Layoff aversion & strategies to maintain your workforce
- Published: Tuesday, May 19, 2020
The economic shock from the coronavirus is something we have not experienced in recent memory. The sudden stoppage of the economy makes it difficult to remember that until March one of the primary concerns for many business owners was finding a workforce to meet their needs.
We don’t know what the future holds, so it is difficult for many business owners to know how to proceed. Yet, we know that planning for the future, including the future of your workforce, is key to positioning your business for success.
Layoffs and Alternatives
Layoffs are a mixed option for businesses. Yes, they’re sometimes necessary, especially in situations where business had dried up. However, layoffs often create unforeseen problems, despite their impact on the short-term bottom line.
If you think that business might rebound and can afford to think creatively, there are alternatives available to you, including:
- Apply for emergency assistance from the Small Business Administration: The Small Business Administration has programs to help businesses cover expenses, particularly during the COVID-19 crisis. For more information or assistance with these SBA programs, see http://missourisbdc.org/.
- Shared Work Programs: Shared work is an unemployment compensation program that is an alternative to layoffs. This program allows businesses to keep people employed while reducing the work of an ‘affected unit’ by 20 to 40 percent. While their workload is reduced, employees are able to receive a portion of their unemployment benefits. For more information on Shared Work in Missouri, see https://labor.mo.gov/shared-work.
- Paid Leave/FMLA for employees who are impacted by COVID-19: The Families First Coronavirus Response Act (FFCRA) provides emergency paid leave as well as Family and Medical Leave (FMLA) to employees who have been impacted by COVID-19, including for the closure of a school or child care facility. Employers are eligible for a 100% payroll tax credit for all qualifying wages paid under the FFCRA, including tax credits incurred to maintain health insurance coverage.
- Upskill Your employees: There are a number of services and programs in Missouri for employers to develop the skills of incumbent workers, including the Missouri OneStart program and Missouri Works. These services are often available at free – or reduced – costs and provide an opportunity to prepare current workers to meet future needs. Contact your nearest community college or Job Center to learn what programs are available.
- Become a subcontractor: It might surprise you, but there are businesses that need workers right now. Depending on the work and the skills of your employees, it might be possible to pivot and become a contractor for some of these businesses. There are several contractual and legal issues that you’ll need to discuss, but this would allow you to keep your workforce employed until your business returns.
- Upgrade your facility/business: Are there projects you’ve wanted to complete but haven’t had the time to do so? Or are there certain tasks you normally perform later in the year that you can do now? If you have the cash available, now might be the time to do work you’ve been putting off by using your current workforce. By doing it now, you ensure your facility is ready to go once demand returns.
- Cross train existing employees for increased flexibility: One challenge that employers often face is the ability of their workforce to do different jobs. Now might be an opportune time, while work is slow, diversify the skills of employees so that you can avoid production bottlenecks in the future.
- Furloughs/Reduced Work Week/Cut Hours/Hiring Freeze/RIF: There are a number of options available for employers to reduce labor costs besides layoffs. The easiest options to institute are a hiring freeze and/or to eliminate open positions, as they do not impact current employees. Furloughs, reducing work weeks, or cutting hours keeps people employed, but they do impact current employees. All of these options are good for employers who expect a temporary downturn in work.
- Offer Sabbaticals: Sabbaticals are periods of time when employees do not work in their regular jobs. Typically sabbaticals are offered so that employees can develop new skills, find time to travel, or rest. Sabbaticals can be paid or unpaid, but employers typically continue benefits during a sabbatical. The expectation is that an employee will return to their job once the sabbatical is over.
- Change your Business: There are a number of business adaptations that can be made in order to maintain your workforce. Some of these options involve sacrifices in order to receive short-term benefits, e.g. reducing your business reserve funds, selling some assets to maintain cash flow, and even sacrificing your personal finances. However, there are other options that might help in the short-term but will also ultimately help your business thrive in the long-run, e.g. renegotiate terms with your vendors, suppliers, contractors, etc. or negotiating relief with creditors. While some of these choices might be painful, they can provide a space to maintain your workforce until it’s absolutely necessary to lay off employees.
The Missouri SBDC is funded in part through a Cooperative Agreement with the U.S. Small Business Administration. All opinions, conclusions, and/or recommendations expressed herein are those of the author(s) and do not necessarily reflect the views of the SBA.
Writer: Robert Russell
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