Four layoff alternatives to consider in economically turbulent times

Economic turbulence can be unsettling for both employers and employees. As payroll is typically one of the largest expenditures for a business, staff reductions may seem like the first avenue to take for immediate cost cuts.

While layoffs can provide short-term relief, they may come with long-term operational and cultural ramifications.

Staff reductions can immediately impact an organization's culture. Employee morale can decrease and distrust in the company can build when these matters are not managed with care and communication. Additionally, employees may begin to feel anxious about their own future with the business and may even begin to look elsewhere for employment, which can greatly affect an organization's day-to-day operations.

With employees top of mind, and to offset the financial impact to their companies, business owners should get creative and consider the many alternatives before resorting to workforce reductions, including the four below.

Salary reductions and furloughs

If the economic situation appears short-term, senior leadership and upper management could accept temporary salary reductions until circumstances improve. However, if the situation is more serious and all levels of the organization are impacted, overhead costs can be cut with job sharing.

With this strategy the number of employees remain the same, but two positions are combined into one and filled by two part-time employees. A furlough or mandatory leave of absence for non-essential employees may also allow employers to take additional time to evaluate a situation before determining if permanent layoffs are necessary.

Reduced or remote scheduling

A shift to a permanent remote work policy may potentially save on operating costs, such as leases and travel, offering more budgetary leeway to avoid layoffs.

Another approach, especially for companies where remote work is not feasible, is moving to a four-day workweek to reduce hours worked and salaries by 20%, which has the added benefit of giving employees more work-life balance.

Benefits and perks scale back

If financial circumstances are more dire, but leadership wishes to avoid layoffs at any cost, employers can turn to reductions or cost-saving changes to benefits and perks for all employees. Temporarily lowering or pausing the company's 401(k) match, relying more on virtual business meetings in place of face-to-face meetings that require travel expenses, and cutting employee bonuses can help ease a company's economic burden without letting people go.

However, like salary reductions, scaling back on benefits and perks should first begin at the leadership level before expanding to other areas of the business.

Streamlined workflows

As employers are auditing their company for savings, they should also evaluate the company's processes and workflows for efficiency. They may find an employee could be more productive in a different department or role or a process is more labor intensive than necessary.

Relying on digital software, where applicable, may help streamline workflows by saving on time and labor. Asking for employee feedback can help identify gaps in process and workflow efficiency.

In fact, employees may have their own ideas to streamline processes, as they likely rely on these processes daily to complete work.

With every decision, it is important to determine what it will cost. No matter which avenue is taken, the most important thing business leaders can do is to openly communicate with employees, including being transparent about the state of business.

Open and honest communication can increase employee buy-in in times of uncertainty and help employees rally around the company.

• Bob McIntyre is a director of service operations with Insperity, a leading provider of human resources offering the most comprehensive suite of scalable HR solutions available in the marketplace. For more information about Insperity, call (800) 465-3800 or visit www.insperity.com.