Cutting Costs to Avoid Lay-offs

There is no doubt that the economy is affecting the construction industry across the board. From highway infrastructure to building, construction companies across the country are feeling the pinch of the recession, so much so that many are seriously considering cut-backs and layoffs.  Caterpillar, Inc., the world's leading maker of heavy equipment used in construction, recently announced job cuts that will ultimately terminate nearly 20,000 positions.  Depending on each company's financial situation, layoffs for some are inevitable, but for many companies there are several ways that employers can cut costs to put off or avoid lay-offs.

Voluntary Incentive Programs Some employees look forward to the possibility of participating in voluntary incentive programs, such as early retirement plans.  Such plans should be made available to all eligible employees or a select group that meets certain criteria.  It's important to ensure that participation is voluntary.  If employees feel coerced to accept an incentive package, your exposure to age discrimination claims may increase. Voluntary Reduction in Hours Many employees desire the opportunity to work less than full time.  Whether they have family responsibilities, a part-time business, or just a desire to enjoy more free time, many employees would welcome an opportunity to reduce the number of hours they work in a week but often feel as though it is not welcomed by the employer. Salary Reductions Although not a popular option for employees, across-the-board salary reductions offer a way to lower company expenses while retaining your staff.  Surprisingly, many employees are willing to accept a reduction in salary to see that their jobs and the jobs of their colleagues are spared.  Telecommuting Since money may not be available for raises or bonuses, consider offering employees the opportunity to work from home.  Allowing staff to telecommute will send a signal that you value them as a part of your staff, even though you may not be able to reward them financially at this time.  Furthermore, studies show that telecommuting improves staff productivity, helps to retain valued employees, reduces absenteeism, and may allow employers to reduce overhead expenses by decreasing the amount of office space and in-house equipment required. Job-Sharing Consider creating job-share opportunities for your employees.  Job-sharing is when two people share the same job within a company, but they work different parts of the week.  This concept can be implemented for both exempt and non-exempt employees throughout any organization and depending on your company's policy, job-sharing employees may not require certain benefits. Temporary Staffing Agencies Unlike temporary workers who may work directly with your company, temporary employees from staffing agencies are employees of the staffing agency. By working with temporary staffing agencies, employers may avoid certain administrative, training and statutory employment expenses, such as workers' compensation insurance, unemployment insurance, some taxes and other fringe benefits. As with independent contractors or temporary workers that exist on your company's payroll, it's equally important not to treat them as regular employees of your company.  Doing so may create a co-employment situation if a litigation matter surfaces down the road. Other Suggestions Employers may also consider temporarily eliminating some paid holidays, social functions and costly perks such as free coffee, to help lower costs during tough times.  When business picks back up, these things can easily be re-introduced to the staff, but be sure to review union contracts and speak with a labor law attorney licensed to practice in your state before making any major changes. Conclusion Try to do what is necessary to make employees feel involved while maintaining their trust and commitment during tough times.  You can accomplish this by asking employees to contribute ideas and suggestions on ways to lower costs that will serve the needs of the company, while also helping to save their jobs and meet their own personal needs.  Employees are more likely to react positively to change when they are involved in the decision-making process.   Furthermore, communicate early and often with them, and if you're unable to share certain information, try to explain why.  Most employees will appreciate your honesty and accessibility and when business picks up, you want to make sure that your most valuable employees are still onboard and ready to move the company forward.