Winning Workplaces

On her blog yesterday, About.com's HR guide Susan Heathfield acknowledged that workforce reductions are a tough but realistic choice that must be faced in order for some businesses to survive trying times like these. Still, she points owners and leaders to some steps they can take to avoid getting to the plateau of staring reductions in the face.

These include:

Institute a hiring freeze
Freeze salary and benefit increases
Let contract and temp employees go
Incentivize employees to leave through voluntary layoffs, buyouts, or early retirement
Plan to save costs associated with normal employee attrition
Reduce pay rates, fringe benefits, or work hours
Schedule unpaid employee furloughs

These are good suggestions, some of which Winning Workplaces Chairman Ken Lehman addressed recently in his "Share the Pain" editorial. Yet, as he stressed in that article, your attitude toward team building and nurturing highly engaged employees can yield dividends in this cost-cutting process. Consider Ken's thoughts on how the employee engagement of two of our recent Top Small Workplace winners, which faced the prospect of layoffs in industry downturns, benefited for the long term in their open and honest communication with employees:

2008 winner JA Frate, a light trucking company from Illinois, and 2007 winner Corporate Ink, a technology-industry specific PR firm from Boston, met with their employees when times were especially tough in recent years and negotiated pay cuts in order to avoid layoffs. Everyone, including the CEO, took a cut.

The payoff for both companies came when times improved. Beyond the pay element for workers (restoring their full wages), the firms were in a better position to pay themselves when conditions improved – while their competitors were scrounging to hire back competent talent and ... re-develop relationships with their stakeholders.

Part of Ken's argument here is that if you try "share the pain" strategies first, it will make the next tier of choices before leadership – including flat-out workforce reductions – more palatable, for everyone involved. So reductions should be a last resort.

What has experience taught you about layoffs in your business? How have you tried not to go there, and how have you benefited as a result?