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Downsizing
can have long-term negative impacts on your business. It can breed
destructive ill will among remaining employees and leave shortages in
productivity. To avoid this, consider other options to remaining profitable
in a down economy.
Examine
all your costs. Consider giving each department a mandate to cut expenses by
a certain percentage. You set a guideline regarding overhead expenditure,
but the department head, or team, has the power to determine what is
important and what isn’t. Giving them some discretion over what is cut and
what is not helps sustain respect and teamwork. Be sure to communicate that
this is in lieu of lay offs. Team members are more likely to accept the
changes when they understand what is at stake and that you are taking steps
to protect their jobs.
One
means of tightening the belt is creating a staggered workweek. While team
members reduce their hours, they can choose to work which days of the week
they want. Some may choose Monday through Thursday, and others Tuesday
through Friday. If this option is chosen, be sure to clearly communicate
that all functions and operations must be covered.
Another
place to look before implementing lay offs is benefits. Have open
discussions with your team to assess the situation and explore options. One
option may be to increase employee contributions to their health-care plan.
You may also want to shop different health plans. When the economy is tight
companies become more competitive with their pricing strategies. If your
company makes contributions toward employee retirement plans, consider a
temporary suspension of your contribution. Be sure to communicate any
benefit changes early to your team.
A
creative strategy for boosting productivity and pushing through trying times
is lowering base salary and starting an incentive bonus program. You may
want to do this company-wide or among your senior level people. Of course,
this program needs to be based on being able to achieve a certain amount of
profit. The better the company does, the higher the bonus. This is not only
a strategy for avoiding staff cuts, but a way of motivating team members to
perform their best and be more productive.
Whatever
strategies your company chooses, it’s critical to communicate the policies
and changes clearly. Let your team know the financials, the choices and why
the decision was deemed the most appropriate at the time. Remain committed
to implementing these strategies on a temporary basis. Assure the team that
when times are better, all changes will be reconsidered.
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