Cissy Pau, Principal Consultant of Clear HR Consulting, was quoted in a recent article in IT Business Edge about creative alternatives to layoffs during these difficult economic times.
Some creative alternatives to layoffs to reduce payroll expenses that we have been a part of include:
- Across-the-board wage cuts: All employees agree in writing to a wage cut of X%. This keeps everyone employed, while reducing payroll expenses by the desired amount.
- Voluntary separation incentive packages: Rather than laying off staff, certain employee groups are canvassed to see if they would volunteer to separate from the company, either with a retirement allowance (if they are close to retirement age) or with a separation allowance.
- Reduced work week: Employees reduce the hours they work in a week, with the proportional decrease in salary. In Canada, under certain circumstances, employees will be eligible for Employment Insurance payments for the portion of hours they don’t work. This has to be agreed to in writing with the Government of Canada, and be for a specified period of time.
- Unpaid leaves of absence: Some employees will take advantage of these leaves (usually between 3 to 12 months) to do things like traveling, taking courses, etc. which would otherwise be difficult for them to do. At the end of the leave they return to work. Their salary expenses are saved during the period of the unpaid leave, and the employee gets to do an interesting experience that they value.
Ultimately, companies want to be seen as “employers of choice”, so they can attract and retain great staff, no matter what the economic conditions. How companies treat staff when times are tough is just as important as when times are good. Using creative alternatives to layoffs is one way to continue to be viewed as an employer of choice.
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