In today’s economy, organizations across all industries may be considering a reduction in force.  However, laying off employees isn’t the only way for organizations to reduce costs.  It’s worth noting that alternatives to layoffs are often recommended because they save employers time and money. They also protect a company from potential damage to their employer brand and overall reputation.  Layoffs often eventually trigger costs, and they may not save money in the long term.  The costs of layoffs include hiring new staff when a business is done with its hiring freeze, serious short-term impact to employee engagement (and productivity), and even potential legal action. Employees may sue if they feel their termination was discriminatory or noncompliant with the WARN Act. In part two of this two-part series, MP’s HR experts outline four powerful alternatives to layoffs employers should consider.  

  
4 Powerful Alternatives to Layoffs  

1. Cross-training employees and implementing a hiring freeze.

Many organizations could cut costs significantly if they didn’t hire temps, interns, assistants, or seasonal employees.  Employers could train their core staff to pick up the responsibilities of these types of employees.  Training software, such as MP’s, is especially beneficial for implementing this layoff alternative.  Organizations can customize training for employees who need to pick up new tasks and track their progress.  They can also allow employees to take training from anywhere and anytime with a mobile device or computer.   

Cross-training and hiring freezes as alternatives to layoffs come with compliance and management considerations.  Firstly, to reduce the damage to employee morale, employers could note that this arrangement will only be for a short time until business picks back up.  Secondly, managers should take these new responsibilities into account and balance their team’s workloads appropriately.  With new responsibilities, employees may not be able to accomplish as much as they did previously during their work weeks.  Lastly, if hourly employees pick up new responsibilities, employers should reevaluate whether they are still properly classified as exempt.  If they are, managers should carefully decide if these employees should be allowed more work hours to complete their new (and old) job duties.  It must be communicated to employees if they won’t be allowed more work hours.  Per the Fair Labor Standards Act (FLSA), the company is responsible for paying for all time a non-exempt employee works—whether it’s planned or not.  Furthermore, an employee working beyond 40 hours a week may be entitled to overtime pay if they’re non-exempt.  Employers should consider using time and attendance software, such as MP’s, to track employee hours and ensure they’re being paid in a compliant manner (especially if they’re non-exempt).   

2. Implementing job sharing programs.

Another way to reduce costs is to implement job share programs.  If employers can still retain more of their staff, even if they need to reduce the roles they’re paying for.  With a job sharing program, the organization allows two employees to share the duties of a job typically filled by one full-time employee. Each employee works reduced hours (and takes attendant pay cuts).  Employers should note that this arrangement may impact employees’ access to benefits.  Employers should also ensure clear, open communication about this change.  They should tell employees that the intention is for the program to be temporary.  If the business can do it, they will return people to their full-time roles.  Finally, managers should prepare to support employees through this change.  Sharing the duties of a position may come with some awkwardness, frustrations, and communication and logistics challenges.  It will not be a simple change to make immediately. Using talent management software, like MP’s, may help managers and employees communicate and collaborate better as they navigate job sharing.  

3. Participate in worksharing programs.

Some states offer worksharing programs, which are different than job sharing programs.  A workshare program offers employers support to reduce an employee’s hours (often significantly).  The workshare program helps supplement the employee’s income with partial unemployment benefits equal to the percentage their hours were cut.  While the employee doesn’t continue to make their full salary, they do get to retain their job.  The employer maintains its workforce and avoids the costs and challenges of rehiring later, being understaffed, etc.  Additionally, the state benefits because they’re not paying full unemployment benefits.  Employers participating in worksharing programs should note that every state’s program has different rules, criteria to qualify, etc.  Companies with remote employees and offices in multiple states should note that some employees may be eligible for different programs, depending on where their workers perform their jobs.  As with other options, employers should ensure open, honest communication with affected employees.  Organizations should work with an HR expert to review worksharing program options and ensure compliance while participating in them.   

4. Cutting or reducing benefits and perks.

Temporarily reducing or cutting benefits may save an organization some money.  These are some examples of actions employers could consider taking that will have a significant impact.  They could be taken together as a group, or staggered: 

• Stop providing free meals and snacks 
• Cut down budgets for travel  
• Utilize videoconferencing instead of in-person meetings that require travel 
• Stop providing corporate swag, such as t-shirts, pens, etc. 

• Lower or temporarily stop 401(k) matching (consult with your 401(k) provider for more guidance)