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Alternatives to layoffs: finding ways to save more than just jobs.

One of the most difficult components of operating a business is confronting the painful decision to lay off your employees.

Layoffs can create more problems than just an agonizing decision for the employer. It is a morale devastator that can drive existing employees to focus their work hours on new job searches, or leave them with a severe case of "survivor's guilt;" either way, productivity is lost.

But these are not the only issues that surface after layoffs. The cost of recruiting and retraining once the bottom line improves can be more than the initial layoff savings. Consider the time investment and costly mistakes new hires are potentially prone to, as well as the risk of bringing on a weak hire to replace the good hire you had.

Holistically, layoffs look bad for the company. Stakeholders, vendors and customers take note and raise eyebrows when the pink slips are handed out. They wonder if the company is in trouble. Sometimes layoffs are the only option, and if they must be done, do them early and quickly. Make sure the decision is proactive in nature and not reactive. However, they should always be a last resort. There are a number of alternatives to layoffs based on the experience of thousands of small and mid-sized business owners in the member network of The Alternative Board:

1. Reduce the Work Week

If possible, reducing the workweek from five days to four can save jobs. Eight hours is 20 percent of the work week and that equates to significant payroll savings. Don't assume you'll entirely lose the 20 percent productivity from your employees either. Employees will most likely focus more diligently and work harder when they are at work because they realize you're trying to save jobs. Of course, for this and all the other tips here, clearly communicating that the point is saving employee jobs through creative means--not just saving company payroll money--is an important part of keeping that morale high.

2. 'Tis the Season

Offer an unpaid holiday option. For example, instead of taking two weeks off, ask your employees to take four, with two unpaid. Millennials, generally unburdened with mortgages and major family expenses, might embrace the opportunity to go on a prolonged holiday. Showing a good faith effort, you could also implement unpaid holidays intermittently throughout the year so that employees can schedule and budget for them appropriately.

3. Sabbaticals Aren't Just for Educators

Sabbaticals offer employees the opportunity to take time to enhance their skill set. This time will be taken at reduced or no pay, and the employees are generally responsible for any training courses they undergo; however, they will bring more to the table when they return. This by no means is delivered for the purposes of a perk, but they most likely will prefer this option as opposed to losing their jobs.


4. Lend a Helping Hand

A tactic that isn't as common, but can be a viable solution is employee lending. See if other businesses want to hire your employee on a temporary basis while you save on payroll. However, make sure all of the logistics are ironed out between both companies and the employees involved before you initiate a lend.

5. Challenge Your Employees

Finally, challenge your employees to help find ways to save the company cash and incentivize them to do so. An example: for every $1,000 they identify in savings to the company, offer them $200. You'll be surprised about how many things your employees will bring up that you wouldn't have previously considered cutting back on, but are real money savers. When times are tough, every bit helps.

When your team knows you're fighting for them, they will fight for you.

Jason Zickerman is president and CEO of The Alternative Board. He offers a number of alternatives to layoffs based on the experience of thousands of small and mid-sized business owners in the member network of The Alternative Board:
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Title Annotation:RESOURCES
Author:Zuckerman, Jason
Publication:NSBA Advocate
Date:Jan 1, 2009
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