Are layoffs my only cost-cutting option?
You can still cut back without shedding staff. Here’s how.
Avery Wasoleck, Partner, Lane Office Furniture, New York City
When costs need to be cut, the first thought is often employee layoffs. Is there a more creative way for my business to achieve savings?
By Elise Reinemann, Fortune Small Business contributor
Layoffs, which can put a dent in company production and morale, are not as efficient as you may think. And the cost of severance packages and unemployment benefits can add up. So you’re wise to pursue alternatives.
Steve Kane, managing director at Kane Partners in Hillsborough, Calif., suggests “spreading the pain.” Instead of bidding your workers farewell, try cutting hours, the pay per hour, or compensation across the board. In fact, some employees may be okay with a reduced workweek that lets them temporarily trade money for time, says Pamela Brandes, associate professor of management at Syracuse University. They might welcome the chance to pursue other interests or care for children or elderly relatives. Brandes also advises rethinking your scheduling: Limit expensive overtime, ask employees to take extra, nonpaid vacation time, and don’t fill vacant jobs.
Try to determine whether the dip is short or long term. Attracting a competent staff is expensive, Kane says. So if the problem is short term, it makes better sense to restructure temporarily rather than terminate employees permanently.
Layoffs can be especially trying for small businesses, notes Brandes, because they disrupt what are often close-knit networks of colleagues. Survivor employees tend to sympathize with departed co-workers and must struggle with increased workloads as they worry about their own job security. But if a layoff is inevitable, Brandes advises you to help your employees by putting the word out to business partners. A supplier or distributor might be looking for talented workers.
Give us your advice: Check out recent “Ask & Answer” questions.
Related links:
Can I tell my employees not to smoke?
Comment
Email
RSS
DiggEmployee Layoff is not a creative way for business to achieve savings. Other better options in my personnel opinion are:
a) Less working hours: You can reduce the incentives and other allowances, electricity bills and other expenses related to it.
b) Reduce advertising costs; during this period.
c) TA/DA of higher officials can be reduced or even cut for a time period. They will be allowed to claim only originals.
d) Communications through emails should be practiced at this time.
e) Kindly ask the employees to switch off all electrical equipments when not in use.
f) personnel use of internet should be restricted.
g) Usage of office vehicles for personnel use should be banned. Log book for this to be maintained. Unnecessary repairs of office vehicles should not be allowed.
The above listed are very simple things; a lot more can be added in the list.
Thank you very much for your post. Absolutely excellent information and very useful for me. Great done and keep posted. Looking forward to reading more from you.
All of the tips suggested are good, but they only address employee and employee-related costs. I’ve found many opportunities over the years to cut overhead costs that often go unnoticed, such as:
1. Transporation, both LTL/TL and small package shipping. Many companies negotiate an agreement then never re-negotiate when the company grows and volumes increased, thus leaving lots of $ on the table. Additionally, with excess capacity in the LTL market, now is the time to renegotiate discounts, FAKs, etc. Just be sure to sign-on with a company that will weather the downturn.
2. Office supplies & equipment.
3. Little things like coffee, water coolers, uniforms, etc.
4. Wireless services.
5. Telephone services.
6. Any other services, e.g. custodial, repair, maintenance.
7. Temporary labor.
It is time consuming to address all of these items, so use your ‘gut feel’ to prioritize and start plugging away. Normally my approach is to go back to my current supplier and ask for a price reduction … if they say ‘no’, then bring in the competition, submit a formal RFQ to the existing supplier and competitors, and then choose the best value for your firm. Don’t forget to lock in pricing for as long as possible, and include a ‘termination for convenience’ clause into the contract.
Happy shopping.
Features-
Smart entrepreneurs are now doing deals in 140 characters or less on Twitter. More -
As more customers choose - or are forced - to fill prescriptions by mail, independent pharmacies are struggling to survive. More -
A Texas hospitality company considers where to invest and where to cut back to weather the recession. More -
How 7 innovative companies are inspiring workers and boosting the bottom line. More -
42 startups duked it out in the world's most lucrative business plan competition. We trailed one team to the bitter end. More -
The Emerging 200 program aims to boost job growth by training inner-city entrepreneurs to expand their companies. More -
These resellers of DVDs, CDs and books make millions from the media industry's leftovers. More
We at Atlanta House Cleaning could not disagree more with the earlier respondent who suggested that cutting advertising costs are another option. A business’ survival depends on ability to attract customers in any business climate. Even during the great depression, over 3 out of 4 people were still employed. This means there will always be market out there that has demands that must be met. Cut what you must, but don’t cut advertising.