Managing on the Downside
Hardly a day goes by lately without seeing a headline or news story about layoffs in corporate America. Just a few months ago, this space was offering tips on creative recruiting. Now, following the March tech stock crash, the Dot Com shakeout, and a less than robust retail season, corporate America is tightening its belt. In the Dot Com Camelot, this was a rude awakening.
In the mainstream corporate economy, this is an expected adjustment which is dealt with through "rightsizing." Rightsizing is a fancy word for layoffs. But, from a human resources perspective, I advise managers to try to limit use of layoffs only as a last resort. There are a number of other cost control measures that can be exercised before resorting to layoffs.
Salaries are a major expense item and an easy target for the cost cutting axe. But deep cuts can also have a devastating affect on morale of layoff survivors affecting the ability of the firm to provide its products or services. Here are some thoughts to help managers weather the storm.
Track your business numbers and develop response plans at the first sign of changes. Look for as many ways as possible to trim expenses before actually cutting staff.
Consider use of temporary or contract workers to respond to seasonal ups and downs in the business cycle. In a downturn, the temps would be the first to be let go, protecting job security for your regular staffers.
Track overtime hours and curtail abuses or eliminate overtime work except in cases of extreme emergency affecting customer service.
Most businesses experience normal turnover as employes come an go. Freeze hiring and combine responsibilities as individuals leave voluntarily.
Reduce or freeze pay increases during a downturn. When taking this action, define your strategy, provide communication guidelines to supervisors, and be sure to continue regular performance appraisals. If implemented, this action should be done across the board at all levels of the organization.
Trim executive perks. Suspend club memberships. Scale back or suspend auto leases. When management holds onto its perks while reducing employee benefits, it sends a negative message to employees.
Define performance goals and communicate objectives to employees and management alike. The goal gives a performance target to strive for; a focused effort may help keep everything on track.
Consider cutting hours and work schedules. To be fair to all workers, determine appropriate adjustments for salaried as well as hourly workers. In more serious cases, salary cuts may be imposed. Be sure to check any applicable union or employment agreements before implementing such a change.
Communicate. Communicate. Communicate. Assess your numbers, come up with a plan, and communicate your cost cutting efforts, "because we're all in this together."
Our next column will offer tips and ideas to soften the blow if you are actually faced with implementing a layoff.
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William S. Hubbartt is president of Hubbartt & Associates, a St. Charles, IL consulting firm specializing in employee compensation, employee handbooks, personnel policies and supervisory training. (www.Hubbartt.com) Mr. Hubbartt is author of The New Battle Over Workplace Privacy, published by AMACOM Books.
