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Three alternatives to laying off staff members

In this blog, I had intended to discuss the tips and strategies for retaining right-fit employees beyond the training process. It occurred to me that discussing employee retention when so many companies are in the midst of downsizing seems a bit contradictory. So, I thought it best to address the topic of layoffs before we discuss additional strategies and tactics for employee retention.

Before implementing sweeping layoffs, the first question any organization should ask is, “Is laying people off the only and best alternative?” Recognizing the valuable asset of the workforce and understanding that when business improves, and it will for many companies, rehiring and training new employees will be a significant cost to the organization, not to mention the loss of intellectual capital that moves down the road with the employee.

Alternatives to layoffs

1. Pay cuts: As reported in the May 4, 2009 issue of Business Week, one alternative that is coming into play is being dubbed the 10 percent (or so) solution. Executives at companies such as Hewlett-Packard, the New York Times and Best Buy are cutting pay. While this strategy seems simple, no one gets fired and the organization does not have to do a massive rehire when the economy makes a comeback, there is risk. Most employees expect cuts in or a hold on raises and bonuses, but their base pay is supposed to be protected. However, most people would rather have a pay cut than be unemployed. This does not mean that wage and salary cuts are an easy way out. There may continue to be anxiety over the possibility of future layoffs after the pay cuts.

   The process for handling pay cuts is as important as the process for handling layoffs. Here are tips for implementing a wage or salary reduction that will help to mitigate the damages such as low morale and anxiety:

   • Communicate openly and honestly – explain the reason for the pay cuts; tell employees that you value them and that you are doing everything you can to avoid layoffs.

   • Implement pay cuts incrementally based on performance.

   • Avoid cutting the pay of top performers.

2. Maximize resources by reassigning employees to other departments and job functions. If you have the ability, move people around to other jobs in the organization, pulling from areas where labor is less needed and moving to areas that have holes to be filled or that are better able to handle the additional labor costs. To do this effectively:

   • Communicate openly and honestly – explain the reason for the move. Do not soft-pedal the impact on the employee. For example, do not tell the employee, “This will probably be a temporary move” if you know that it is a permanent reassignment

   • Assess the employee’s knowledge, skills and abilities (KSAs).

   • Match them with a job that fits their KSAs.

3. Assess the company’s organizational processes to be sure that you are operating as lean as possible, taking measures to eliminate waste in human and physical resources in order to bring money to the bottom line. When organizations take a hard, objective look at processes, it is often surprising the waste that is discovered. This waste, when eliminated, can contribute significantly to the profits of the organization, thereby reducing or eliminating the need for drastic measures that affect the workforce and inhibit the company’s ability to deliver service to the customer.

After the September 11 attacks on the United States, as you can imagine, attendance at the Walt Disney World and Disneyland Resorts dropped to their lowest levels in 30 years and yet no front-line employees were laid off! Raises for salaried management were deferred for one year; employees, salaried and hourly alike, were reassigned to different areas to better allocate the human resources; hours were cut from front-line jobs, depending on the status of the individual; salaried and front-line employees were given a chance to take vacation time that was already on the books.

When the business came back, and it did in December for the holidays, Disney had retained its intellectual capital and those very important right-fit cast members (employees), maintaining the company’s ability to deliver the magical experience to guests.

Please feel free to contact me at debbiez@lsapartners.com. You may also want to visit www.globalLSA.com or www.lsapartners.com to see offerings from LSA Partners.

Respond to this blog column with your questions, thoughts and comments on alternatives to layoffs. What methods have you used? What has worked? What hasn’t? And, why?

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Filed Under: People Management    |  Tags: change management, economy, employee pay, employee retention, hiring, maintenance leadership, maintenance management, maintenance manager, management, motivation, recession, talent management

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