Laying off employees can have several negative effects on the company. It can disrupt employee morale, and cause other employees to leave their jobs prematurely. It can send a bad message to investors, vendors and customers. Company downsizing is also a lot of work for the employer, and has financial and legal implications that must be considered.
Before your business experiences any financial difficulties, it’s a good idea to implement staffing strategies designed to prevent or minimize company downsizing. Take a look at the goals most important to your company, and hire based on the skills you need to reach them. Hire employees that have skills in different areas so they can be re-assigned to another role if needed in the future. Also, have a plan in place to groom candidates for leadership roles in the future.
If you do feel you need to re-evaluate your business expenses, here are some alternatives to downsizing:
1) Communicate with Employees and Ask for Feedback
Before you decide to start laying off employees, ask for their input on how the company can cut costs and be more efficient in its operations. Also, instead of downsizing, ask employees if they would be willing to go with a less extreme option. A few examples of what to offer employees that can help you cut costs are reducing hours and pay cuts.
2) Cut Down on Vacation and Sick Pay
Benefits such as health insurance are really important to most employees. But one of the better alternatives to downsizing is cutting back on vacation and sick pay. Many employees would rather have less paid time off than lose their job. You can also avoid company downsizing and cut costs by offering unpaid vacation days.
3) Allow Employees to Work from Home
One of the growing alternatives to downsizing in 2017 is to decide which employees can do their jobs outside of the office. You can greatly reduce operating costs by giving employees the option to work remotely.
4) Offer Job Sharing as an Alternative to Downsizing
Instead of laying off one employee and keeping another, you can combine their duties into one position. Though they will work less hours (at least temporarily), both workers remain employed. In the meantime, your company still cuts costs.
5) Reduce Perks and Extras
Until your business gains financial strength, freeze hiring for any new employees. Avoid company downsizing by looking at what business and employee expenses you can do without for a while. Some examples are employee lunches, equipment and software upgrades, and unnecessary travel.
Be sure to explore all of these alternatives to downsizing before laying off any employees. Sometimes company downsizing is a necessary option, but at least this way your employees will know that you care and tried to avoid it. If you do have to lay off employees, see if you can offer them severance pay and keep their benefits in place for a period of time. Also proactively write them reference letters and recommend resources that will help them in their job search.