Beyond Layoffs: How to Right-Size Your Workforce

Layoffs are an unfortunate default when a company realizes it has more manpower than it can afford or productively keep busy. While sometimes layoffs are unavoidable, there may be times when you’re able to explore better alternatives for your company and your employees.

Employee Input
Begin by asking your staff for their input. When you enlist your employees to help solve the problem, they may surprise you with their creative ideas of how to cut expenses or generate more revenue. Be open about your finances, expectations, needs and goals, and listen to what your employees suggest.

Training and Development
Turnover is expensive. If you forecast a shift in needed skills in the near future from what you currently have, implement a training and development program. You’ll not only save time, money and headache from the termination/recruiting process, you’ll retain skilled knowledge and talent that already has a working knowledge of your company and a reputable network of business relationships.

Hiring Freeze / Attrition / Early Retirement
Allowing employees to phase out naturally without replacing them may spare having to lay-off any employees. The downside, however, is that attrition and early retirement may not provide you with as quick of an impact as needed to satisfy your immediate financial woes.

Non-Paid Vacation
Offer employees to take time off without pay. Some employees may be excited to spend more time away from work, even if it’s unpaid, which will save the company money and allow the employees to be more rested when they return.

Voluntary Quits
Create a severance package that may entice employees to voluntarily quit. Require interested employees to discuss their interest with management (this can help you avoid losing your top talent to a severance deal).

Reduced Workweeks
Some employees may jump on the opportunity to only work four days a week rather than five, even if it means dropping from full-time to part-time status. If you only need a handful of employees to reduce hours, ask for volunteers to move to a reduced workweek. Try to make the schedule enticing to employees, such as providing a weekly three-day weekend or ensuring their workdays are consecutive to allow more consecutive days off for quick getaways.

Job Sharing
Sometimes one job can be shared by two employees, including the necessary workspace. If this is an option at your workplace, ask first for volunteers (who have fitting roles) who would be willing to job share. Allow them to work out details according to their availability and job needs.

Part-Time Status
If reduced workweeks and job sharing aren’t an option and you still need employees to have reduced hours, part-time work may be a solution. If possible, continue to offer benefits and fair pay to retain your employees, especially if you expect the part-time status to be temporary until business picks up again. If you’re a large employer of 50+ employees, you’re still under the ACA mandate to offer benefits to employees who work at least 30 hours a week or an average of 130 hours per month. (Employers with fewer than 50 employees are under no obligation to provide benefits or define full-time eligibility at 30 hours.) Need help determining whether your employees should be considered full-time or part-time per the ACA regs? See this how-to guide for look-back measurements. Still not sure how reduced hours will impact your workforce and current benefits package? Contact your Employee Representative or Benefits team to discuss options to retain a well-balanced workforce and employee benefits program.

Reduce Benefits
You may need to adjust how much employees pay towards their employer-sponsored benefits or reduce their benefits package completely. Be sure you keep communication lines open with employees about this option to help soften the blow.

Downsizing is hard on both employees and their families but finding alternative ways to laying off employees can be a win-win. Whatever you decide to do, be aware that you’ll likely lose some valuable employees in the process. Remain positive and supportive and stay on good terms. If for nothing else, your company will create a reputation of demonstrating compassion – and do so without sacrificing profits.

alternatives to layoffs

When you’re wanting to explore alternative ideas to layoffs, start here.

Laura Lancaster, PHR, SHRM-CP

Author Laura Lancaster, PHR, SHRM-CP

Along with being a Master of Human Resources, Laura is a master of communicating and provides her clients with world-class customer service. She can really cut some rug on the country swing dance floor and enjoys musical theater in between motorcycle rides.

More posts by Laura Lancaster, PHR, SHRM-CP