On paper, the easiest thing to do when your business is struggling is to layoff a few employees, but unfortunately off paper this is the hardest thing to do when your business is struggling. Since our current economy remains, shall we say, less than ideal, it is becoming extremely difficult to keep a small business up and running while still yielding a profit. As a small business owner or manager, you know that keeping a tight hold on your finances is crucial to the success or failure of a business in today’s world. When you factor in employee cuts, suddenly your finances look a little bit better; but it is an extremely hard decision to make. After spending 40 hours a week with someone, you get to know them. In the end, this makes your job all the more difficult.
Even worse, if you find yourself struggling with this decision, you are not alone. 
According to the Bureau of Labor Statistics, “employers initiated 1,397 mass layoff events in the first quarter of 2011 that resulted in the separation of 190,895 workers from their jobs for at least 31 days.” Fortunately, there are steps you can take before your employees fall into one of these statistics. Consider a few of the alternative solutions to layoffs before making your decision:
Tips to Avoiding Layoffs during the Tough Economic Times
Consider pay cuts for employees
This is probably the most popular way to avoid layoffs because it can return great results. Most employees will not be happy about a cut in pay, but most will be aware that it is better than losing their job. While some may opt to find employment elsewhere, you should still have your pick of employees who will be happy to work for a little bit less money knowing the current state of the economy.
Reduce employee travel whenever possible.
Consider using Skype technology if you need to communicate with a customer or client who is far away. Skype also works great because it allows for employees who need to attend important meetings or seminars to attend virtually. This will then avoid the cost of a flight, hotel, food expenses, and even a rental car. Although this may not be the idea way to talk to clients or attend meetings, the financial benefit can be great.
Limit the amount of paid days your employees can take off
This will not be the most popular news around the office, but once again most will agree that limiting the amount of paid days an employee can take off is better than layoffs. Explain to your employees that they are still allowed to take days off, they just might not be paid.
Eliminate all of the perks that occur in your office
Getting rid of office perks should, unfortunately, be one of the first things to go. Perks include coffee, game tables, office parties, and even end of the year bonuses.
Attempt to tighten employee schedules around the office
This idea came to me after reading an article about a San Francisco company called Samovar Tea Lounge. The company had 60 employees and the owner told everyone they could not clock in early or clock out late, and his company saved $100,000 in just one year! If you have a company that requires employees to record their hours, make this a rule and see if it works for you.
Offer your employees unpaid furlough days
Asking your employees to take a short leave of absence is another option. Aside from feeling bad about laying off employees, it can sometimes be hard to let someone’s talents go. If you feel like you need someone in your company, but simply cannot afford to pay them, this might be an option to consider.
In the end, employees will understand how difficult it is to keep a business alive in this economy and will appreciate it if you take the time to try a few of these ideas before considering layoffs. Ask employees if they have any better ideas when it comes to cutting down on finances, and I think you will find that your dilemma will actually become a team effort.
Amanda DiSilvestro is a writer on topics ranging from social media to telephone answering services. She writes for an online resource that gives advice on topics including inbound call center to small businesses and entrepreneurs at Business.com.
