Are you afraid of the coronavirus impact? Find out how to deal with it
The global coronavirus epidemic has presented an unprecedented economic impact on most businesses. Small businesses have been worst hit by this crisis due to minimum cash reserves to cushion them through tough times.
To keep up, some companies resorted to cost-cutting, massive layoffs, and in worst scenarios, shutdown. All businesses are understandably concerned about capital resources, including sales and customers’ confidence.
However, not every business needs to resort to layoffs when recession threatens. In fact, those that make responsible alternatives are likely to emerge even stronger after the Covid-19 downturn.
Therefore, consider the following measures before opting for a workforce reduction.
Schedule furlough alternative
Instead of layoffs, consider a furlough option to cost-cut expenses. During the mandatory furlough, you can offer partly paid or voluntary severance for a specified period.
As opposed to layoffs, this can be subjected to call-back rights or any other stated expectations. Consider asking some staff to work half hours without payment.
It is the perfect time to welcome unpaid sabbatical leave, maternity leave, sick leave, or incentivise early retirement. Make the employees understand that your overall goal is to prevent retrenchment. As such, they will be more willing to furlough options. Some will comfortably take to forgoing bonuses or allowance and absorb extra workload to compensate for vacant positions.
Although furloughs can still have some impacts, employees will easily move on and return when the economy bounces back.
Hold the hiring process, particularly in non-essential positions. This enables the existing employees to consolidate and commit to essential works that can continue generating revenue to the company.
As companies embrace remote working, tech-related positions are vital. Non-essential departments like research can be put on hold. If eligible retirees opt for early retirement, do not fill their positions.
Instead, ask other employees to step up. This might, however, force you to slightly increase their salaries to encourage them to take up a larger workload. Besides, halting hiring will relieve employees of the threats of being replaced.
Lower salary and other benefits
Everybody understands the current difficult situation that is covid 19. At times, employee health insurance and fringe benefits are detrimental to a company’s financial position.
Therefore, pay cuts, suspending or offering partial medical covers can be favourable steps.
Some will even favour it compared to layoff.
When lowering salaries, remember to include ratification measures to avoid losing some of your best employees.
For example, pledge to continuously review the decision or offer other benefits like position elevation when normalcy restores.
Diversify your ‘cash cows’
Whenever there is economic turbulence, the effect often spreads throughout the supply chain. Every business is impacted differently.
For instance, those in airlines are likely to be hit harder as opposed to those in recession-proof sectors like education or health industries.
You can, therefore, re-define your target audience, do in-depth marketing and look for more partnerships to ensure continuous workflow. This will eventually reduce the chances of job losses.
For example, if you are a marketing agency, partner with IT service providers, target airlines, reach to several manufacturers, and even health insurers.
In the end, you will have uninterrupted cash flow while avoiding stringent cost-cutting like layoffs.
Lead by example
Economic downturns require collective commitment and sacrifice from both employers and employees. If cutbacks are the only option to save retrenchment, then lead by example.
Servant leadership is paramount at this time. Embrace the decision by president and deputy to take an 80% pay cut to channel more cash to the Covid-19 fight. If you are the CEO or top leader, take the largest voluntary cut back.
Your juniors will likely reciprocate the same and take it as a positive measure to sustain the company.
Minimise temporary and contract workers
Most temporary and contract workers are independent and often prepared to be axed by the organisation during tough times. On the contrary, permanent employees are never psychologically prepared.
Therefore, layoffs might set them back – let alone the fears of Covid-19. Workforce like interns, lawyers and consultants are annual and contractual; thus, they can be put on a back burner during this covid 19 economic period.
Such a workforce can easily re-acquire the services of contractors without necessarily undertaking a new recruitment process.
Have open communication
People often favour organisations that have honest and open communication channels.
Employees know that there is a global health crisis, the economy is struggling, and changes are also inevitable at the company’s level.
Communicate the next steps for that the company intends to make during and after the COVID 19 crisis. Exercise some clarity on the company’s financial position and the areas that will be prioritised.
For example, tell them if job security, cash flow, or capital requirement are your main concerns.
Hold a meeting and crowdsource ideas with them on what the company can do first.
They might have thoughts like taking cutbacks or allowances that perhaps were not in your plans. Demonstrate that you understand their concerns by implementing collective agreements.
High chances are you will receive much support from them.
Depending on the extent of the economic downturn, always try to make layoffs the ‘last resort.’ In such a case, have a compassionate way of implementing it to avoid exposure to other challenges.
Embracing these measures means you will still have your experienced and valuable employees when the economy bounces back.