Economic Recession and Employee Lay-offs have been frequently talked about and most worried-about public topics in the recent times. While layoffs seem to be the most trodden path by businesses to remain financially viable, there are many other approaches that companies can take to navigate economic downturns.
Cut 10% for 100% : If reducing employee cost seems inevitable and say, reducing 10% of the salary cost is the need, reduce 10% of the salary to 100% of the employees and distribute the pain rather than giving 100% of the pain to 10% people by driving them away when they need you the most. If you wish not to take risk losing your top most performers by reducing salaries, exempt the top 1% performers from the salary reduction exercise. Most companies talk a lot about how they care for their people and about a family culture within the organisation; this is the time to practice what they preach.
Cut costs, not jobs : One more alternative to layoffs is to implement cost-saving measures in the company’s operations. Layoffs aren’t free of cost. They come with costs such as severance pay apart from other indirect costs. Instead of incurring costs to reduce costs, work on streamlining processes, reducing waste and inefficiencies, and finding more cost-effective ways to produce goods or deliver services. By identifying and addressing areas where the company can be more efficient, it may be possible to cut costs without having to let go of staff.
An even better approach is to encourage employee involvement in cost-cutting efforts. Many companies have found that employees can be a valuable source of ideas for cost-saving measures, as they often have first-hand knowledge of inefficiencies and areas for improvement. By involving employees in the process and encouraging them to come up with creative solutions, a company can not only save money but also improve morale and foster a culture of continuous improvement.
Look around creatively for new opportunities : Finally, Business leaders could think of how their organisations can adapt to a different economic situation and explore ways to value-add to customers in a recession scenario. As Robin Sharma said, recession could be an opportunity in wolf’s clothing. During COVID outbreak, we have witnessed some companies quickly changing their product portfolio and improving business while their peer companies ran out of ideas and then out of business. It is said that telephone and automobile were invented during recession times. Winners during recession are companies that adapt to consumers’ changed needs during recession or invent new technologies.
In summary, while layoffs may be necessary for some companies in a recession, there are several other approaches that can be taken to navigate economic challenges and maintain a strong and motivated workforce. By implementing cost-saving measures, involving employees in the process, investing in employee development, and diversifying revenue streams, companies can find creative and sustainable ways to weather any economic storms.
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