How To: Small Business Owners Can Avoid Layoffs in Tough Economic Times

Posted by on August 10, 2011 in Business Management, Business News [ 1 Comment ]

You know better than anyone that after working at least 40 hours per week your employees become like a second family.

You learn about their families, go out to lunch with them, and in some cases this has gone on for 10, 20, or even 30 years.  With that said, you are not alone. Any business owner would agree that laying off good, hard-working employees is one of the hardest parts to keeping a business afloat, especially in these tough economic times.

Unfortunately, this is an issue that many companies, both large and small, have had to deal with more than usual.

According to the Bureau of Labor Statistics, “employers initiated 1,397 mass layoff events in the first quarter of 2011 that resulted in the separation of 190,895 workers from their jobs for at least 31 days.” Fortunately, there are steps you can take before your employees fall into one of these statistics.

Although some of the alternative choices may be difficult and a bit of a shock to your workers, no measure is as drastic as a layoff, and ultimately your employees will be more receptive to whatever alternative decision you make. With these simple ideas to keep in mind, you just might be able to get your office family through the tough times.

How to Avoid Layoffs During Hard Economic Times

In order to lessen the chances that you will have to let some of your employees go, here are some tips to keep in mind:

  • Leave of Absence – Offer your employees unpaid furlough days and you will be able to keep your talented workers while still keeping your head above water financially. Generally, an unpaid day off would not make an employee happy; however in today’s economic times people are beginning to realize the value of having a job no matter how much they may or may not work. You will be surprised how appreciative your employees will be when they are not being laid off like many others nationwide.
  • Pay Cuts – See what you can do in terms of employee salary. If you are really hurting for money, there is a good chance employee pay cuts will do the trick. In most cases your employees will understand, while others will opt to find other employment.
  • Limit Days Off – Paid sick days and vacation days can add up, especially if you are a small business. In order to avoid layoffs, put in place new parameters when it comes to paid sick and vacation days. Explain that this does not mean your employees can’t take a sick day or a vacation day, it simply means it will not be paid. Once again, for most this will sound far better than getting laid off.
  • Reduce Traveling – Traveling is a huge expense for any company. With technology such as Skype, your employees can be at important meetings or seminars virtually as opposed to having to fly out and stay in a hotel. Although not ideal, it will help avoid layoffs, so the benefit is there.
  • Tighten Schedules – If your business requires employees to clock in to track their hours, set a rule about clocking in on time. Take San Francisco company Samovar Tea Lounge as an example. The owner told his 60 employees they could not clock in early or clock out late, and his company saved $100,000 in just one year.

In the end, you may have to take measures that are less than ideal to your employees; however most will be understanding if you are honest. If you have to make a financial decision between doing something the employee may not like and laying off the employee, chances are your employees will actually be happier with the former.

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Editor’s Note: This “How To” blog geared towards small business owners will run each Wednesday, the goal being to assist small business owners in their day-to-day operations. As a small business owner, is there a topic you would like to see covered? If so, email:

One thought on “How To: Small Business Owners Can Avoid Layoffs in Tough Economic Times

  1. Pingback: How To: Small Business Owners Can Avoid Layoffs in Tough Economic Times – Resource Nation (blog) | Financial News One

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