Due to the sudden economic crisis resulting from the COVID-19 pandemic, organizations are seeking out ways to cut costs. Out of which, employee layoff has also become one option. But before doing this, companies should consider how it will affect them in the long run. Instead, companies should find creative alternatives to layoffs to keep the business afloat.
Here are some alternatives that businesses can consider:
- Ask employees for ideas: Ask for suggestions from staff about how to cut costs and improve the productivity of the organization. Getting employees involved can ease insecurity and promote solidarity, even if what you save doesn’t meet your shortfall expectations. By this, employees will also feel valued as their suggestions will be heard.
- Hiring freeze: Some companies deploy mass lay-offs but are still placing job postings at the same time. This way, they are getting rid of valuable human capital to save money while bringing new employees at low salaries. It should be avoided, as retaining employees cost less than to replace them. Consider a hiring freeze as an alternative to layoffs.
- Slight salary cuts: Explain everyone across the board that salary cut is the need of the hour. The reduction should be such, that it won’t completely shatter employees’ finances, but also give the business a bit of a financial break.
- Work from home programs: Keeping employees at the workspace costs money. People consume water, electricity, office supplies, and other facilities. Sending workers home can cut costs to a large extent without dumping them.
- Cut part-time staff and contractors: If crises are bigger, it’s legally easier and cheaper to end the employment of contractors and part-time workers. One can always rehire if necessary. Instead of using costly temps, consider rehiring retired employees that already know your business, to fill gaps.
- Reduce employee benefits: Cut employee benefit plans and policies like medical or dental, 401(k) plans, insurance plans, leaves, and other fringe benefit policies.
- Offer extra days of unpaid leave: On this most of the employees will agree, as it would be like a vacation time although unpaid.
- Institute shorter workweeks: Reduce the number of working hours of the employees and proportionally decrease pay. This can be considered as a seasonal arrangement for slow periods. Shorter workweeks can cut costs by a significant margin.
- Focus on Efficiency: Find out ways on how things can be done faster, less expensively, and more productively? Where can cash be saved? How to encourage staff to become more efficient in their jobs?
Are layoffs necessary sometimes? Yes, but they should be a last resort instead of a front-line option. It’s better to lay off some of the employees than to lose the business. But one should make sure, it is not the go-to solution when the business starts to slip into the red.