In the current economy, many organizations may be considering a reduction in force. However, laying off employees doesn’t have to be the only answer to reduce costs. In fact, seeking alternatives to layoffs may save employers significant time, money, and damage their employer brand pretty similarly.  Often, layoffs carry their own hidden costs. These include hiring new staff when business picks up, serious short-term and long-term impact on employee engagement and productivity, and potential legal action if employees feel they were unfairly or non-compliantly terminated. In part one of this two-part series, MP’s HR experts outline powerful alternatives to layoffs employers should consider. 

  
3 Powerful Alternatives to Layoffs 

1. Conduct furloughs. 

Organizations could use furloughs to save money and retain their workers.  There are a few different ways to furlough employees. In some cases, employees are put on involuntary, unpaid leave. Another way to furlough staff is when an employee works reduced hours for a period of time, with proportionate pay cuts. For some organizations, a furlough could mean the entire organization shuts down for a short period of time, certain work hours, or specific days of work weeks. Employers should note that if they place workers on furlough, they must not reach out to them with questions or to handle any work tasks. Employers must also consider how a furlough will impact employees’ access to benefits. If the employer can continue to provide employees with the same access to benefits through the furlough, this will help significantly with employee engagement morale, engagement, and retention. Lastly, organizations should run a discrimination analysis before implementing furloughs as alternatives to layoffs. This analysis will reduce legal risk and exposure. Employers can work with HR experts, like the ones at MP, to do this. Benefits administration and services, such as MP’s, could assist employers with handling complicated benefits scenarios for furloughed employees.  

2. Offer a sabbatical program. 

Sabbaticals are common in academia, but could still be applicable in the corporate and nonprofit worlds. While sabbaticals are typically paid, employers could also choose to offer an unpaid sabbatical. The sabbatical should be rolled out as an option to take off extended time to rest, pursue personal goals, or complete training or education to further their career.  These alternatives to layoffs may be especially welcome in fast-paced, demanding field, such as finance. In practice, the sabbatical will be similar to a furlough. However, employees may choose and use it for personal development. Employers must ensure that, as with a furlough, they do not reach out to employees with questions or tasks during the sabbatical. They must also consider how this will impact access to benefits (ideally, it should not). Lastly, to avoid any concerns of discrimination, employers should offer the option to take a sabbatical to all employees who meet pre-set criteria.  Organizations should not intentionally (or unintentionally) discriminate against employees by not offering sabbaticals. Employers should consult with HR experts before implementing a sabbatical program for the first time.  

3. Making pay cuts.

Pay cuts are common alternatives to layoffs. Organizations should be mindful that this tactic may be especially painful to employees living paycheck to paycheck. These are best practices for implementing pay cuts: 

• Review relevant employment laws and ensure employees will still be paid at least minimum wage. HR experts, like the ones at MP, can assist with this. 
• Make the cut uniform across all departments. Do not target specific departments. It’s critical to avoid the appearance of discrimination. 
• Communicate about the pay cut with plenty of notice. Give employees time to plan for it. 

• Share the reason for the pay cut and tell employees it’s meant to be temporary. Let employees know there will be continued communication about the pay cuts as time goes on—and follow through.   
• Designate a point of contact and encourage employees to reach out with questions. Open, constant communication will be critical to reducing the impact on employee morale. 

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