A New Alternative to Employee Lay-offs Can Help Staff Start-up/Small Businesses

In today’s economy it appears that every day more and more companies are laying off countless numbers of workers.  However, what you don’t hear about are the companies that are in dire need of superior talent, but typically can’t afford to hire a full-time person with the skills and experience they’re seeking.  From this dichotomy is born a new staffing business model currently being piloted in the United Kingdom.

This program is being launched by a not-for-profit organization called WorkWise UK, and the program, essentially an online swap shop, is called StaffShare.  The basic concept:  companies without current need for the employees they have – but yet not wanting to lose them permanently, offer them up for short and medium-term loan to companies needing the talent but not able to afford the full-time staff position.  Both firms provide their information on the website, the WorkWise system makes a potential match and the two parties work out the details of the exchange.  StaffShare takes a 7.5% commission for making the match.

The program was originally developed to benefit charitable organizations when it was conceptualized two and a half years ago.  However, after it’s launch 6 months ago  in the midst of the worst economic downturn in decades was so well received, the scope of the program was expanded.  Learn more about the details of the program HERE.

We at Strategic Growth Concepts believe this inventive business model has tremendous potential for success in the U.S. and will be watching the UK pilot to see how things progress.  We urge U.S. businesses to begin considering a similar program here, where major corporations that are now forced to consider layoffs can instead loan those employees to smaller or start-up businesses that can’t afford the high-skill, high-priced talent on a full-time basis, but can likely afford to take advantage of it for several weeks or months. 

What kind of impact do you think such a program could have on the development of new businesses/small businesses in the U.S.?  And since small businesses are typically responsible for the largest percentage of jobs and job growth in the U.S. economy, what type of impact could such a program have on the economic recovery if applied on a wide scale?  We think the results could have a substantial impact on economic recovery for the following reasons:

  • rather than experiencing layoffs, employees at companies considering down-sizing can instead be placed into temporary positions where they can maintain a regular income until once again needed at their permanent position
  • since employee layoffs would be decreased, less people will need to utilize state-sponsored unemployment programs and planned government health programs as well
  • less people needing to utilize unemployment programs insures that the Federal government will not have need to subsidize state programs and extend benefits; thereby making more money available for other economic growth-oriented programs (or to pay down the historic debt our country is now facing)
  • the employees placed in temporary positions will keep their skills fine-tuned, and will likely pick up additional skills and experience which will make them even more marketable going forward
  • companies that were considering layoffs can instead take advantage of the short-term cost-savings of having the employees temporarily removed from their payroll, but yet have the ability to bring them back when their company’s economic crisis has passed
  • small businesses will be able to achieve success faster due to the fact that they are able to take advantage of premier talent and expertise to help them achieve growth
  • more successful small businesses will create more jobs
  • more jobs will lead to faster economic recovery

I’m certain that economic naysayers will be able to poke holes in our assumptions about the potential benefits of such a program, but in my opinion, even if only one or two of those assumptions were to actually come to fruition, I believe the results would be positive.  What do you think?

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The author, Linda Daichendt, is Founder, CEO and Managing Consultant at Strategic Growth Concepts, a consulting and training firm specializing in start-up, small and mid-sized businesses. She is a recognized small business expert with 20+ years experience in providing Marketing, Operations, HR, and Strategic planning services to start-up, small and mid-sized businesses. Linda can be contacted at linda@strategicgrowthconcepts.com and the company website can be viewed at www.strategicgrowthconcepts.com.

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What a Small Business Owner Should Know Before Laying Off Employees

Though economists are telling us the recession has come to an end and things are beginning to rebound, the unfortunate result of an economic downturn that has lasted so long and affected so many industries, countries and skillsets is that the recovery is likely to take a very long time to show itself to small businesses.  This being the case, small businesses are still finding themselves having a need to cut costs and layoff employees.

While no business owner likes laying off an employee, those that have been ‘in the trenches’ awhile will typically reach the appropriate conclusion when necessary and begin developing a strategy to do what’s needed. 

However, it’s at this point when many small business owners may find themselves in a difficult situation.  If a layoff has not previously been required, then the small business owner will rarely have knowledge of the laws and issues involved in conducting a layoff with a minimum of risk – to the company and the employees.  The following information should be helpful in guiding you down the path of a worry-free layoff.

WARN Them

One of the most prominent employment statutes is the Workers Adjustment and Retraining Notification Act (WARN) of 1989. The WARN act gives workers and their families time to plan for a transition caused by employment loss. Slightly fewer than half the workers in the United States are covered by the statute, as it only applies if there are 100 or more employees in the company.

According to Heather Gatley, senior partner and vice-chair of the labor and employment practice at the Florida-based law firm of Steel, Hector & Davis, WARN requires employers to give employees and local governments 60 days of advance written notice of plant closings and mass layoffs in the following situations:

  • Plant closing – An employment loss during any 30-day period at the single site of employment for at least 50 full-time employees.
  • Mass layoff – An employment loss at the single site of employment during any 30-day period that must involve at least one of the following circumstances:
    • A reduction that affects at least 50 full-time employees who make up at least 33 percent of the company’s workforce.
    • A reduction that involves at least 500 full-time employees.

So, what does it mean to you? If your company fits any of these criteria you are required to provide the employees notice of a layoff. Therefore, in order to  A) keep the peace and  B) keep things as productive as possible until the layoff takes place, make sure you develop a comprehensive down-sizing program that takes care of the company – and the soon-to-be ex-employees as much as possible.  You should also insure that you have a plan to take care of the company’s remaining employees, who are just as likely to be shell-shocked as those who are out of work, but will also have the added burden of extra work to make up for those who are gone.

Documenting business justification and protected classes

Though employees would likely not consider it, from management’s point of view, deciding whom to lay off is hardly an easy decision. Senior executives must establish a documented, justifiable business reason for the layoff and analyze its effect on various protected classes of employees, typically defined by age, gender, race, and national origin. Unless the company can prove that its actions were genuine, and not a pretext for discrimination or sleight-of-hand (cutting a department only to resurrect it with a new name and new people), it could face lawsuits, according to Gatley. Federal protected class laws apply to companies with 15 or more employees, and while local laws vary, they typically cover companies with smaller numbers.

So how does a company insure they are fulfilling their legal obligations to employees, while still meeting the needs of the company?  The best way is to hire an outplacement consulting firm who specializes in these projects and can guide you thru them.  Another benefit offered by such firms is their ability to provide Job Search services at varying levels to those employees who have been down-sized.  This helps to make both the out-going and remaining staff feel that the company has been as responsible as possible, and provided every assistance they were able to insure the welfare of all involved

Is Forced Time Off the Right Cost-Savings Solution for Your Company?

As more and more employers are looking for ways to save money in today’s economic crisis, many are reaching a decision to implement an “unpaid time-off” program. There are pros and cons to this decision – from both the employer and employee perspective. If your company is considering such a program, the article below will be worth your time and consideration. The questions asked will help you evaluate if ‘forced time off’ is a viable solution for your firm, or not worth the potential risks.

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Is Forced Time Off Fair?

March 16, 2009 , Tom Davenport, Harvard Business Publishing

One of the common approaches to dealing with this recession is for companies to ask — well, tell — employees to take time off without pay, a day every week or two. This 10 or 20% haircut is supposed to indicate that “we’re all in this together,” and that it’s better for everyone to suffer a little than to lay some people off.

While I have some sympathies with this philosophy, I’m not sure it’s either fair or wise. On the issue of fairness, if such a policy had been instituted in 1969, it might have been very fair. But in 2009 there is much less of a relationship between hours on the clock and work actually done, at least for knowledge workers. How many of you reading this post actually work only 40 hours a week? How many of you only work on official workdays? Today, most people have a continuous mixture of work and non-work activities, and it will be difficult for any knowledge worker to stop working for a day every week or fortnight. I might suggest that this is exactly what the employer wants, but that would be a cynical remark.

There is also the issue of whether the forced haircut is wise. I have problems with its wisdom in two respects. One involves the fundamental principle that all employees are equally valuable. It’s nice to pretend that they are, but we all know they’re not. Giving all employees a haircut may lead the most valuable ones to look elsewhere. There was a column in a recent Boston Globe about treating all employees (at Boston’s Beth Israel hospital) alike with regard to cuts. It’s heartwarming, but if it leads to an across-the-board haircut, might some of the best employees leave for wealthier hospitals across town?

The other potential problem is that employees, given an involuntary time chop, may look elsewhere to fill the void. They’ll freelance, e-lance, or moonlight to replace the lost income. This could lead to a variety of negative scenarios for the employer/barber who originally chopped their time. The employee might find the freelance employer more desirable, and jump ship altogether for full-time employment there. Or he might end up doing a bit of his freelance work while ostensibly on the clock for the 80% or 90% employer. I’m not saying that 10 or 20% haircuts for everyone are necessarily a bad idea. I do think, however, that they are hardly a no-brainer either. The inclination to share the pain is admirable, but it could open the door to a host of problems.

Benefits vs. Budgets: Providing Employees with Real Assistance During Tough Economic Times

By Darla Mullner; June 18, 2009

It’s no secret that every business today, regardless of sector, is faced with tough financial decisions. To that end, how do companies retain employees when budgets are impacting salaries and benefits? On one hand, management might take the position that with uncertainty in the marketplace, employees, despite reduced compensation packages, will stay in a job no matter what. That’s the short side of the argument.

The larger picture is that the economy is sure to rebound and employees have long memories. One approach is to provide meaningful benefits coupled with real assistance for all employees in an effort to aid retention and provide for an enhanced quality of life.

When faced with a competitive marketplace, the demand for highly skilled workers in a particular industry such as health care is fierce. The most cost-effective and efficient strategy is to hire the best employees during the recruitment phase and retain them for as long as possible by offering benefits that will enhance their quality of life. These quality of life benefits encompass several areas and include financial assistance, health and well-being and work-life resources.

Financial Assistance
In addition to wages, perhaps your organization may allow employees to “assist” co-workers that are facing a difficult financial situation. If your organization is a nonprofit and has a foundation or charitable affiliation, consider whether or not a special employee-fund can be established. Annual or any time contributions can be made and “drives” such as a cookie, flower or the like can generate thousands of dollars. Another way that employees can assist a co-worker in need is through the donation of Paid Time Off (PTO) hours. This is especially useful when an employee is experiencing a serious medical condition and has exhausted their own PTO hours or if they need income for time off.

Large organizations should take advantage of the purchasing power of a big group through discounted services and coupons offered by national retailers and service industries.  For example, employees might receive a 15 percent discount when using an on-campus or nearby daycare provider. Employees might be eligible to receive 20 percent off tax preparation services by a nationally known tax preparation service. Other reduced costs can be negotiated for employee entertainment such as amusement park fees and movie theatres.

Health and Well-Being
Most employers are well aware of continually rising health care costs. Disease prevention and fitness opportunities not only benefit the employee, but healthy team members use less health care services and costs can be better managed. Consider partnering with a local fitness center and offer free or discounted memberships, not only a great benefit, but also a great way to contribute to the bottom line.
 
Employees are people with lives outside the workplace. To ensure productivity and peak performance, offering a free employee assistance program (EAP) when someone needs guidance, counseling, referrals to local services or reliable professional care is often money well spent by the organization. Services include emotional health counseling and referrals, financial consultation including budgeting, credit assistance and college or retirement planning. The EAP also provides legal services including consumer and family law situations, traffic citations and estate planning.

Work-Life Assistance
Going beyond a paycheck can help make a difference in an employee’s life. What can your organization provide to enhance the lives of workers? For instance, consider offering all employees interest-free loans for the purchase of a personal computer. The incentive is that many employees in a large manufacturing firm or service organization may not have access to a personal computer on daily basis. As more communications and employee activities become electronic it becomes even more critical to offer ways to “wire” staff members to the organization. Partnerships with banks or credit unions are also desirable for employees who can take advantage of the option of checking and savings accounts as well as automatic payroll deduction for home and auto loans.

Helping employees hone skills that might be outside their normal job duties is also a great idea. Consider partnering with a local community or business college to offer staff free office software classes such as word processing, spreadsheet and presentation software.

The lifeblood of any business is its workforce. Today’s leaders must recognize that without talented, highly skilled and dedicated workers, many organizations would merely be buildings with equipment and furniture. Therefore, the best investment we can make for the future is the investment of a compensation package that provides employees with useful and meaningful benefits that enhance their quality of life.

Darla Mullner is human resources director at Rush-Copley Medical Center in Aurora, IL, a 183-bed hospital providing health and wellness services to the greater Fox Valley community.  Rush-Copley was named one of Chicago’s 101 Best and Brightest Companies to Work For in 2008. Mullner can be reached at dmullner@rsh.net.

Carefully Consider Your Hiring Practices

In my experience working with small businesses, particularly those without a trained HR professional on staff, I have seen many instances of illegal hiring practices.  In most cases, the problems are not necessarily intentional, but rather due to a lack of employer knowledge of the right way (legal) and wrong way (illegal) to conduct a candidate search and an interview. 

While this issue may seem to be minor within the scope of all the things a small business owner has to worry about, I assure you, the consequences can be substantial.  Consider the case of a Sonic franchisee who refused to hire a person with a speech impediment; that franchisee is currently facing Federal charges which can result in major financial penalties – read about the case HERE.

The following are links to some articles that will provide you with information to help you effectively prepare to conduct an effective, legal interview that will result in hiring the best candidate for your company:

Questions Not to Ask

Laws to Know Before Hiring

Tips on Hiring an Effective Manager

In these economic times where any employer who is actually hiring essentially has their pick from hundreds – or even thousands of candidates, that doesn’t mean that candidates should be treated any less respectfully than before.  Nor does it mean that companies can afford to be lax in the implementation of their hiring policies and procedures.  Make certain your company is protected, learn the legal guidelines and insure that those involved in hiring at your company follow them to the letter.

Financial Impact of Layoffs on a Small Business

With all the downsizing and layoffs in the last year or so, I’ve started to think alot about the effects on small businesses who have been forced to layoff employees.  While these layoffs are typically not as publicly known, in many ways they can have a much higher level of impact. 

The first impact that might be felt is that of the U.S. economy overall from the collective small business layoffs since small businesses are  responsible for between 70% and 80% of U.S. jobs.  With small businesses being at the forefront of the banking trauma going on in recent months, its a safe assumption that they’re having to layoff employees in substantially higher percentages than their larger counterparts.

The second impact, is the effect on each individual small business.  I often wonder if the small business owner really analyzes the big-picture effect of an employee layoff from a financial standpoint prior to making the decision, or do they just think about the actual cash outlay for payroll?  A recent article I read in the Effortless HR Blog lays this analysis out in a very logical, easy-to-understand methodology.  You can read the article by clicking HERE.

After reviewing the article, I challenge all small business owners who are considering a layoff to do some additional analysis before making your final decision.  Make sure you’re thinking thru the additional tasks you will personally have to take on that may prevent you from making sales, which in turn could have an even more adverse affect your firm.

Steps to Downsizing with an Outplacement Program

Though it may not have occurred to you if your firm is currently experiencing difficult circumstances, making use of an outplacement service can help to strengthen the relationship between your firm and its departing employees.  In spite of the fact that economic or other circumstances may have required that you ask an employee or group of employees to leave your firm, you can show your understanding of the difficult transition they’re about to undertake, and at the same time you can thank them for their previous service to your company.  This can be accomplished by providing outplacement services to ensure they are provided with the tools to move on to the next phase of their careers as quickly as possible.

Historically when most companies downsize, they send employees off with a severance package and little else.  However, companies that want to do right by their former employees enlist the aid of an outplacement firm to help displaced employees transition quickly into new jobs, or advise them on alternate career paths that can lead them to exciting new opportunities.  

And as beneficial as this service may be for the employees, surprising to most employers, it’s also good for the company.  Benefits provided to the firm from an outplacement program can include public enhancement of the company’s image, aiding the company in its reorganization efforts, and reducing the risk of legal liability from downsized employees or government entities who decide that the company did not act in good faith in its downsizing process.

If your company is in a position where it is considering a layoff, I encourage you to consider the following action steps as you finalize your plans.

Action Steps

Hire an outplacement service company or consultant – Outplacement firms assist not only in helping employees transition out of the company, but also in helping the company understand the legal issues regarding employee termination. Outplacement firms provide career coaches that work one-on-one with employees by helping them to update their resumes, assess their strengths and weaknesses, and prepare for new career opportunities.  If you’re undertaking a company-wide layoff, outplacement firms can handle the transition process for a single employee, for dozens or even hundreds of employees. And due to their experience, such companies know the type of services and support that former employees need most during this time, as well as ways to make the layoff process easier for both employer and employee.

Make an alumni program part of your outplacement strategy  – Though circumstances may require you to lay off employees in your current situation, you may find your firm needing to rehire them if the company’s financial state improves, the economic climate changes, or if new positions open up for which their skills (and existing company knowledge) would be transferable.   Adding an alumni program to your planned outplacement services allows you stay connected to valued former employees while also providing them with a way to stay in touch with colleagues and friends for support during their transition and beyond.