NFIB

Five Alternatives to Layoffs for Small Businesses
03/ 28/ 2002

It's always painful for a small company to lay off workers. The atmosphere at a small business frequently allows employees to become not only close and valued co-workers, but also friends. But during such difficult economic times, many companies are forced to consider drastically cutting costs. Cutting staff is often one of the best ways to maintain control of your cash flow, but in today's Workshop, Jeffrey Moses gives five viable alternatives to layoffs.

1. Establish a hiring freeze.

Current employees may need to work a little harder to handle the responsibilities of a position for which a new employee would normally be hired. But explaining the alternative should cause everyone to pitch in and do their part.

2. Move employees to different departments.

Though it could mean an employee is faced with a new job description, it's better to find an alternative use for a valued employee than to simply let that person go, as long as that employee is open to the change.

3. Cut your salary first.

Don't fool yourself into thinking employees will continue to give your business the same amount of dedication after you've cut their pay. If you must make salary reductions, employees will be more understanding if you start with yourself.

4. Consider cutting back the work week.

While this is technically a reduction in salary, employees will be more agreeable when a cut in pay is coupled with a cut in work.

5. Offer early retirement to those close to the retirement age.

Such an offer must be accompanied by normal retirement benefits, since few employees will want to retire early if doing so means sacrificing the quality of their retirement in any way.

In cases when layoffs are unavoidable, it's almost always best to make the layoffs all at once, rather than to do so periodically and leave everyone else hanging. Be open and honest. Few things are more detrimental to a company than a workforce that is unsettled because of uncertainty about job security.

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