Alternatives to Layoffs: Part I

If your objective is to reduce people-related costs, layoffs are a fast way to go.  But many companies are looking for ways to reduce costs without losing good talent.  Here is a summary of our report on optional strategies that could be used with, or instead of, layoffs and are proven effective in reducing people-related costs.  For a copy of our full report including more cost reduction tips and techniques click here.

Strategy #1:  Alternatives to Layoffs

Laying off people means losing the investment you’ve made in hiring and training.  It will cost you more to replace the lost people when growth resumes — if you can find similar talent.  Additionally, layoffs can damage trust, respect and loyalty, as well as create high stress levels.  Sometimes they’re unavoidable, but consider these alternatives.

  1. Cut overtime.
  2. Cut or reduce travel, purchases of office supplies and equipment.
  3. Reduced workweek.  Nevada casinos recently instituted four-day workweeks as has Pella Windows, AK Steel, the City of Atlanta, and various hospitals.
  4. Eliminate or scale-down annual celebrations.  You can still celebrate achievements, but be consistent with the cost-reduction theme.
  5. Hiring freeze.
  6. Reduce/eliminate bonuses.
  7. Unpaid vacations.  Dell is offering employees up to five days without pay through January.  Honda is also offering voluntary unpaid vacations for U.S. employees.
  8. Voluntary or enforced furloughs.  The Seattle Times mandated a week of unpaid furlough for 500 workers amounting to $1 million in savings.
  9. Salary or wage freezes.
  10. Merit increase freezes.
  11. Pension cuts.
  12. Suspend 401(k) matches, as Kodak announced recently.
  13. Offer flexible work schedules to reduce hours.
  14. Cut pay by some percentage across the board.  Motorola recently implemented salary cuts.
  15. Schedule a work shutdown.  Cisco planned a four-day end of year shutdown. 
  16. Exit incentives to encourage voluntary quits (Watch out — you might lose the wrong people with this one.)
  17. Offer additional time off instead of pay increases.

Next:  Strategy #2 — Involve Employees in Cost Reduction

For a copy of the full report, click here.

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