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HR professionals have the opportunity to play a more strategic role in the business by keeping up to date with the latest HR innovations--technological, legal, and otherwise. This special report will discuss how HR managers can anticipate and address some of the most challenging HR issues this year.

Topics in this special report include:

  • Healthcare in 2012
  • FMLA Paid Leave Initiatives
  • Ethics
  • Social Media
  • Environmental Responsibility
  • Workplace Wellness
  • Classifying Employees
  • Retirement of Baby Boomers
  • Identity Theft
  • Communications

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December 07, 2009
Cost-Cutting? Try These Strategies

Unemployment claims continue to rise, making it clear that many organizations are still relying on layoffs to reduce their payroll costs. Surveys have shown that whether a company has or has not cut its workforce during this recession will influence its decisions regarding other expense-reducing techniques.

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For example, a survey conducted by Challenger, Gray & Christmas found that organizations that had cut jobs initiated more alternate cost-cutting measures—an average of six—than those that had not done layoffs: The latter group used fewer than three other expense-reducing measures. The average number of such measures used by all companies was five. In order of most to least popular among survey respondents, here are the alternative measures:

  • Reduced or eliminated travel expenses (66.7%)
  • Instituted a hiring freeze or reduced hires (61.9%)
  • Reduced year-end bonuses (52.4%)
  • Cut or eliminated other perks (38.1%)
  • Reduced employees’ work hours (28.6%)
  • Eliminated year-end bonuses (26.0%)
  • Reduced tuition reimbursement (23.8%)
  • Initiated a furlough program (23.8%)
  • Reduced or eliminated 401(k) match (19.0%)
  • Reduced year-end bonuses (14.3%)
  • Forced use of vacation time (9.5%)
  • Reduced office space by boosting telework (4.8%)
  • Instituted a 4-day workweek (4.8%)

If you must conduct layoffs, other firms have advice for you. The Human Capital Institute, a global trade group that specializes in talent acquisition and development, collaborated with Taleo, a vendor of talent management technologies, to conduct a large global study of approaches to layoffs. Here are the five top strategies they recommend for layoffs:

  1. Identify the work that is core to maintaining a profitable business. Look at positions, not people, for the functions that are essential. It is sometimes better to eliminate a less critical business unit completely than to lay off the same percentage of people in all units. In the organizations’ survey, 56% of respondents identified their core work.
  2. Next, identify the competencies that are crucial to attaining your business goals. Eliminate only noncore employees.
  3. Protect your brand and your bottom line, especially by thinking through the message that your layoffs will send. The survey found these examples of layoff characteristics that firms wanted to communicate to clients and the public: Efficiency, few people affected, retention of selected talent, fairness, and alignment with strategy.
  4. Communicate with employees constantly. Never let them be surprised by layoff news in the local media; you want to be the first to tell them. Communicating all you know as quickly as you know it helps ensure that you convey your message accurately rather than leaving it to the potential warping of the rumor mill.
  5. Take good care of the survivors once layoffs are over. Don’t make the mistake of thinking they should simply be grateful to have kept their jobs—especially if they’ve gained lots of extra work.

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