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

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.

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.

Even in Today’s Economy, Finding Qualified Job Candidates Can be Difficult; Here are 10 Tips to Increase Your Odds

Employee graphicYou would think with today’s economy that  all you would have to do to attract employees would be to stick a sign in the window of your business that said “Hiring” or place an advertisement in the local newspaper and then pick a new employee out of the hundreds that applied. However, as needs become increasingly more technical and specialized, jobs for businesses small and large are going unfilled – even with today’s surplus of available labor.

However, this situation doesn’t mean you should give up on hiring new staff.  In many ways, small businesses have an advantage in hiring because all things being equal, there are many qualified candidates who would prefer to work for a small business. The following tips for attracting employees will help you increase your company’s chances of finding the specialized staff that you need.

1. Find out what the going rate is for the available position and insure that your company is at least matching it.

One common mistake many small business owners make when creating a position is to base the salary on their budget rather than market realities.  This strategy serves to insure that their employee recruitment efforts will be unsuccessful.  Why should the most qualified prospects work for your company at a lower wage when they can earn more with your competitor?

2. Offer a comprehensive employee benefit program; and remember, not all benefits cost money.

In situations where a prospective employee has the qualifications that allow them to pick and choose, an excellent employee benefit program can move your company into the preferred position. For successful employee recruitment, your company needs to offer employees life, medical and dental coverage at a minimum. If your small business does not have an employee benefits program, it’s time to speak with your insurance company about setting one up. You can often achieve cost efficiencies in the purchase of those benefits by joining business organizations such as the Chamber of Commerce where you can take advantage of their larger group rates for members.  Additionally, don’t forget about the small things that can be of big importance to employees because they add to their quality-of-life; items such as:  flex-time, birthday’s off, personal days, paid time off to perform community service work, bringing pets to work, etc. can provide a nice incentive that set you apart from other companies competing for these highly-qualified employees.

3. Make lifestyle part of your employee recruitment offer.

Since many employees today are just as concerned about quality-of-life as they are about the amount of money a position offers, the area your business is located in can be an added benefit toward luring prime employee talent. If you’re fortunate enough to be located in an area with great skiing, beaches, extensive hiking/biking trails, excellent golf courses, limited traffic issues, great weather or other attractive features, be certain to emphasize those benefits during conversations with prospective employees.

4. Emphasize the benefits your small business offers that many companies do not.

Make your company more attractive to potential employees by offering things such as work-at-home or flex-time options, Adoption Assistance, Education Assistance, On-site Daycare, In-chair Massages, or other benefits that provide the potential employee an added incentive to join your company.

5. Find creative ways to offer perks similar to those of ‘the big guys’.

As a small business, you may not be able to offer the perks large corporate companies are able to offer their employees due to cost – but you may be able to offer a reasonable facsimile. For instance, many large companies offer on-site health facilities such as a fully equipped gym. Chances are good that as a small business, you’re not going to be able to add one of these to your premises, but you might be able to offer employees coupons to use local gym or spa facilities, or a company-paid gym membership.

6. Offer employees opportunities for advancement.

Most employees aren’t looking for jobs where they’ll do the same thing for the next thirty years. Typically they are seeking a position that offers opportunity for advancement, as well as a way to insure they achieve that advancement.  For example, will your company offer the chance to develop new skills?  Do you have an actual career-path designated for new employees which insures their ability to advance?  Do you offer a mentor program in which they can learn the best ways to succeed within the company?  All of these programs provide added incentive for a prospective employee to choose your company.

7. Create an employee incentive program to drive performance.

Employee incentive programs not only reward good employee performance, they also give prospective employees something to look forward to if they select your company. Whether it’s an annual company-paid retreat, a program where employees collect points that they can trade in for cash, or awards that are highly-recognized and coveted within the company and/or your industry, employee incentive programs can increase your chances of attracting the most qualified employees.

8. Institute a profit-sharing program.

There’s possibly no better way to incentivize an employee’s performance and loyalty than to give them a stake in the company’s success. A business that appears to be on an upward trend – and provides profit sharing – can be a powerful inducement to motivate quality recruits to join your firm.

9. Sweeten the pot – up-front!

When competition for the best employees is fierce, a plain old signing bonus may be what’s needed to move the needle in your direction. If you elect to add such a program, there are two things to keep in mind:  1) The signing bonus has to be large enough to matter, and 2) the signing bonus must be contingent upon remaining with the company for “x” amount of time or it will require repayment. (Otherwise you’ll have a revolving door as people sign up, take the money and run.)

10. Broaden the scope of your advertising.

It’s not enough anymore to place an ad in the ‘Help Wanted’ section of the local newspaper. In today’s hiring environment, it’s imperative that you place advertising in online job boards, in trade association publications/online media, and that you post them in a wide variety of social media such as LinkedIN and Twitter.

It also helps to get your current staff involved in the employee recruitment process as they already have knowledge of the company culture and can typically identify those who will ‘fit’ and those who won’t. Signing bonuses can be made available to those who successfully refer a new employee.

There are many qualified people who can do the work you need done, no matter how specialized;  you just need to develop the right incentives for them to select your company over others they may be evaluating.  Make sure you utilize every conversation with an employee as an opportunity to ‘sell’ the advantages of working for your firm to insure that you can build the best-qualified, most highly-motivated team possible.

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.

Motivate Employees with ‘Flexible Fridays’

As with many small business owners, I belong to a number of online social networks including Twitter and Facebook.  I frequently review postings from other members to identify interesting information that I believe will be of value to my target customer, small business owners. 

In reviewing some recent Twitter postings, I came across one from Amy Nichols the CEO of the franchise organization, Dogtopia.  Her posting regarding the ‘Flexible Fridays’ program at her company struck me as a concept that other business owners might have interest in using in these days of high gas prices, long commutes and 60-hour work weeks. Therefore, I asked Amy if she would write an article to share her program with our readers.  The resulting article is below.  I hope you enjoy it as much as I did. (By the way, as a former D.C. area resident myself, I can absolutely attest to the traffic difficulties Amy discusses in her article; I assure you, I would have been thrilled to have an employer who believed in ‘Flexible Friday’s’ when I lived there!)

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Flexible Fridays

Washington, D.C. is known as our nation’s capital, but it also has another national moniker, that of one of the worst cities for traffic in the country.  Forbes ranked us in the Top 3 Worst Traffic Cities with the likes of Los Angeles and San Francisco. http://bit.ly/ForbesWorstCitiesForTraffic

Commuting in our area is grueling, and after leaving the “rat race” seven years ago to start my own business, I thought I had found a way to truly control the time I spend in my car.  I opened a doggie daycare, Dogtopia, just seven miles from my house.  Our business hours had me commuting outside of the most congested periods of the day, and I felt that I had solved the problem.  No longer would I be subjected to hours of wasted time in my car.  Until I decided to expand the business, that is.

A few years later we decided it was time to grow Dogtopia.  We had great success with the first dog daycare franchise in Tysons Corner, VA and felt it was time to add a “sister store” in North Bethesda, MD.  The new Maryland store would be only 14 miles from the Tysons Corner location – an easy commute between the two.  Or so we thought.  Apparently, the Wilson Bridge that takes you over the Potomac River and from Virginia into Maryland, had other ideas.

Skip forward a few more years and we are now a growing franchise company with 20 locations across the country.  We also have over 30 employees, six of which are in franchise management and report daily to our North Bethesda location.  The North Bethesda location now houses our national headquarters and training center.  Since we began the business in Virginia, that also happens to be where the majority of our corporate staff  lives, thus the daily undertaking of the Wilson Bridge.  The result, I was back to where I started eight years before and dealing daily with the horrors of DC traffic!

It occurred to me last summer that it would be quite easy to work from home on Fridays, and I felt that I deserved a day free from commuting.  My second thought was that my employees would really enjoy working from home on Fridays.  And if I could do it, why couldn’t everyone on our management team?  They would each save two hours or more in daily commuting time, and could therefore have an earlier start to their weekend and more time with their family.  I even came up with a clever name, “Flexible Fridays.” 

The way the program works, you can work wherever you want, but there are a few rules:

  1. Must be available by phone
  2. Must be online and available in email
  3. Must be on Instant Messenger

 The first two are quite obvious; the third requirement is because even when in the office, I often use IM to communicate with my team.  I might have a quick question while on the phone with a vendor or franchisee and it prevents me from having to yell and/or put the person on hold. 

Our initial ‘Flexible Fridays’ program last Summer worked great!  Knowing they had at least one day per week where they could avoid traffic really improved the outlook of the staff, and I know they appreciated my gesture.  There have been a few frustrations, but the slight inconveniences are more than outweighed by the increased satisfaction felt by my staff.

 This year I decided to once again offer ‘Flexible Fridays’ and so far, so good.  Other times of the year it would not be possible due to franchisee training and other commitments, but it has become a nice Summertime perk, and one that I plan to continue indefinitely.