More Ways to Avoid Layoffs

In our continuing research to find companies who have avoided layoffs and the ways in which they are doing so, we’ve come across some interesting examples and a variety of strategies.  However, one thing they all have in common – they all place a very high value on their employees and are willing to make extreme efforts to keep them.  Whether large or small, this is an excellent lesson for all businesses.

As a follow up to our article on a new alternative to layoffs being tested in the UK, below please find links to stories about more companies who have managed to save people by saving their jobs, thereby doing their part to keep the economy moving forward.

No layoffs – ever!

More companies without layoffs – ever!

Learned lessons from previous layoffs – now trim the fat, without trimming people.

Cutting labor costs, without cutting the labor

Cutting costs without layoffs

If your firm is seeking ways to avoid layoffs and can use some assistance, please feel free to contact us at Strategic Growth Concepts so we can help you get back on track and minimize the trauma to your firm.

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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.

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.

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

Steps to Downsizing with an Outplacement Progam

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.

Younger Workers Getting the Axe; Older Workers Getting Jobs

 by John Zappe, Jul 28, 2009

CareerBuilder says unemployed older workers are having a tough time finding jobs. A survey released last week says only 28 percent of workers over 54 laid off in the past 12 months found new jobs compared to workers 25-34 who are quicker at finding work. In that age group, 71 percent found a job within 12 months.

As a result, says CareerBuilder, 63 percent of the 55 and up group have applied for lower-level jobs, including entry-level positions and even internships.

That’s probably not much of a surprise to recruiters; 37 percent of them told CareerBuilder they have received applications for entry-level jobs from retirees and workers over 50.

What may well come as a surprise is the rise in older workers and the impact the recession is having on their ranks.

Layoffs and job losses have hit the younger workers hardest. According to data from the Bureau of Labor Statistics in the 18 months since January 1, 2008, the number of workers in the 25-54 age group has declined by 5.1 million. For workers over 54 though, there are 624,000 more working. In fact, there were gains in the number of older employed workers in every age group the BLS tracks except one — 55-59 year olds who saw a modest decline of 79,000 in the 18 months.

Before you point out that the sheer number of older Americans has been rising, which is certainly true, consider for a moment the participation rate. Based on a monthly survey conducted by the U.S. Census for the BLS, the participation rate is independent of population size. It describes the percent of various population groups in the labor force.

The data shows that for the last 10 years, more and more older Americans are working. Since 1999, the percent of working Americans 55-64 has grown by 10 percent, while the over 64 age group has jumped — and that’s an apt word — by almost 40 percent. Contrast those changes to the 25-34 year olds who have declined from 84.6 in 1999 to 82.9 percent for the six months ending in June.

In the 61 years for which the BLS has data, this many older Americans have never been employed. In the mid-50s the percentage began to rise until 1967 when, at the peak, an average of 62.3 percent Americans aged 55-64 worked. The percentage began to decline until it bottomed in 1986 at 54 percent of the age group working. There it remained, rising modestly until the recession of the 90s when it started its upward climb.

 Even more dramatic has been the number of those 65 and over reentering the workforce. For years, between 11 and 12 percent of retirement age Americans have worked. In 1998, on average, 11.9 percent of the 65 and over group worked. In June, it was 16.8 percent.

The explanation for the uptick in older Americans working is not too difficult to guess at: Longer life spans, better health, and access to health insurance whether private or through Medicare, the decline of the defined benefit pension coupled with the increase in the Social Security age, and, in the last two years, the recession, which has devastated many workers 401(k)s.

The implications, however, are harder to forsee, as is deciding if this is a structural change in the American labor force or a temporary economic blip. A BLS economist told me a colleague of his is researching these very questions.

Regardless of the cause of the return to work by older Americans, there’s no denying the graying of the workforce. For the first six months of this year workers 55 and over accounted for 21.8 percent of the labor force. That’s the highest percentage since 1971.

Meanwhile, the percentage of 25-34 year olds has taken a nose dive. From a high of 36.6 percent in 1986, the percentage has dropped 11.5 points to 25.1 percent for 2009. For the 25-54 year age group as a whole, there’s been a decline of almost eight points since 1993, when 86 percent of the workforce fell into that age group. For the first six months of 2009, 78.2 percent do.

Consider now the demographic factors we’ve detailed: an aging workforce, reentry into the workforce by workers who in years past would be retired, lower workforce participation by workers in the entry-level age group of 25-34, and, finally, the sheer reduction in employment by that age group caused by layoffs and other factors.

The implications of this are immense for employers and recruiters.

Among them is the increase they are seeing in mature workers seeking jobs. That 37 percent of recruiters who told CareerBuilder they’ve received applications from mature and retired workers for entry level jobs is, therefore, not that much of a surprise after all.

Even though the CareerBuilder survey says 65 percent of the employers report being willing to consider overqualified candidates, the reality is probably closer to the 44 percent of mature workers who say they’ve been told they are overqualified. Recruiters who reject overqualified mature workers may find it increasingly difficult to find the young workers who might otherwise take those jobs.

Should recovery from the recession prove to be as long as some economists are now fearing, retirements will continue to get pushed off and retirees with diminishing payouts from their 401(k)s and other savings will reenter the workforce at an accelerating pace.

Evidence of the former is in the CareerBuilder survey. One in five employers report being asked by employees to postpone retirement. Most of those employers (86 percent) said they would consider it.

If the demographics are any guide, 100 percent may come to wish they did.

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.