January 30, 2009

Staff Reductions: the Last Resort

Everywhere you turn, the current state of the economy is a central topic. The economic crisis is not only an issue in the United States, but a matter of global concern. In fact, the United Nations projects that about 20 million jobs will be lost worldwide by the end of 2009.

As many businesses across the country are facing financial challenges, employees naturally are uneasy about their future with employers. The fears of reductions in workforce loom large in employees' minds. Minds that are also dealing with adjusting mortgages, rising childcare, fuel, food, and generally a higher cost of living.

Jon Gordon, author of "The No Complaining Rule: Positive Ways to Deal with Negativity at Work," suggests that employer's ramp up communication during this period of uncertainty to quell employee fears. By holding weekly meetings, sending out informative newsletters or e-mails, an employer can better manage fears. Gordon says, "Even if things are great, people are still nervous." When there's a void in communication, he says, "Negativity fills the void."

The reality is that as many businesses experience the twinges of financial strain, the first thought often is to turn to staff reductions, as reductions can be a fast and quick cost saving measure. However, the decision can also result in general fear, increased workers' compensation and employment law claims, a loss of trust, and non-productivity.

There are options that employers should consider before making the decision to cut staff. Some alternatives are highlighted below.

Have frank and open discussions with staff about financial challenges. Staff may willingly agree to a reduction in pay or hours worked in lieu of undergoing a reduction in staff.

Consider retraining current employees so that they can assume greater responsibilities and limit the need of having to hire additional workers with specific expertise or limited skills sets.

Consider cutting back on perks such as employer-sponsored meals and snacks. Although many enjoy workplace perks, most would gladly give them up if it meant saving jobs.

Consider alternative ways to save money, such as banning color copies, canceling company service subscriptions or limiting employer-sponsored memberships.

Have employees volunteer to leave early on days where business is slow or set up a rotating schedule of who will go home early on slower days.

The bottom line is if this is a challenging time for your business, be open and share with your staff. Employees are much more willing to compromise and contribute solutions when they feel their input and opinions matter.

About the author:
Michele O'Donnell joined the MMC team in January 2007 and currently leads MMC's elite team of HR Consultants. Ms. O'Donnell has been involved in the Human Resources industry for more than 14 years, bringing vast training and management experience to the MMC leadership ranks. Her experience spans the broad scope of labor law, regulatory compliance and HR Best Practices, drawn from her rich experience as Director of HR for several firms throughout her career. She currently works to ensure that MMC's consultants forge long lasting relationships with our clients, fostered in exceptional service and unsurpassed HR expertise. Ms. O'Donnell earned her baccalaureate degree in Business Administration from Auburn University before receiving her Masters degree in Human Resource Management from Troy State University.

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