With the ensuing economic crisis in the aftermath of the coronavirus outbreak, many employees have found themselves furloughed if not laid off entirely.
The support of many world governments has mitigated some of this financial damage but that can only last so long, and the prolonged damage to the economy will likely see many companies scrabbling for cash for the near future.
This unfortunately means that more layoffs are a possibility. There are other solutions, however, and the financial recovery that needs to happen post-pandemic will need as strong a workforce as possible to guarantee its success. Here we’ll go through some of these alternatives that will better safeguard the economy whilst cutting down on business costs.
If you’re a businessperson or an investor also seeking advice on how to spread your capital during the post-pandemic recovery period, you should check out this piece by Javad Marandi.
Communication and Commiseration
Before delving into the possible alternatives, some mitigating techniques should be considered in the event that you have no choice but to lay people off. The current situation isn’t due to some office politics, everyone knows that there is a pandemic, that both businesses and individuals alike are suffering, so for a business to keep its cards close to its chest is a poor move.
Instead focus on communication and transparency so that you’re upfront, managing expectations, and being completely honest with the financial health of your business going forward. This allows employees to consider and get to grips with the possibility of being laid off, so it won’t sting so much when it does happen, and some will even have scouted alternatives to fall back on. If doing this, also be specific, don’t overpromise, and stay away from empty platitudes which employees will likely see right through.
As for commiseration, this won’t be the same for all businesses but there are likely ways that you can cut back before resorting to layoffs. This essentially means that the employees should see the financial squeeze at every level of the company. If they start getting laid off whilst higher-ups are enjoying unnecessary company expenditures, then they will obviously feel that the reasons behind the layoffs aren’t genuine. Many CEOs during this period have taken cuts to their own salary before leaving their employees without a job. If layoffs have to come, then perhaps it’s best that employees see you really did try to limit costs at every level of the business.
There is a compromise between employment and full layoffs, and they’re called furlough schemes. The UK government is matching 80% of the wages that employees need whilst at home to make maintenance payments, taking the stress off of employers and their businesses since they can keep the employees ready to return to work when things die down without it being too heavy a cost.
When seeking layoff alternatives, you’re going to need a lot of ideas. This will be more or less viable depending on the size and employee population of the company involved, but sometimes opening the floor up for ideas may be the best course of action.
Some CEOs and other managerial elements in corporations are hesitant to give up the illusion of control since crowdsourcing ideas is a tacit admission that you’ve run out of your own, but it doesn’t need to end in chaos and an upheaval of the company’s chain of command. Showing an interest in the ideas of your employees can also build rapport and company loyalty, increasing the likelihood that they will buy into whatever solution you do decide upon.
It should be expressed during these crowdsourcing stages that lower capital requirements, lower risk, and an increased job retention rate are the main objectives that need to be satisfied.
Use Time Economically
This is perhaps the foremost preventative measure when it comes to avoiding layoffs, which is simply reducing the time spent in work and so the costs of your employees working. This could take the form of a reduced, four-day workweek in non-essential roles to reduce staff costs.
The option for half-time work can also be put forward since some employees might agree to work less time for less pay if they know it could save theirs and their colleagues’ jobs in the long run.
In more extreme circumstances, unpaid leave in the form of a sabbatical may be a viable option too, as employees may be more amenable to the idea if they know the current state of the company. Other similar forms of cost-reduction are the banning of overtime and the reduction of vacation days available to your employees, or at least a “use it or lose it” policy for vacation days.
Shave Staff Costs
To round off, there are a whole bunch of additional costs that go into maintaining employees that can be shaved away with little to no immediate detriment towards them. This usually involves the slowing down of standard company practices like stopping raises and pausing retirement fund payments. If these actions are taking place, it also stands to reason that there should be a freeze on hiring too, since you don’t want to invite more people onto a slowly-sinking ship that needs its leaks plugged.
Deferred compensation for work or outright pay cuts are also an option, preferably done with the consent of the employee. Speaking of temporary salary cuts, it’s best that the most drastic cuts occur on those employees who can take it, meaning you shouldn’t decrease the pay of those with the lowest salary range since they’re the most at-risk of being laid off.
Know Your Contracts
This goes for both company bosses and employees. Any changes may need to be noted in writing as they will go against what is stated in contracts that have set levels of compensation and set schedules. This may involve negotiation in order to change the terms whilst minimizing the breach of contract taking place, so that a solution is reached that’s cost-reductive for the company but convenient for the employee.