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:
- 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.
- Next,
identify the competencies that are crucial to attaining your business goals.
Eliminate only noncore employees.
- 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.
- 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.
- 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.