Alternatives to Downsizing: Challenge Employees to be Part of the Solution

Consider this: “According to research cited in the November 2008 issue of HR Magazine, companies that laid off 0.5 percent of their workforces experienced a turnover rate 2.6 percentage points higher than companies that didn’t cut staff. The more people that were laid off, the more people quit,” researchers said, according to the Society for Human Resource Management (SHRM).

Not only that, coincidentally, many of these same businesses suffer declining customer service and productivity levels and other performance issues. Surviving employees can often experience higher stress levels and decreasing engagement with their jobs.

Based on my research and observations, employee layoffs can often affect those workers who remain with the company in unexpected and undesired ways.

Given the above, and with so much negativity going on these days, I want to review creative and innovative ways that organizations can potentially spare employee jobs.

It’s important to note that the following are for general guidance only; for definitive guidance, employers are encouraged to consult with legal counsel, because federal and state laws govern employee pay, and businesses must remain in compliance with those laws and regulations.

Possibilities include:

1. Reduce the work week. Some businesses can realize up to a 20 percent reduction in payroll when they go from a five-day work week to a four-day work week.
2. Extend time off. For example, instead of providing for two weeks of paid vacation a year, a business could offer five weeks, two of which are paid.
3. Challenge employees to help the company save money. Ask employees to look for ways to reduce spending. Some businesses will offer a monetary incentive to employees whose ideas save the company valuable dollars. Obviously, a business will need to diligently think through this approach and apply appropriate rules and regulations, but oftentimes employees can come up with some excellent ideas.
4. Offer temporary sabbaticals, or what are often referred to as flexi-leaves. These type of leaves provide for extended periods of time away from the office or place of business. For example, managers may challenge an employee to take a break from the job and take a reduction in pay to acquire training; after which he or she returns with full pay and newly acquired skills.

In addition, SHRM has also researched ways that companies employ tactics other than layoffs to cut staffing costs. Among them:

• Implement a hiring freeze.
• Place a freeze on wages and bonuses.
• Reduce pay across the board by a specific percentage or tiered percentage of pay.
• Hire more contract, temporary or contingent workers. This concept can particularly work in some manufacturing businesses that experience production fluctuations.
• Retrain employees for other positions within the organization.
• Consider job-sharing opportunities.
• Shut down the business for a period of time. Again, this approach is often taken by manufacturing firms, and they may simply shut down the entire plant for a period of time. 

What more should be said about this important topic? 

1. First, before slashing positions and reducing the workforce, which can often end up hurting a business more than helping it, consider alternatives. In the aftermath of layoffs, employers may end up spending more time and energy calming employees’ fears and worrying about retaining those surviving employees. Many employers find themselves engaged in ‘handholding’ with those employees in order to keep them either engaged or from seeking what those employees perceive as a more secure place of employment.
2. Place a high priority on organization-wide communications. It is vitally important to communicate and support employees who employers rely on to take on more work, handle longer hours and do more for the same or even less pay. Communicating and supporting those employees will go a long way in keeping them on board and working productively.
3. Acknowledge, reward and recognize employees for even the small wins along the way. Celebrate their accomplishments and achievements. Give them the thanks they deserve.
4. Give employees a sense of context to help them understand why organizational changes are taking place. Senior management should provide them with information and details about the direction that the business is going toward.
5. Make sure employees are treated consistently when implementing layoff alternatives. As previously mentioned, it’s important to consult with legal counsel and HR when wages are involved to avoid the possibility of costly lawsuits. 

In short, employers who view layoffs as a last resort usually find themselves in a better position to retain their experienced, high-performers. What I often see is that these hardworking and dedicated employees are more inclined to stay with a company that they perceive as stable and concerned about employee morale.

Talented, high-performing employees are more apt to stay with employers that consider layoffs only as a last resort.