Far too often, large and small companies assume that layoffs are the best response to lower earnings and declining profits. However, since you’ll probably need to provide many of your workers with fairly sizeable severance packages, you may have to wait six months or longer to really reap any benefits. Furthermore, by that time, you may need to start rehiring again – possibly saving your company very little in the long-run.                                                                                                           

For these and other reasons, it’s often wise for an employer to avoid a layoff – or at least a large one. Here are some ways you can often cut down on expenses so that a layoff won’t be necessary (unless your company finances are beyond repair).

Cost-Cutting Steps that Can Help You Avoid Layoffs

Freeze wages. Give serious thought to asking your highest paid company executives to accept this “freeze,” too. While this move is rarely popular, it has been used successfully in recent years since most workers would prefer lower wages – over a specific timeframe – than none at all;

Stop hiring “permanent” new employees when others retire or move away on their own accord. Make it a point to just use qualified temps (willing to work for reasonable wages) to fill in these openings;

Ask employees to forfeit weekly hours. While this usually means every hourly worker may have to work harder for less – it sure beats standing in an unemployment line;

Continue honoring past contracts – but then stop offering extensive employee benefits to new workers – unless or until the company’s earnings pick up considerably;

Switch to a four-day work week. Depending upon your industry, this often helps many companies save sizeable amounts of money;

Review your telecommuting policy. If it’s working well and helps to minimize employee expenses, then keep it. Otherwise, if it’s not very cost effective or you think you can obtain better work from employees in a brick-and-mortar setting (like Yahoo), let everyone know that this privilege is not absolute and can be withdrawn at any time;

Consider short-term, possible rotating furloughs.  Asking workers to take one week off every month or six weeks can prove very cost effective. Just make it clear how long the furloughs will continue and require all employees to take part in the furloughs – this latter point can help improve everyone’s morale;

Give serious thought to permanently reducing paid sick days off and paid vacation periods. Nearly everyone would rather be stuck in town with a job without vacations (or very short ones) -- than marooned at home because their job has ended.

If you’ll honor your employees with meetings on these topics, supplemented with specific and explanatory emails, you can make it much easier for everyone to accept these new changes. Just try to return to the former status quo – if at all possible – as soon as you can. Otherwise, you may start losing your best and brightest employees who can always afford to look elsewhere for work.


To obtain help with handling all of your Georgia business planning needs, please contact Shane Smith Law today.  You can schedule your free initial consultation with a knowledgeable Peachtree City estate planning attorney by calling: (770) 487-8999.

Shane Smith
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