According to the National Federation of Independent Business (NFIB), the nation’s largest small-business organization, layoffs by small businesses have hit record levels. “The small-business economy is weak everywhere,” says William Dunkelberg, NFIB’s chief economist.
Small-business owners are traditionally reluctant to make layoffs their first cost-cutting move. While big companies expand and contract their work force with relative frequency, small companies tend to view their investment in people with greater reverence. Conditions will at some point turn around, and it becomes more difficult and expensive to bring good people back later.
Under current conditions, small firms are seeking ways to cut worker costs without cutting them loose altogether. Some non-layoff strategies include:
• Institute a four-day work week (with shortened hours) for some employees.
• Eliminate office space, phones and computers and allow certain employees to telecommute.
• Freeze new hiring, eliminate current job openings and further reduce staff via attrition.
• If some employees have less to do because business is down, redistribute responsibilities throughout the business.
• Reduce or eliminate raises and bonuses or apply an across-the-board pay cut.
• Eliminate as much overtime as possible. Create a new overtime policy and restrict its use to select employees and circumstances.
• Reduce company pension plan contributions and increase the employee portion of health insurance premiums.
• Beware of substituting expensive temporary help for full-time employees. With less staff, using temps is tempting, but you’ll have to resist.
You will also consider voluntary exits, furloughs or temporary layoffs. With the right financial incentives some employees may consider leaving voluntarily. Be sure to seek legal advice for this approach, however, to avoid discrimination lawsuits.
Some businesses that never considered such measures before are trying out telecommuting and a four-day work week. They save overhead costs while employees save on commuting costs.
Before deciding, consider which of your employees would be a good fit. High performers with self-accountability will do best. Also consider the impact on yourself and others. Depending on your current style, you might now have to “manage by results” rather than the more traditional “manage by observation.” •
Daniel Kehrer can be reached at
editor@business.com.
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