12 Key Practices to Avoid a Layoff
As the COVID-19 public health crisis continues, U.S. businesses are dealing with unprecedented disruptions to operations and workforce stability. Employers are scrambling for ways to assist their employees during this uncertain time. Unfortunately, with the unstable economy and tighter budgets, many businesses are seeing an unprecedented decline in revenue and profits. In a panic, businesses may initiate mass layoffs, which can, in turn, hurt their reputation and overall employee morale and performance.
While such a reduction in workforce may be inevitable, employers can consider trying to avoid that outcome with the following key practices.
1. Transfer Employees
Moving employees to another department can help the company adjust to temporary dips in business. For instance, if the company reduces activity or spending in one department, the company could temporarily transfer employees to another department where there is a greater need.
2. Reduce Hours/ Change to Part-Time
Hourly employees can be placed on a reduced-time or part-time schedule, and overtime hours can be reduced or eliminated entirely. Full-time employees may jump on the idea of going to part-time status for a set amount of time while continuing to receive benefits.
3. Job Share / State Sponsored Work-Share Programs
Start a Job Share Program: job sharing allows two employees to work a reduced schedule in a job that normally would be filled by one full-time employee. Inquire about your state sponsored shared-work programs to provide employers with an alternative to layoffs. Under these programs, the employer temporarily reduces the hours of a group of employees, and the affected employees collect partial unemployment benefits.
4. Reduce Pay
Pay cuts are difficult for employees, especially those living paycheck to paycheck, but they can be easier to swallow if employees feel it is a shared sacrifice. Because of this, many companies apply pay cuts across the board. If your company has traditionally offered regular merit or cost of living increases, merit pay freezes may also be an option.
5. Cut Wages from the Top Down
Leaders can protect the financial position of the company by forfeiting their paychecks. True leaders make sacrifices before they impose sacrifices on others. For instance, our client Raising Cane’s is leading by example, Raising Cane’s CEO, Todd Graves and his co-CEO AJ Kumaran– are forgoing their salaries during the crisis, calling it a “no brainer”. #impactful solutions
6. Freeze On-boarding
Consider enacting a hiring freeze until business picks back up. This will allow the company to consolidate several positions or departments. It can also serve as an opportunity to restructure departments.
7. Freeze Bonuses
In addition to cutting wages of the highest-earning employees, freeze bonuses as an alternative to layoffs.
8. Reduce Non-Employee Workforce
While this causes some turmoil in the lives of temporary employees, the employer does not have the same commitment to these employees as to regular employees.
9. Encourage Use of Paid Time Off
In the event the employer decides that a location needs to close, employers can encourage their employees to use accrued paid time off, to the extent the employer reasonably expects the closure to be temporary. This measure will not reduce wage costs, but it can reduce operational costs.
10. Allow Salaried Employees to Take Voluntary Unpaid Leave
Some employees might welcome a sabbatical, which is longer than a furlough, but still guarantees that the person can have his or her job back afterward.
11. Exit Incentives
Rather than laying off several employees, consider offering a severance and early retirement option to a top employee near retirement age.
12. Institute Mandatory Unpaid Leaves or Furloughs
Unlike layoffs, furloughs involve putting employees on a period of definite or indefinite unpaid leave with the expectation that they will at some point return to work. According to a recent COVID-19 Talent Survey, 27% of companies plan to conduct furloughs in the next 3 months.
It is not easy to be a manager or entrepreneur today. We always carry a responsibility for the people who work for us. This is our highest calling. If you have to layoff, do it the right way and with compassion. Take care of both the people being laid off and the survivors.