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You are here:  Home  →  Saying 'No' to layoffs

Saying 'No' to Layoffs

When tough economic times roll around, the first impulse is to layoff people to stay in business. But, could this be a shortsighted response? A succesful business should balance the profit/loss from this strategy. If you factor in the cost of unemployment insurance and hiring and training new employees when business turns around,  layoffs may end up costing you more than you save. Employers often overlook or underestimate the true costs of layoffs. Expenses for planning, legal fees, severance, outplacement and redistributing work all add up. Layoffs also reduce productivity among survivors and cost a company institutional knowledge.
Let's look at some creative ways to cut costs in lieu of layoffs.

> Freeze hiring
> Reduce hours
> Delay raises or cut salaries
> Eliminate bonuses
> Redeploy workers in busy business segments
> Offer early-retirement packages
> Cut temporary staff
> Trim spending on training, travel, marketing and other perks
> Ask vendors for discounts
> Move to a smaller office space and allow some workers to work from home
> look for work sharing with firms that are not direct competitors.
> Cross train blue-collar factory workers into white-collar sales and office jobs

Following mass job cuts at the end of this year, two-thirds of U.S. employers plan to freeze their staff size for the first quarter of 2009, according to a new Manpower Inc. report.

The Milwaukee-based employment services company found that 67% of nearly 32,000 employers surveyed expect neither to hire nor fire workers in the first three months of the year, the largest such indication of reticence since 1992.

Caution signs follow early December's report by the Labor Department that employers cut 533,000 jobs last month, the biggest monthly reduction since 1974 and the deepest in percentage terms since 1982. In the last three months, companies eliminated 1.25 million jobs.

The Federal Reserve Bank of Chicago reported that 26 regional economists and business leaders participating in the bank's economic outlook symposium December 12 have forecast unemployment to rise from its current rate of 6.7% to 7.8% in 2009, which would be the nation's highest since 1992.

It would be in the employers best interest to look for creative ways to try and retain their existing workforce.