Even if you've stumbled onto hard times, the last thing you want to do is lay off your hardworking and dedicated employees. The good news in this not-so-good economy is that layoffs are no longer your only option. Here are a few increasingly popular alternatives employers are adopting to ease the payroll burden:
- Cut salaries. This one's a gamble: While an across-the-board salary cut can hurt morale and may cause some employees to look for greener pastures, it can also keep your company afloat. Be sure to first check any bonus or compensation agreements you've entered into with employees.
- Offer early retirement packages. You can give people a chance to voluntarily leave your ranks, but you can't slant your retirement roster along gender, age or department lines. "Be consistent in whom you're offering early retirement to," says Jonathan Levy, an employment attorney with Fair Measures Corp. in Santa Cruz, California.
- Connect performance with salary. If you structure employees' compensation to reflect their performance, you'll have a built-in adjustment when the business isn't doing so well: "Employees automatically get paid less," says David Goldstein, a labor and employment attorney with Faegre & Benson LLP in Minneapolis.
- Shorten the workweek/offer unpaid days off. These strategies have been tried with limited success, in both France and the United States. If you have no contractual agreements with employees, it's legal, says Goldstein. Sending nonexempt or unionized employees home can be tricky, though-check with the specific laws of your state before proceeding.
- Train a flexible staff. Running a versatile ship, where employees are cross-trained in various jobs, can help during tough times, suggests Goldstein. "Then you can reallocate resources when you need to," he says.
Whatever option you choose, conserving cash and avoiding legal landmines are your primary goals. Consult a lawyer or HR expert before putting your plan in motion.
- Faegre & Benson LLP
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