Business is slow, profits are lean, and drastic measures seem necessary to keep going. Many businesses have laid off employees and are now operating down to the bone. Cutting hours or pay of essential staff may be necessary to survive? How do you pick? Ask the Magic 8 Ball or draw straws?
One employer told me, “I’m going to spread the pain equally.” That maybe a good plan, maybe not – the point being, there should be a plan. Big businesses have in-house resources to plan big changes. For businesses without those resources, I’ve listed some at the end of my blog.
Here are some additional thoughts to consider while determining your options:
Communicate – You’re asking everyone to do more with less and fight for the survival of their company. Don’t drop a bomb out of the blue. Cooperation and effort evaporate like an ice cube in August when people feel that management is hiding the truth. Keep employees updated on the general picture. Have you asked your employees for suggestions? People performing the work often have good streamlining ideas. Discuss possible actions like reduced hours and pay if they seem imminent. If the time comes, ask for volunteers; someone might surprise you. In the end, the boss makes the decisions – but employees make up the picture and their input can help.
Unemployment – An employee can file for Unemployment Insurance (UI) if substantial and adverse change occurs in a job. Pay cuts of 20% or more generally meet that definition. This is where the whole “planning” thing comes in. The business of your company must be covered, the most valuable employees retained, and the costs lowered. You must consider questions of skill, experience, discrimination, and possibly seniority. Cut hours and you cut pay. A person can file for partial UI if employed part-time; most don’t.
Status – Remember to spell out exactly what you intend to change. Not paying for certain holidays anymore? That’s not what the employee policy says, so if challenged, you will be paying. Oh, and that employee who keeps working past quitting time may not be exempt anymore since you’ve cut hours and pay. Either pay that hard worker or just say no; non-exempt workers aren’t allowed to “donate” time.
While the economy may be improving, no one is giddy with relief yet. Many businesses continue to suffer and delivering bad news to employees is especially tough. Hopefully, your business – and you – will make it through and prosper.
When you feel like Atlas carrying the world on your shoulders, we’ll carry some weight with you. Want to discuss, moan or query regarding personnel issues? Participate in this blog cuz I’d love to hear from you.
University of Houston Small Business Development Center
Texas Manufacturing Assistance Center Gulf Coast
City of Houston 1Stop Business Assistance
Small Business Administration
Lone Star College
San Jacinto College
College of the Mainland
Cally Graves is an Industry Liaison between business, workforce, and education working with Workforce Solutions . She has 35 years of experience in workforce development, primarily working with employers in Houston, Texas and the Gulf Coast region.