Keep Your Business in the Black Without Giving Employees the Boot

The news is filled every day with reports of businesses laying people off by the hundreds or thousands. Companies of all sizes are being forced to downsize, file bankruptcy, and even close their doors forever. No business is immune to facing problems with their balance sheets in an economy this fraught with potential disaster. But an uncertain future for a small to midsize company is usually harder to manage.

For companies with hundreds of employees, management can choose to lay off people in order to trim operating costs and thereby retain financial capital. But for small companies, there are creative ways to make changes to help the balance sheet while allowing employees to stay, thereby retaining human capital.

Reduce salaries across the board. When faced with the prospect of losing their job, employees might welcome the idea of taking a pay cut instead. But lowering the salaries of just a few people or a group of people will risk fostering grudges or ill-will, which will impact productivity and morale. A more effective solution is to cut salaries for everyone by the same percentage, across the board, including management. It may sound odd, but cutting salaries for everyone instead of laying people off, might make people feel like they are a part of the solution and increase the feeling of workers all pulling for the same team to ensure company success.

Eliminate vacation or holiday pay. Paid vacations and holidays are a benefit offered by most companies, but they aren't dictated by law. Therefore, a company can save money by ending those benefits offered to employees. Although it will mean that employees will not be paid for taking time off, it may also mean that they will take fewer days off, which will increase productivity. And not being paid for time off is certainly better than being laid off.

Offer temporary furloughs. Some employees may be willing to take a little time off without pay if it will result in their job being more secure. Furloughs could be scheduled for employees to alternate times off without pay, with one group off for two weeks, then as they return to work a second group goes off for two weeks, and so on. Being laid off temporarily until economic conditions are better sure beats being laid off permanently.

Implement a shorter work week for hourly employees. For years some large corporations have had work weeks of 35 to 37 hours rather than the traditional 40-hour work week. The trend of a shorter work week was originally designed to make the workplace more appealing and keep employees happier. For companies with hourly employees, a shorter work week will mean less pay, but if working fewer hours will increase the likelihood of being able to keep the job, then workers may gladly accommodate to reduced schedule.

Cross-train workers. One easy way to save money immediately is by canceling your company's contracts with outside vendors. If you poll your employees to get an idea of their skills and strengths, you can cross-train people to perform jobs that are currently being done by outside contractors, and therefore keep that money in-house. For example, cleaning crews that come in overnight, services that deliver coffee or bottled water, landscapers, and companies that fill the vending machines can all be taken off the accounts payable books, and employees can do those chores themselves. This solution will not affect workers' salaries at all, but it will require people to pitch in and work longer hours.

The most important thing a company can do in times like these is to be completely open and honest with employees. Instead of having your workers coming in to work each day wondering if it will be their last, you should have regular status meetings to keep them apprised of what's going on. Regular meetings will not only ease worries and give employees a chance to ask questions, they will also provide a venue for voicing suggestions or ideas, and giving people a chance to offer solutions as a team instead of worrying about the future individually.

Making your employees feel like a team working together to keep your company afloat will do wonders for efficiency, productivity, and morale. If a company tightens its belt by everyone contributing to the solution, then everyone will have a stake in the reward when the company continues to flourish and the economy rebounds.