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.
- Cut overtime.
- Cut or reduce travel, purchases of office supplies and equipment.
- Reduced workweek. Nevada casinos recently instituted four-day workweeks as has Pella Windows, AK Steel, the City of Atlanta, and various hospitals.
- Eliminate or scale-down annual celebrations. You can still celebrate achievements, but be consistent with the cost-reduction theme.
- Hiring freeze.
- Reduce/eliminate bonuses.
- 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.
- Voluntary or enforced furloughs. The Seattle Times mandated a week of unpaid furlough for 500 workers amounting to $1 million in savings.
- Salary or wage freezes.
- Merit increase freezes.
- Pension cuts.
- Suspend 401(k) matches, as Kodak announced recently.
- Offer flexible work schedules to reduce hours.
- Cut pay by some percentage across the board. Motorola recently implemented salary cuts.
- Schedule a work shutdown. Cisco planned a four-day end of year shutdown.
- Exit incentives to encourage voluntary quits (Watch out — you might lose the wrong people with this one.)
- 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.