What to Consider Before a Layoffby Cherryll Sevy, CMC Download this article:
 What to Consider Before a Layoff (PDF, 327KB)
 Before you send valued employees out the door, it’s prudent to consider many, varied alternatives to a layoff. While reducing the number of employees is one way to cut near term expenses, there are several other ways to reduce expenses without the potential long term impact of losing your most valuable resource---your people.
- Fix the Leaks.
Review all cash outlays as to whether or not they are "expenses" or "investments". Control expenses and evaluate investments to ensure the value exceeds the cost. Remember, your employees are an investment, not an expense. Communicate to the company the cost control measures you are taking before you move towards your staff.
- Cut or eliminate executive bonuses and perks.
This is a very powerful statement to your entire organization. Recognize that employees read almost daily of the excesses in executive compensation. While my client companies and most organizations have reasonable, competitive pay practices, the highly visible, greedy few, have led to a public disgust of such egregious behavior. Distance yourselves from this perception and make a positive statement of solidarity that we're all in it together. If it is perceived everyone is not sharing the pain at this time, don't be surprised if motivation and teamwork deteriorate to adversely affect today's results and tomorrow's future.
- Freeze Salaries, Bonuses and Raises.
Consider a company-wide pay reduction. In the last recession, a local semiconductor company asked its employees for cost reduction ideas rather than a layoff of their friends and colleagues----everyone agreed to a 10% pay cut until things improved. The morale and team spirit got them through that period and they continued to be one of the premier Silicon Valley employers of choice.
- Offer Time Off-paid or unpaid.
Recently, San Luis Obispo County employers were given the opportunity to voluntarily take up to 15 days of unpaid time off. For many, time off (even unpaid) is highly valued and it reduces payroll costs. Companies can also consider a 10% reduction in pay by shutting down every other Friday. It has become quite common for employers to schedule plant shutdowns over the holidays and require either unpaid time or use of vacation time coupled with the holiday pay. There are a variety of options to consider.
- The California Work Sharing Plan
This plan offers employees the opportunity to apply and receive a pro-rata wage replacement (unemployment benefits) when hours are reduced due to business slowdowns. If your company expects a slowdown, employers must apply to participate before the actual need. Go to our forms and documents page for an application.
- Be aware of legal risks of a layoff.
If the company employs more than 100 employees, and is considering a large reduction, the company may be covered by the federal WARN Act which requires 60 days notice. It is also essential to carefully review each employee considered for a layoff to mitigate any potential discrimination or retaliation claims. Employees remember the decisions made in these difficult times. Prudent, thoughtful choices made today will ensure you have a motivated, committed and strong team of talent when the economy improves. It will improve, it always has! If you are considering talent strategies, would like more information or simply want to share your thoughts on this, please contact Cherryll. Cypress Ridge Solutions, creating real solutions for real people with an eye on bottom line success
If you would like more information on speaking topics, click here for a video demo and to see a list of presentations Cherryll is currently making to groups. |
