Thoughtful Downsizing

During economic down turns or drastic losses in income like the Covid-19 pandemic companies are quick to lay off their employees. The fear-based consideration is that if we cut the salary cost, we might be able to save our company. There are alternate considerations that could be just as or more effective.

1.What is the cost of layoffs? Keeping employees employed could end up saving the company money in the long run. The price of severance, employee alienation, litigation if they sue, not to mention the hit on morale for the remaining employees can surpass any layoff costs you were hoping to save. Add to that the cost of recruiting and training when you end up hiring new employees.

2.Could your current employees help to solve current financial troubles? Employers are often surprised that their employees are devoted to the company for better or worse. Involving them during the difficult times not only brings on a new challenge that all can feel a part of, but it also builds compassion for the company and the difficult situation they have found themselves in. When they know that the company is being transparent, it eases insecurities and bitterness that the situation is out of their control. Keep the lines of communication wide open, involve them and you might be surprised where they offer to cut costs and find ways to increase production.

Employers can even be as bold to say, “We would rather not cut anyone’s jobs, so we need an all-hands-on deck approach for ideas on where else we can cut costs until this situation blows over.” Eventually, when you feel they are on-board and appreciate the transparency, steering is a possibility, by giving them options and ideas like,

• Cutting bonuses
• Nixing raises
• Freezing hiring
•  Stopping travel
•  Pausing overtime pay
•  Postponing equipment buys and upgrades
•  Doing away with office perks (like the free sodas for example)
•  Eliminating all office events and parties
•  Finding alternatives or free activities to boost morale
•  Shorten work weeks (employees might enjoy it and it cuts cost-if but temporarily)
•  Go virtual where you can (this can decrease the amount of square space you need to lease. Video conferencing to manage your teams is the future.)

When you see how everyone comes together to save everyone’s jobs throwing in extra unpaid time off is something that they might appreciate as well.

3. Could another company benefit from your company’s skillset? The Wall Street Journal mentioned this as an option: “Exchange workers with other employers. Larger companies do this within their own umbrella of subsidiaries. Smaller firms can choose partner companies or vendors. Ideally, the host firm would pay employee salaries and get the use of a skill set like marketing that it might not have on staff. The mutual benefits are a cross pollination of skills, retention of employees and temporary wage relief.
4. See where you can cut wages and benefits. Before allowing morale to take a hit from layoffs, cutting wages and benefits can be a temporary pain for all that would reap benefits in the long run. This even weeds out the employees that aren’t as dedicated to the company in its long-term goals. Which in the end may be a big win anyway?
5. When all else fails, could you only cut employees that aren’t full-time? Employees understand at this point that you have tried everything in your power to keep people employed. They’ve had time for the harsh reality that it is time to let people go. And they shouldn’t be too emotional when part-timers and contractors have to go as your last attempt to save full-time employee jobs.

At this point, you’ve been transparent, you’ve involved everyone in the process and heard their ideas, questions and concerns. It’s hard to be upset with a company that has respected their opinions and heard all sides of the situation and hard decisions that must be made.