The economy is precarious, budgets are tight, and companies are still dumping their most valuable assets faster than TV networks dump shows that struggle in the ratings. But wait. There are alternatives to layoffs. If you pursue those alternatives, not only do you retain key employees, you can still trim labor costs, keep morale high and put yourself in a position to prosper when the economy bounces back. Here’s how:
- Consider making some jobs part-time. Some employees will leap at the chance to cut their hours while maintaining full or partial benefits. Later, when business improves, you’ll be in a strong position to ramp up.
- Offer job sharing. Two employees, each working part-time, voluntarily sharing one position, bring double energy and double smarts to the job. The challenge is to make sure you’ve got the right people and the right jobs.
- Offer phased retirement. Offering phased retirement allows retirees to settle gradually into a new lifestyle and it gives you continued access to their brains and experience.
- Offer leaves or sabbaticals. Offering time away from work without reducing benefits, seniority or employment rights can help you keep top talent while temporarily cutting costs.
- Get creative. One company granted stock options to employees who voluntarily reduced their salaries. It offered $2 worth of options for every $1 in reduction. Twice the anticipated number of employees accepted the offer — and morale soared. What “perks” can you offer that will make employees want to help you?
- Ask employees. Go direct to the source and ask employees for ideas on how to cut costs. Trust us: They know where the excess is hiding.
Real Life Examples
Paul Levy, the CEO of Beth Israel Deaconess Medical Center in Boston, called employees to a meeting. He stood before them and told them the truth: The hospital was facing tough times. But it wasn’t merely an announcement; it was in invitation to dialogue.
“I’d like to do what we can to protect the lower-wage earners… now, if we protect these workers, it means the rest of us will have to make a bigger sacrifice. It means that others will have to give up more of their salary or benefits.” Employees erupted into loud, enthusiastic, sustained applause. And then they offered ideas. Lots of ideas. Levy says that at one point he was getting 100 email messages an hour.
Ultimately, the cost-cutting moves that employees suggested weren’t enough to save every job. But together the hospital team saved more than 400 jobs.
John Brown, president of Primary Freight Services, a shipping and logistics company in Rancho Dominguez, California, had similar thoughts. Brown saw his family-run firm’s revenues drop 24 percent, but he decided to buck the downsizing trend. Instead he cut executive pay — including his own — and moved his staff to a four-day work week, thus saving 18 jobs and medical coverage for his employees.
“It would have been a lot easier to look better if I laid off staff,” he says about his company’s balance sheet. “But…if I took away the core of what I have I would have taken away from what made the company successful in the first place — my employees.”