business process in another industry. For example, let accounting services be the reported business function in an accounting firm. Then, in this case, the business 

process for the function is operations, because that activity 

directly relates to the service provided by the company. If, 

however, the function accounting services were reported by 

a manufacturing company, it would not be considered operations, but would be classified under general management 

and firm infrastructure.

MLS feasibility study: business function collection 

In advance of the development of the formal structure of 

the Business Processes and Business Functions system, 

the BLS conducted a feasibility study of business functions 

through the MLS program. The program collects important 

information on extended mass layoffs at large establishments through an interview with the affected employers. 

The interview includes 15 questions that address the nature 

of the layoff. For the feasibility study, an open-ended question about the business functions involved in the layoff or 

closing was added to the employer interview. Among the 

questions to be answered by this test were the following:

Would an appropriate individual be found to respond to the business function question?

Would that person understand the question and the 

concept of a business function?

Would the responses be pertinent to business 

functions?

Ten States participated in the feasibility test as part of 

their regular MLS employer interview, asking the business function question for all layoff events identified in 

the State in September and October of 2006. Like regular 

MLS interviews, the test interviews were conducted by 

telephone and the employers were not given a copy of the 

interview questions with response options. Data on business functions involved in layoffs were collected through 

an open-ended question.

The sequence of the questions used in the interview was 

viewed as very important in ensuring that the discussion 

of the layoff event would lead to the concept of “business 

function.” That is, the layoff or closing was verified, the economic reason for the layoff was provided, and the industry 

of the establishment was verified, leading to the question 

about business functions involved in the layoff. The interview questions and objectives leading to the business function question are shown in exhibit 2. (The full set of questions for the employer interview is presented in exhibit 3.) 

Summary of major findings. The 10 participating States 

collected business function responses related to 154 extended mass layoff events reported for September and October 2006. In all, 237 business functions were reported. 

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Monthly Labor Review • December 2008 55

Core business processes

Strategic management. Those activities carried out at the highest managerial levels. Included are the formation, implementation, and evaluation of cross-functional decisions that enable the organization to achieve long-term objectives. Among such 

operations are the following:

Coordinating activities Identifying new investments, acquistions, and divestments

Setting product strategy

Procurement, logistics, and distribution. Those activities associated with obtaining and storing inputs and with storing and 

transporting finished products to customers:

Buying Shipping

Distributing Receiving

Loading Transporting

Packing Warehousing

Operations. Those activities which transform inputs into final outputs, either goods or services. In most cases, business functions categorized as operations will equate with the industry code of the establishment or the activity most directly associated 

with that code. The specific function—the production of a good or the provision of a service—will relate to the specific industry. 

Operations activities are as follows:

Assembling products Managing production

Producing goods Managing services 

Providing services Conducting quality assurance or quality control

Fabricating components

Product or service development. Activities such as the following, associated with bringing a new, improved, or redesigned product 

or service to market (many of these activities are research, marketing analysis, design, and engineering activities):

Developing business plans Developing products or services

Analyzing markets Researching products or services 

Designing products or services Testing

Marketing, sales, and customer accounts. Activities aimed at informing existing or potential buyers (many of these activities are 

promotion, advertising, telemarketing, selling, and retail management activities):

Advertising Conducting market research

Managing accounts Coordinating media relations

 Billing Merchandizing

Branding or managing products Processing orders 

 Collecting payments Selling

Marketing Telemarketing

Customer and aftersales service. Activities, including training, help desks, call centers, and customer support for guarantees and 

warranties, that provide support services to customers after purchase of the good or service:

Offering call center services Maintaining and repairing products 

Providing customer relations Providing technical support 

Providing customer service or support Providing warranty support

Installing products

Support business processes

General management and firm infrastructure. Corporate governance (legal, finance, planning, and public and government relations), accounting, building services, management, and administrative support activities:

Accounting Managing fraud

Providing administrative support Providing general management

Providing cafeteria services Managing government relations

Providing clerical support Providing housekeeping services

Managing contracts Providing investor relations

 Exhibit 1. Classification of business processes with selected business functions
Business Processes and Busiiness Functions

56 Monthly Labor Review • December 2008

The function most reported fell under the business process 

operations. This result was expected for the MLS program, 

because the program focuses on relatively large layoffs (50 

or more workers) at relatively large firms (employing 50 or 

more), and the firm has the largest number of its workers 

involved in operations.

The new question on business functions worked well. 

The States reported little difficulty in finding a knowledgeable respondent. Relatively few respondents had difficulty 

answering the question, thus supporting the assumption 

that the concept of a business function had meaning and 

applicability for them. Most employers provided the names 

of one or more business functions in their immediate response to the question. The study did identify areas where 

clarification and guidance were needed. For example, it was 

necessary to ensure that information on all business functions involved in the layoff, and not just the main function, 

was collected. Also, during the test, probes were developed 

for use when the employer responded with occupations instead of business functions.

On the basis of the feasibility study results, the collection of data on business functions in the MLS program in 

all States began with mass layoffs and closings reported 

for the first quarter of 2007.

Functions and processes in the MLS program

Since the January 2007 implementation of the system, 

State analysts have collected data on business functions 

involved in extended mass layoffs (those lasting more than 

30 days) as part of the employer interview, and since June 

2007, they have coded those functions to higher level business processes. Analysis of the performance of the system 

over the first year indicates no significant issues on the 

part of either the employers interviewed or the data collectors. (See table 1.) 

Asking employers about business functions has not 

adversely affected either the interview or the response 

rate. In 2007, a total of 14,046 employers were contacted 

because administrative data on unemployment insurance 

claims indicated that a layoff occurred. Extended layoffs 

and closings were identified for 5,364 private employers 

in nonfarm industries. Employers refused to participate 

in an interview in well below 5 percent of events. “Do 

not know” responses to the business function question 

remained low, indicating that the correct person is being 

reached for the interview and that most respondents in 

fact think in terms of business functions. The number of 

employers that the interviewer was unable to contact was 

relatively high and likely reflects total closure of the establishment by the time contact was made.

In order to preclude the analysts’ influencing results 

by having them interpret the business functions cited by 

employers, responses are reported as stated. This approach 

results in variations in the words used to identify the business function. (As an example, the following terms were 

among those reported to describe construction activities: 

construction, constructing, road construction, construcManaging documents Providing legal and regulatory support

Providing facility or maintenance services Planning

Managing finances Maintaining security

Human resources management. Activities associated with recruiting, hiring, training, compensating, and dismissing personnel:

Providing employee assistance Hiring and firing personnel

Managing human resources Recruiting

Offering labor relations services Training

Managing payroll and compensation

Technology and process development. Activities related to maintenance, automation, design or redesign of equipment, hardware, 

software, procedures, and technical knowledge:

Developing computer systems Providing Internet services

Maintaining or repairing computer systems Designing processes 

Managing data Developing and testing software 

Processing data Providing software and information technology

Engineering services

 Exhibit 1. Continued—Classification of business processes with selected business functions
Monthly Labor Review • December 2008 57

Wording of question Objective of question

1.  Based on our unemployment insurance claims records,

we believe that you may have had a (layof

in staff ) during (month). Is

 Yes

 Valid No (Probe: Do you know why these 

 unemployment claims were filed 

 against your company? Enter 

 explanation. End interview.) 

 Don’t know (Ask for another contact)

 Refusal

2.  a.  When did that layoff begin? 

 b. When did you stop laying off work

 

3.  Were workers laid off for more than 30 days? 

 Yes

 No 

4.  About how many workers were laid off for more th

30 days? (Probe: If there is a big gap betw

 number of initial claims and the number of separations)

 Number:

 Don’t Know/INA1

 

5.  What was the primary reason for the job cutbacks?

 Don’t Know/INA1

 Primary:

Secondary:

6.  What kind of business is conducted at the worksite

that experienced the layoffs? (Probe: Wh

 do you manufacture or what service do you provide 

 at that location?) 

 Industry:

 Don’t Know/INA1

7.  Regarding the workers who were laid off,what was

their main role or function within the comp

example,were they in manufacturin

personnel, computer support, or somethi

 (Probe: In addition to [function mentioned], 

 were any of the employees affected by the layoff 

 involved in other activities of the firm, such as clerical 

 support, warehousing, or sales?)

 Main:

 Other: 

To determine whether a layoff occurred at the establishment 

or worksite. (An example of a “valid no” is the filing of 50 or 

more initial claims throughout the State, but not all of them 

at the same worksite.)

For data-editing purposes, to obtain the dates that the employer started and stopped laying off workers in this event.

To establish whether the layoff meets the criterion of permanency—that is, an extended event. If so, then the analyst 

proceeds to ask further questions. If not, the interview ends.

To ascertain the number of workers affected (that is, separated). If the number is less than 50, then the event is out of 

the scope of the survey.

To obtain the primary economic reason(s) for the layoff and, 

if possible, any secondary reason(s).

To verify the NAICS code of the worksite.

To ascertain the business functions involved in the layoff, 

including the main function.

Selected Mass Layoff Statistics survey employer interview questions leading to 

 business functions involved in the layoff event

 Exhibit 2.

1 INA = “is not available.” 
Business Processes and Busiiness Functions

58 Monthly Labor Review • December 2008

Question about the layoff

1. Based on our unemployment insurance claimsrecords,

we believe that you may have had a (layof

in staff ) during (month). Is 

 Yes

 Valid No (Probe: Do you know why these 

 unemployment claims were filed 

 against your company? Enter 

 explanation. End interview.) 

 Don’t know (Ask for another contact)

 Refusal

2.  a.  When did that layoff begin? 

 b. When did you stop laying off work

 

3. Were workers laid off for more than 30 days? 

 Yes

 No 

4.  About how many workers were laid off for more th

30 days? (Probe: If there is a big gap betw

 number of initial claims and the number of separations)

 Number:

 Don’t Know/INA1

 

5. What was the primary reason for the job cutbacks?

 Don’t Know/INA1

 Primary:

 Secondary:

7. Regarding the workers who were laid off,what was

their main role or function within the comp

example,were they in manufacturin

personnel, computer support, or somethi

 (Probe: In addition to [function mentioned], 

 were any of the employees affected by the layoff 

 involved in other activities of the firm, such as clerical 

 support, warehousing, or sales?)

 Main:

 Other: 

6. What kind of business is conducted at the worksite

that experienced the layoffs? (Probe: Wh

 do you manufacture or what service do you provide 

 at that location?) 

 Industry:

 Don’t Know/INA1

 Exhibit 3. Employer Interview script

Employer Name: 

UI Account No.:

Address:

Layoff Event ID#:

Layoff Quarter:

Trigger Week:

Contact Name/Phone Number:

O.M.B. No. 1220-0090

Approval Expires

Jan 31, 2009

Cover these points in your introduction:

• Introduce yourself, and the office you are calling from.

• Explain why you are calling.

• Summarize key points of confidentiality pledge. If asked, give 1220–0141 as the OMB clearance number.

• Explain that this data collection is voluntary, and it will only take a few minutes

8. In which county is the worksite located?

 County: 

 Layoffs occurred at more than one worksite and

 county

9. Just prior to the layoff,what was the total number of

employees at this worksite, counting both hou

salaried workers (an estimate is 

 Number: 

 Don’t Know/INA1

See footnote at end of exhibit.

→

→
Monthly Labor Review • December 2008 59

 

10. During the cutbacks/layoff, has your worksite

remained completely open, partially ope

shut down

 Open, no change in operating status

 Open, divisions stopped or shifts cut

 Partial closure of single-unit establishment

 Closed, entire worksite(s)

 Closed, entire establishment

 Long-term work completed offsite

 Don’t know/INA

11. Will there be a recall of workers, and, if so,what

percent will return 

 Yes, enter percent: (and check box)

 100%

 50–99% 

 Up to 50%

 Don’t know 

 No Skip to Question 13

 Don’t know (ask for another contact) 13 

12. What is the anticipated return date for those who

were 

Date: (and enter range)

 Less than 90 days 

 90–180 days

 181–270 days 

 271–364 days

 365 or more days 

 Don’t know/ INA1

Questions about Movement of Work

Do not ask Questions 13–14, if:

• Reason for layoff was seasonal or vacation

• Layoff was temporary (30 days or less)

13. a. Did this layoff include moving work from

this worksite to a different geogr

location within your com

Yes Ask 13b

No Go to 14a

Don’t know Go to 14a

b. Is the other location inside or outside the U.S.?

Don’t know/INA1

Inside U. S. In what State(s)?

 

Outside U.S. In which country(ies)? 

See footnote at end of exhibit.

c. Of the total number of workers laid off, h

many were laid off because your comp

moved work to this new location? 

estimate is ok

 Don’t know/INA1

Number inside U.S. 

Enter State(s) & No: 

Number outside U.S. 

Enter Country(ies) & No: 

14. a. Did this layoff include moving work that

was conducted in-house by your emplo

to a different company, t

contractual arrangem

Yes Ask 14b

No Go to 15

Don’t know Go to 15

b. Is that company located inside or outside of the

U.S.?

Don’t know/INA1

Inside U. S. In what State(s)? 

 

Outside U.S. In which country(ies)? 

 

c. Of the total number of workers laid off, h

many were laid off because your company moved

work to a different company? (an estimate

is okay)

Don’t know/INA1

Number inside U.S. 

Enter State(s) & No: 

Number outside U.S. 

Enter Country(ies) & No: 

15. Thank you very much. Let me be sure I have all 

your information correct just in case I need to get

back to you at a later date. Can you tell me your

name, job title, and phone numbe

Name: 

Job Title: 

Direct telephone number: 

 Exhibit 3. Continued—Employer Interview script

→ 

→ 

→ 

→ 

→ 

→ 

→ 

→ 

→ 

→ 

→ 

→
Business Processes and Busiiness Functions

60 Monthly Labor Review • December 2008

tion activity, construction activities.) In the first quarter, 

487 terms were used to report 1,862 business functions. 

Twenty-eight of those terms were used 10 or more times, 

accounting for 1,113 business functions, 60 percent of the 

total reported. (See table 2.)

Guidance was provided to analysts in an attempt to 

standardize terms for a number of functions and eliminate 

overly detailed functions. For the second through fourth 

quarters, about three-quarters of the business functions 

reported were associated with terms used 10 or more 

times.

The standardization effort focused on business functions that frequently appear in a firm, such as administrative support, clerical support, construction activities, 

general management, food services, and lodging services. 

Exhibit 4 lists some standardized nomenclature for reported business functions. In some instances, the functions reported (for example, dishwashers and electricians) 

were overly detailed, approximating occupations. In industries such as construction, the activities reported were 

closely aligned to the industry. In providing guidance to 

the analysts conducting the employer interview, an attempt was made to standardize the level of detail and the 

reported activity where appropriate.

Summary Information

Layoff Status (check one)

Temporary: Layoff less than 31 days

Permanent/Extended: Layoff included at least 50 

separations and lasted more than 30 days

Closure: One or more worksites closed or entire 

establishment closed

No Layoff: Employer indicates that there was no layoff

or that separations were either voluntary (e.g., quits, 

retirements, transfers to other locations in company)

or involuntary (e.g., firings due to employee 

misconduct, failure to perform duties). 

Additional Contact Persons

Name: 

Job Title: 

Direct telephone number: 

Name: 

Job Title: 

Direct telephone number: 

Name: 

Job Title: 

Direct telephone number: 

1 INA = “is not available.” 

 Exhibit 3. Continued—Employer Interview script

Employer Contact Status (check one)

Contact completed

Contact incomplete

Refused to provide any information

Comments:
Monthly Labor Review • December 2008 61

Table 1. Total mass layoff events, selected measures, 2007, by quarter

Action First quarter Second quarter Third quarter Fourth quarter

Total potential mass layoff events...................................... 3,139 3,289 3,025 4,593

Total private nonfarm extended layoff events............... 1,110 1,421 1,019 1,814

 Events with business function responses................... 977 1,297 884 1,587

 Does not know...................................................................... 9 6 15 51

 Refused (entire event)........................................................ 49 49 43 54

 Unable to contact................................................................ 75 69 77 122

Exhibit 5 displays the business functions reported in 

extended layoff events for the third and fourth quarters 

of 2007 (as reported in early 2008), loosely grouped by 

business process and without regard to the industry of 

the establishment experiencing the layoff. As an example, functions that involve the provision of services are 

grouped together. From the business process perspective, 

and as previously described, it is important to recognize 

that any one of the listed business functions can represent either operations of the establishment (if the function 

directly represents the industry code) or a non-operations

process. For example, the 30 business functions reported 

in the third quarter as accounting services may represent 

operations from accounting firms or general management 

and firm infrastructure if the accounting functions were associated with firms from other industries.

Fifty-five business functions are identified in the exhibit, 

based on functions specifically cited by employers and those 

which could easily be associated with the stated function. 

Out of 1,666 functions reported in the third quarter, 1,528 

were grouped into these standard functions. For the 2,325 

business functions reported in the fourth quarter, 2,075 

were so categorized. Taking into account those instances 

in which the employer did not know the affected function, 

analysts were able to assign more than 90 percent of the reported functions to these standard functions each quarter.

About 25 percent of the 1,666 functions reported in 

the third quarter were associated with the production 

of goods and with construction activities. The provision 

of services accounted for nearly the same proportion of 

functions. Of interest during this quarter were reports of 

functions likely associated with the housing and mortgage 

downturn—that is, those involving real estate, lending (including mortgage), financial, and banking services. Also in 

this quarter were layoffs associated with educational services, as schools closed for the summer. Functions considered under the procurement, logistics, and distribution process accounted for about 12 percent of reported activity, 

with some of those grouped as transporting also reflecting 

school closings. In the fourth quarter, 28 percent of the 

2,325 functions that were reported involved extended layoffs associated with construction functions, reflecting the 

seasonal slowdown in that activity. Landscaping services

functions also were related to the time of year.

Identifying the business process

Business process identification involves categorizing the 

specific business function into one of the eight processes 

previously described and used in the MLS program. The first 

step is determining whether the business function is part 

of operations for the establishment. This key categorization 

hinges on the relationship of the function to the industry of 

the establishment. As previously described, in most cases, 

when a business function is identified as part of operations,

it is because it corresponds to the production process that 

is the basis for the establishment’s NAICS classification or 

to the activity most directly associated with that classification. The specific business function depends on whether the 

establishment is classified as a goods-producing or serviceproducing establishment in NAICS. (Other business functions, such as the direct management of the specific services 

or production, also are classified under operations.)

A business function that is classified under operations for 

one establishment can be correctly classified as a different 

business process for another establishment, depending on 

the industry of the establishment. The business function 

warehousing provides an example: if the job loss associated 

with this business function occurred in an establishment 

identified as a warehouse, then the process involved would 

fall under operations; however, if the function was reported 

by a manufacturing establishment, then the process involved was procurement, logistics, and distribution.

It is important to recognize that the MLS-identified establishment and its industry designation are from QCEW

data used to administer the unemployment insurance program in a particular State. Industry classification is based 

on the majority (or plurality) of the work the firm reports 

that it performs in that State. In the case of firms with 

multiple establishments in the State, all locations will 
Business Processes and Busiiness Functions

62 Monthly Labor Review • December 2008

reflect the activity of the majority of employment in the 

State.

If the establishment identified by the MLS program 

as having a layoff event is part of a larger corporate entity located outside of the State and with an industry 

designation different from that of the establishment, 

then the business processes determined from the business functions that take place at the worksite will not 

relate to that larger corporate entity. An example is retail outlets of a manufacturing company. If the State has 

only the retail stores, and not the parent manufacturing 

firm, then layoffs at those stores involving the business 

function selling would be identified as operations, because 

the industry is retail sales. However, relating the business 

function to the industry of the larger corporate entity 

located in another State would place the function under 

the business process marketing, sales, and customer accounts. Thus, the MLS program may categorize an inflated 

number of business functions as operations, because the 

industry identification of the establishment may reflect 

neither the firm’s position in the corporate structure nor 

corporate actions.

2007 analysis of MLS business processes 

In 2007, the MLS program reported on 5,364 extended 

mass layoff events involving the separation of 966,526 

workers.8 During this period, the collection of data on 

business functions involved in layoffs was implemented, 

as was the coding of these functions to higher level business processes. As previously noted, the early collection 

was important not only for providing the initial, nationwide data on this activity, but also for identifying areas 

in which guidance was needed and automation would 

improve both collection and analysis. The discussion that 

follows focuses primarily on business processes because of 

refinements that were made to business functions in the 

early stages of data collection in 2007.

In 2007, employers reported a total of 8,323 business 

functions involved in 5,364 layoff events. When multiple 

business functions were cited in responses, the employer 

was asked to identify the main business function, on the basis of the largest number of jobs lost. The business functions 

were assigned to 6,679 business processes. (See table 3.) A 

single business process can reflect multiple business functions involved in a layoff. Over the year, 67 percent of mass 

layoff events involved only one process, but that proportion 

may reflect collection issues that arose in the first quarter 

and may change as interviewers become more familiar with 

the concepts and situations that apply. Almost 21 percent 

of events involved between 2 and 5 business processes. On 

average, the typical layoff involved 1.4 business processes.

Core business processes dominated in the reporting 

of layoff activity. Operations accounted for the majority 

of processes involved in layoffs: sixty-seven percent of all 

processes reported, and 94 percent of the main process 

reported, reflected one or more business functions categorized as operations. This is not an unusual finding for a 

program that looks at relatively large layoff events. Also, 

significant shares of mass layoffs are due to seasonal reasons and contract completions, activities typically associated with business functions that would be categorized as 

operations for the affected firms.

In layoffs involving more than one business process, 

there was a greater likelihood that some business functions other than operations that were involved in the layoff 

would be categorized as support processes rather than core 

processes. Excluding the main business process associated 

with the layoff, over the year, 58 percent of business processes other than the main one of the layoff were support 

processes, with 41 percent involved with general management and firm infrastructure and 10 percent with human 

Table 2. Business function terms and responses, 2007

 Quarter

 Unique business function terms Business function terms with

 10 or more responses

 

 Number Total business Number Total business

functions functions

First................................................................................................. 487 1,862 28 1,113

Second .......................................................................................... 302 2,350 33 1,815

Third............................................................................................... 218 1,666 30 1,307

Fourth............................................................................................ 288 2,445 35 1,977

NOTE: Table excludes responses of “don’t know” and “is not available” to the business function question.
Monthly Labor Review • December 2008 63

resource management. Core processes other than operations

also played significant roles as secondary processes in layoffs. Nineteen percent of secondary business processes 

were identified as procurement, logistics, and distribution, 

followed by customer and aftersales service (9 percent) and 

marketing, sales, and account management (9 percent).

Open and closed status. During the January-December 

period, nearly 72 percent of the 4,745 layoff events reported no change in the worksite status, while 5 percent of 

the events involved full closure of the employer (without 

regard to recall expectations). Partial closures (for example, 

closures of worksites, divisions, or shifts) accounted for 22 

percent of the events.

When the worksite status was not affected by the layoff, the distribution of main business processes involved 

was virtually identical to the total layoff distribution, with 

operations dominating. When worksites closed, the representation of support processes and of core processes other 

than operations rose significantly.

Industry distribution of extended layoffs. During 2007, 

manufacturing industries accounted for 25 percent of 

private nonfarm layoff events and separations. The largest concentrations were in transportation equipment and 

food manufacturing, followed by computer and electrical 

products. As regards nonmanufacturing sectors, 25 percent of all events were from construction, involving 16 

percent of all separations over the period. Other significant contributors to layoff activity included the retail trade 

and transportation and warehousing.

Among manufacturing industries, operations was reported to be the main business process for 95 percent 

of layoff events, about the same percentage as in all industries. However, these industries had a greater-thanaverage representation of secondary processes involved 

in the layoff. They also reported higher proportions of 

processes identified as procurement, logistics, and distribution and product development, as well as human resource 

management and technology and process development, than 

the proportion for all reported layoff events. (See tables 

4 and 5.)

Both wholesale and retail trade reported lower proportions of events with operations as the main business 

process, but higher proportions with marketing, sales, and 

account management. The wholesale and retail sectors also 

reported high representations of secondary business processes, especially in procurement, logistics, and distribution

and in marketing, sales, and account management.

As with most events, layoffs in the transportation and 

warehousing sector involved operations as the main business process. This sector had relatively higher representations of secondary support processes involved with general management and firm infrastructure and with human 

resource management.

In finance and insurance, the proportion of events in 

which operations was identified as the main business process was only slightly below that of all layoffs. With regard 

 Exhibit 4. Examples of standardized business functions for similar activities and levels of detail

Construction services Food services Lodging services

 Bricklaying Banquet and catering services Bellman services

 Carpentry Bussing tables Concierge

 Concrete pouring/ finishing Cashier services Front desk, check in/out

 Demolition Dining room service Guest services

 Ditch digging Dishwashing

 Electrical Hosting Entertainment services

 Flagging Restaurant operations Christmas events staff

 General labor Room service Gambling services

 Ironwork Waiting tables/serving Guides

 Painting Music production

 Pipefitting Clerical support Sports production

 Plumbing Answering phones

 Road construction Clerical services Facility maintenance services

 Roofing Filing Building maintenance 

 Welding Front-office clerical Facility services

 Scheduling Groundskeeping 

 Typing Janitorial services

 
Business Processes and Busiiness Functions

64 Monthly Labor Review • December 2008

to secondary processes involved in the layoff, of all industry 

groups, the finance and insurance sector had higher-thanaverage reporting of marketing, sales, and account management (along with wholesale trade and arts, entertainment, 

and recreation) and customer and aftersales service. 

Economic reasons for layoff. Among the seven categories 

of economic reasons for a layoff, seasonal reasons accounted for 35 percent of the 5,364 layoff events and 364,225 

separations over 2007. Business demand reasons followed, 

with 35 percent of events and 248,055 affected workers. 

Job losses associated with financial issues (bankruptcy, cost 

control or cost cutting, or financial difficulty) accounted 

for nearly 9 percent of events and 102,362 separations. 

Organizational changes (business ownership change and 

reorganization or restructuring) were cited in more than 7 

percent of events, involving 124,175 workers. Reorganization or restructuring accounted for the majority of these 

events, but business ownership change involved the majority of the separations.

Although the average layoff event involved 1.4 business processes, layoffs associated with organizational 

changes and financial reasons reported 2 or more processes involved. Layoffs due to these reasons were more 

 Exhibit 5. Number of business functions reported in extended mass layoffs, third and fourth quarters, 2007

Business function Quarter Quarter Business function

Third Third Fourth Fourth1 1

 Total ................................... 1,666 2,325

Construction activities ................. 175 660 Buying ............................................. 7 5

Producing goods........................... 244 332 Distributing..................................... 11 26

 Loading ........................................... 12 7

Accounting services...................... 30 24 Logistics.......................................... 2 5

Banking services........................... 6 1 Packing............................................ 9 12

Cafeteria services.......................... 4 2 Receiving......................................... 2 6

Conference services ..................... 12 14 Shipping .......................................... 28 20

Contracted services ...................... 11 13 Transporting.................................... 84 67

Educational services..................... 41 9 Warehousing.................................... 44 49

Engineering services .................... 20 18

Entertainment services................. 22 30 Administrative support.................... 61 65

Facility maintenance services ....... 22 25 Business management...................... 10 6

Financial services ......................... 17 18 Clerical support............................... 80 66

Food services................................ 41 46 Management ................................... 86 84

Health care services...................... 11 6 Planning .......................................... 3 0

Housekeeping services ................. 6 15

Landscaping services.................... 0 48 Human resources............................. 55 36

Lending services .......................... 25 10 Payroll/compensation ...................... 4 7

Lodging services .......................... 5 19

Maintenance/repair services......... 41 43 Account management...................... 8 11

Providing services......................... 8 13 Call center ....................................... 3 7

Real estate services....................... 58 29 Customer service ............................. 43 39

Social services............................... 14 0 Installing.......................................... 11 6

Software and IT services............... 18 18 Marketing........................................ 16 19

 Merchandising................................. 0 3

Assembly...................................... 8 8 Processing orders............................. 3 10

Fabricating ................................... 2 5 Selling.............................................. 61 79

Quality control/assurance............. 12 8 Telemarketing.................................. 1 5

First-line supervision ................... 20 11

Development/design of Business process responses 20 16

 products/services ....................... 6 5 No response 23 246

Research products/services........... 5 3 Unassigned functions 95 210

Testing ......................................... 0 2

1 Data are based on information received through March 2008.
Monthly Labor Review • December 2008 65

 Total, main, and secondary business processes involved in extended mass layoffs, 2007

Business processes in Mass Layoff Statistics

layoff events Total Main Secondary

 Total business processes identified...................................... 6,679 4,745 1,934

 Core processes.............................................................................................. 5,437 4,619 818

 Procurement, logistics, and distribution......................................... 442 67 375

 Operations.................................................................................................. 4,487 4,442 45

 Product development............................................................................ 61 17 44

 Marketing, sales, and account management................................. 230 59 171

 Customer and aftersales service......................................................... 217 34 183

 Support processes....................................................................................... 1,242 126 1,116

 General management and firm infrastructure.............................. 886 90 796

 Human resources management......................................................... 229 26 203

 Technology and process development............................................ 127 10 117

Table 3.

likely to report secondary support processes affected. 

In fact, other than the small number of events associated with disaster and safety, the highest proportions of 

human resource management as secondary support processes were associated with organizational changes and 

financial reasons. Business ownership changes were 

less likely to involve operations as the main process and 

more likely to involve a secondary support process, 

particularly human resource management. (See tables 6 

and 7.)

Movement of work. Movement of work accounted for 

8 percent of the 3,484 extended mass layoff events (excluding those which took place for reasons other than 

seasonal or vacation-related reasons) and 8 percent 

of the associated separations. Of the 4,745 extended 

layoff events for which business functions were provided, 264 involved the movement of work; these 264 

events involved the movement of work to other U.S. 

locations or to locations outside of the United States, 

and the movement occurred either within the same 

company or to other companies. A large majority (88 

percent) of these actions involved moving work within 

the company, and most (71 percent) were domestic 

relocations. 

When layoffs were associated with the domestic relocation of work, operations was cited as the main business process in 87 percent of events, compared with 94 

percent when work left the United States. Secondary 

business processes involved when work was geographically relocated were heavily weighted toward support 

processes. For relocations within the United States, general management and firm infrastructure accounted for 

41 percent of secondary processes reported in domestic 

relocations, followed by procurement, logistics, and distribution (19 percent) and human resource management (16 

percent). Proportions for out-of-country moves were 

similar.

Operations was the main business process cited when 

work moved within the company (91 percent of events) 

and when work was moved to another company (84 percent of events). Secondary business processes were concentrated in support processes for both internal company 

moves and moves to another company and were generally 

similar. 

THE CLASSIFICATION APPROACH of the BLS Business Processes and Business Functions system is a viable way of describing the establishment and its employment. The development and use of standardized 

business functions points to the greater potential of 

analyzing economic events at this detailed level. Despite the limitations imposed by the first year of data 

collection, the Business Processes and Business Functions system applied to extended mass layoffs provides 

interesting and timely insights into firms’ decisions 

and how they are reflected in plant-closing and mass 

layoff data.
Business Processes and Busiiness Functions

66 Monthly Labor Review • December 2008

 Percentage of main and secondary business processes affected in extended mass layoff events, by industry, 

 core processes, 2007

Core processes

 Total 

Product

business Customer

Total Operations development processes and

 aftersales 

service

 

 Total, main ................................................ 4,745 97.3 1.4 93.6 0.4 1.2 0.7 

Accommodation and food services............ 264 95.8 .4 94.7 .0 .0 .8

Administrative and waste services............. 297 94.9 .3 91.9 .0 1.7 1.0 

Arts, entertainment, and recreation........... 135 93.3 .0 88.1 .7 .7 3.7 

Construction....................................................... 1,296 99.5 .0 99.3 .1 .2 .0 

Educational services......................................... 24 79.2 .0 75.0 .0 .0 4.2 

Finance and insurance .................................... 271 94.5 .0 87.8 .0 5.2 1.5 

Health care and social assistance................ 241 97.9 .4 95.9 .0 .4 1.2 

Information ......................................................... 60 85.0 .0 71.7 5.0 5.0 3.3 

Management of companies and 

enterprises...................................................... 25 84.0 24.0 40.0 .0 12.0 8.0 

Manufacturing ................................................... 1,225 98.5 1.9 95.0 1.0 .3 .3

Mining................................................................... 37 100.0 .0 100.0 .0 .0 .0 

Other services, except public

administration .............................................. 84 97.6 2.4 95.2 .0 .0 .0 

Professional and technical services............ 138 92 .8 1.4 87.7 .0 2.2 1.4 

Real estate and rental and leasing.............. 17 100.0 .0 88.2 .0 11.8 .0 

Retail trade .......................................................... 235 95.7 5.1 81.7 .0 7.7 1.3 

Transportation and warehousing................ 304 98.4 4.3 93.4 .0 .0 .7

Utilities.................................................................. 9 88.9 .0 88.9 .0 .0 .0 

Wholesale trade................................................. 80 98.8 7.5 86.3 .0 3.8 1.3 

Unclassified ......................................................... 3 100.0 .0 100.0 .0 .0 .0

 Total, secondary...................................... 1,934 42.3 19.4 2.3 2.3 8.8 9.5 

Accommodation and food services............ 81 25.9 3.7 3.7 .0 8.6 9.9 

Administrative and waste services............. 48 37.5 14.6 2.1 .0 6.3 14.6 

Arts, entertainment, and recreation........... 58 56.9 8.6 8.6 1.7 22.4 15.5 

Construction....................................................... 83 47.0 24.1 1.2 1.2 12.0 8.4 

Educational services ........................................ 10 10.0 .0 .0 .0 10.0 .0 

Finance and insurance .................................... 232 38.4 1.3 1.3 .0 17.2 18.5 

Health care and social assistance................ 128 32.0 28.1 1.6 .0 .8 1.6 

Information ......................................................... 36 36.1 5.6 .0 5.6 13.9 11.1 

Management of companies and 

enterprises...................................................... 20 40.0 15.0 10.0 .0 15.0 .0 

Manufacturing ................................................... 809 42.2 24.8 2.0 4.4 5.6 5.3 

Mining................................................................... 11 18.2 18.2 .0 .0 .0 .0 

Other services, except public 

administration............................................... 41 48.8 43.9 2.4 .0 2.4 .0 

Professional and technical services............ 60 36.7 11.7 3.3 .0 10.0 11.7 

Real estate and rental and leasing.............. 5 40.0 .0 .0 20.0 .0 20.0 

Retail trade .......................................................... 183 62.8 25.7 2.7 1.1 10.4 23.0 

Transportation and warehousing................ 62 27.4 8.1 3.2 .0 4.8 11.3 

Utilities.................................................................. 1 100.0 .0 100.0 .0 .0 .0 

Wholesale trade................................................. 62 53.2 24.2 1.6 1.6 21.0 4.8 

Unclassified ......................................................... 4 50.0 25.0 .0 .0 25.0 .0

Table 4.

 Industry Marketing, 

sales, and 

account 

management

Procurement, 

logistics, and 

distribution
Monthly Labor Review • December 2008 67

 Percentage of main and secondary business processes affected in extended mass layoff events, by industry, support 

 processes, 2007

Support processes

Industry

Total 

General business Human Technology Total management processes resources and process and firm management development 

infrastructure 

 Total, main ............................................................................... 4,745 2.7 1.9 0.5 0.2 

Accommodation and food services........................................... 264 4.2 3.8 .4 .0 

Administrative and waste services............................................ 297 5.1 2.7 2.4 .0 

Arts, entertainment, and recreation.......................................... 135 6.7 6.7 .0 .0 

Construction...................................................................................... 1,296 .5 .4 .0 .1

Educational services........................................................................ 24 20.8 20.8 .0 .0 

Finance and insurance ................................................................... 271 5.5 4.8 .4 .4

Health care and social assistance............................................... 241 2.1 .8 .4 .8

Information ........................................................................................ 60 15.0 .0 13.3 1.7 

Management of companies and enterprises......................... 25 16.0 16.0 .0 .0 

Manufacturing .................................................................................. 1,225 1.5 1.1 .2 .2

Mining.................................................................................................. 37 .0 .0 .0 .0 

Other services, except public administration........................ 84 2.4 2.4 .0 .0 

Professional and technical services........................................... 138 7.2 4.3 2.9 .0 

Real estate and rental and leasing............................................. 17 .0 .0 .0 .0 

Retail trade ......................................................................................... 235 4.3 3.8 .0 .4

Transportation and warehousing............................................... 304 1.6 1.0 .7 .0 

Utilities................................................................................................. 9 11.1 .0 .0 11.1 

Wholesale trade................................................................................ 80 1.3 .0 .0 1.3 

Unclassified ........................................................................................ 3 .0 .0 .0 .0

 Total, secondary..................................................................... 1,934 57.7 41.2 10.5 6.0 

Accommodation and food services........................................... 81 74.1 65.4 7.4 1.2 

Administrative and waste services............................................ 48 62.5 45.8 10.4 6.3 

Arts, entertainment, and recreation.......................................... 58 43.1 41.4 1.7 .0 

Construction...................................................................................... 83 53.0 42.2 6.0 4.8 

Educational services........................................................................ 10 90.0 30.0 30.0 30.0 

Finance and insurance ................................................................... 232 61.6 46.6 8.2 6.9 

Health care and social assistance............................................... 128 68.0 58.6 7.8 1.6 

Information ........................................................................................ 36 63.9 47.2 11.1 5.6 

Management of companies and enterprises......................... 20 60.0 45.0 5.0 10.0 

Manufacturing .................................................................................. 809 57.8 36.5 13.0 8.4 

Mining.................................................................................................. 11 81.8 36.4 18.2 27.3 

Other services, except public administration........................ 41 51.2 48.8 2.4 .0 

Professional and technical services........................................... 60 63.3 46.7 10.0 6.7 

Real estate and rental and leasing............................................. 5 60.0 60.0 .0 .0 

Retail trade ........................................................................................ 183 37.2 26.8 7.7 2.7 

Transportation and warehousing............................................... 62 72.6 48.4 22.6 1.6 

Utilities................................................................................................. 1 .0 .0 .0 .0 

Wholesale trade................................................................................ 62 46.8 30.6 11.3 4.8 

Unclassified ........................................................................................ 4 50.0 50 .0 .0 .0

Table 5.
Business Processes and Busiiness Functions

68 Monthly Labor Review • December 2008

 Percentage of main and secondary business processes affected in extended mass layoff events, by reason for layoff, core processes, 2007

 Core processes

Total Customer

 business Product and

 processes development aftersales 

 Total, main ............................................ 4,745 97.3 1.4 93.6 0.4 1.2 0.7 

Business demand.......................................... 1,842 97.9 .9 94.9 .5 1.0 .7

 Contract cancellation ................................ 70 100.0 2.9 91.4 .0 .0 5.7 

 Contract completion.................................. 882 98.2 .1 97.4 .6 .0 .1

 Domestic competition .............................. 15 93.3 .0 93.3 .0 .0 .0 

 Excess inventory or saturated market . 36 100.0 .0 100.0 .0 .0 .0 

 Import competition.................................... 71 100.0 .0 100.0 .0 .0 .0 

 Slack work, insufficient demand,

or nonseasonal business slowdown.. 768 97.3 1.8 91.7 .5 2.3 .9

Organizational changes.............................. 386 91.7 2.8 81.1 1.0 4.9 1.8 

 Business ownership change.................... 96 87.5 3.1 77.1 2.1 4.2 1.0 

 Reorganization or restructuring 

of company................................................. 290 93.1 2.8 82.4 .7 5.2 2.1 

Financial issues............................................... 444 96.6 1.8 90.5 .5 2.5 1.4 

 Bankruptcy .................................................... 64 96.9 1.6 92.2 .0 1.6 1.6 

 Cost control, cost cutting, 

or increased profitability ....................... 170 94.7 3.5 84.1 1.2 2.9 2.9 

 Financial difficulty ...................................... 210 98.1 .5 95.2 .0 2.4 .0 

Production specific....................................... 82 93.9 2.4 87.8 .0 1.2 2.4 

Disaster or safety related............................ 32 100.0 3.1 96.9 .0 .0 .0 

Seasonal ........................................................... 1,861 98.1 1.5 95.7 .1 .5 .4

Other or miscellaneous............................... 98 100.0 1.0 96.9 1.0 1.0 .0 

 Total, secondary.................................. 1,934 42.3 19.4 2.3 2.3 8.8 9.5 

Business demand.......................................... 498 42.0 19.5 3.2 4.4 7.6 7.2 

 Contract cancellation ................................ 43 39.5 9.3 4.7 2.3 11.6 11.6 

 Contract completion.................................. 59 30.5 13.6 6.8 1.7 3.4 5.1 

 Domestic competition .............................. 13 46.2 30.8 .0 7.7 .0 7.7 

 Excess inventory or saturated market . 30 53.3 30.0 .0 6.7 13.3 3.3 

 Import competition.................................... 108 39.8 25.9 .0 7.4 3.7 2.8 

 Slack work, insufficient demand,

or nonseasonal business slowdown.. 245 44.5 18.0 4.1 3.7 9.4 9.4 

Organizational changes.............................. 382 35.3 12.0 1.6 1.8 9.7 10.2 

 Business ownership change.................... 91 34.1 9.9 2.2 .0 15.4 6.6 

 Reorganization or restructuring 

of company................................................. 291 35.7 12.7 1.4 2.4 7.9 11.3 

Financial issues............................................... 504 38.1 15.1 .8 2.0 10.1 10.1 

 Bankruptcy .................................................... 104 39.4 11.5 1.9 1.0 12.5 12.5 

 Cost control, cost cutting, 

 or increased profitability ...................... 175 41.1 22.3 1.1 4.0 5.1 8.6 

 Financial difficulty....................................... 225 35.1 11.1 .0 .9 12.9 10.2 

Production specific....................................... 35 40.0 17.1 5.7 8.6 2.9 5.7 

Disaster or safety related............................ 10 50.0 30.0 .0 .0 10.0 10.0 

Seasonal ........................................................... 438 55.0 31.5 3.7 .2 8.2 11.4 

Other or miscellaneous............................... 67 32.8 13.4 1.5 1.5 10.4 6.0 

Table 6.

Total

service

Operations

Reason

Marketing, 

sales, and 

account 

management

Procurement, 

logistics, and 

distribution
Monthly Labor Review • December 2008 69

 Percentage of main and secondary business processes affected in extended mass layoff events, by reason for

 layoff, secondary processes, 2007

 

 Reason 

Total 

Technology

 

business 

 Total and process

 

processes

development 

 Total, main ......................................................... 4,745 2.7 1.9 0.5 0.2 

Business demand....................................................... 1,842 2.1 1.2 .7 .2

 Contract cancellation ............................................. 70 .0 .0 .0 .0 

 Contract completion............................................... 882 1.8 1.1 .6 .1

 Domestic competition ........................................... 15 6.7 .0 6.7 .0 

 Excess inventory or saturated market .............. 36 .0 .0 .0 .0 

 Import competition................................................. 71 .0 .0 .0 .0 

 Slack work, insufficient demand,

or nonseasonal business slowdown............... 768 2.7 1.7 .8 .3

Organizational changes........................................... 386 8.3 6.7 .3 1.3 

 Business ownership change................................. 96 12.5 10.4 .0 2.1 

 Reorganization or restructuring 

of company.............................................................. 290 6.9 5.5 .3 1.0 

Financial issues............................................................ 444 3.4 3.2 .2 .0 

 Bankruptcy ................................................................. 64 3.1 3.1 .0 .0 

 Cost control, cost cutting, 

or increased profitability .................................... 170 5.3 4.7 .6 .0 

 Financial difficulty.................................................... 210 1.9 1.9 .0 .0 

Production specific.................................................... 82 6.1 .0 4.9 1.2 

Disaster or safety related......................................... 32 .0 .0 .0 .0 

Seasonal ........................................................................ 1,861 1.9 1.5 .4 .1

Other or miscellaneous............................................ 98 .0 .0 .0 .0 

 Total, secondary............................................... 1,934 57.7 41.2 10.5 6.0 

Business demand....................................................... 498 58.0 42.2 8.8 7.0 

 Contract cancellation ............................................. 43 60.5 39.5 14.0 7.0 

 Contract completion............................................... 59 69.5 52.5 6.8 10.2 

 Domestic competition ........................................... 13 53.8 23.1 7.7 23.1 

 Excess inventory or saturated market .............. 30 46.7 40.0 6.7 .0 

 Import competition................................................ 108 60.2 36.1 15.7 8.3 

 Slack work, insufficient demand,

or nonseasonal business slowdown............... 245 55.5 44.1 5.7 5.7 

Organizational changes........................................... 382 64.7 40.1 15.4 9.2 

 Business ownership change................................. 91 65.9 42.9 16.5 6.6 

 Reorganization or restructuring 

of company.............................................................. 291 64.3 39.2 15.1 10.0 

Financial issues............................................................ 504 61.9 41.9 12.7 7.3 

 Bankruptcy ................................................................. 104 60.6 41.3 13.5 5.8 

 Cost control, cost cutting, 

or increased profitability .................................... 175 58.9 41.7 10.3 6.9 

 Financial difficulty.................................................... 225 64.9 42.2 14.2 8.4 

Production specific.................................................... 35 60.0 51.4 5.7 2.9 

Disaster or safety related......................................... 10 50.0 30.0 20.0 .0 

Seasonal ........................................................................ 438 45.0 39.0 5.0 .9

Other or miscellaneous............................................ 67 67.2 44.8 14.9 7.5 

Support processes

Table 7.

Human

resources

management

General

management

and firm

infrastructure
Business Processes and Busiiness Functions

70 Monthly Labor Review • December 2008

Notes

ACKNOWLEDGMENT: The author gratefully acknowledges the assistance of 

Patrick Carey and Yang Guo in the development and verification of the data 

presented in this article.

1 See, for example, Leslie Haggin Geary, “Offshoring backlash rising,” CNN

Money, Jan. 12, 2004, on the Internet at money.cnn.com/2004/01/09/pf/q_antioffshore.

2 Sharon P. Brown and Lewis B. Siegel, “Mass layoff data indicate outsourcing and offshoring work,” Monthly Labor Review, August 2005, pp. 3–10.

3 Michael Porter, On Competition (Boston, Harvard Business School Publishing, 2008), p. 77. 

4 George S. Yip, Total Global Strategy II: Updated for the Internet and 

Service Era (Upper Saddle River, NJ, Prentice Hall, 2003); and Timothy J. 

Sturgeon and Gary Gereffi, “The Challenge of Global Value Chains: Why 

Integrative Trade Requires New Thinking and New Data,” paper prepared 

for Industry Canada and presented at the Global Value Chains Workshop, 

Ottawa, Ontario, Canada, Sept. 27, 2007. 

5 Ursula Huws and Simone Dahlmann, Outsourcing of ICT and related services in the EU: A status report (Luxembourg, European Foundation for the Improvement of Living and Working Conditions, 2004).

6 Sturgeon and Gereffi, “The Challenge of Global Value Chains,” p. 24, 

define strategic management as “activities that support the setting of product 

strategy (i.e., deciding what ‘new product development’ works on), choosing 

when and where to make new investments and acquisitions, or sales of parts 

of the business, and choosing the business partners (e.g., suppliers and service 

providers).”

7 The MLS system does specify that the direct management of an operations business function is also classified under operations, as the twin 

functions managing production and managing services. General management

functions are classified under the process general management and f irm 

infrastructure.

8 See the BLS MLS Web site www.bls.gov/mls for the “Extended Mass Layoffs” news release for the fourth quarter of 2007.