Post a new topic
    6 Replies Latest reply on Mar 5, 2009 12:42 PM by Lighthouse24

    Layoffs versus pay and hour reductions

    clnshirtz Wayfarer
      Business has slowed down for me to the point where I need to reduce employee costs. My 2 options seem to be - either lay off or fire one of 3 employees or ask for them to all take pay and hour reductions equal to getting rid of one employee. I am leaning toward getting rid of one of them, because I think it is in some ways easier for one person to try to find a new job than 3 people to try to get by on less. However, I can see the other side too.

      What do people advise? Please share specific experiences from the past if you can.
        • Re: Layoffs versus pay and hour reductions
          americangirl1 Newbie
          I have never had employees; they were all independent contractors which significantly reduced costs! You may want to look into this. Don't mention it to the employees until you find out the pros and cons. If that idea does not appeal to you, I would lay off one person. Otherwise, all 3 will be demoralized. The 2 that are left may work harder after they see that you needed to downsize! I know it's not easy or a pleasant decision no matter what you do, but sometimes you just need to make the best and most practical business decision for yourself and for the sake of your business. Hope this helps, and good luck!
          1 of 1 people found this helpful
          • Re: Layoffs versus pay and hour reductions
            LUCKIEST Guide
            Layoffs versus pay and hour reductions, Welcome

            I do not have an answer to your question, BUT the question is very important and timely.
            In today's New York Times Sunday) there are two columns on layoffs versus pay and hour reductions.
            Front page "Forced Down the Job Ladder" and in the Business Section "JOBS" "An Alternative to Layoffs:
            The Shorter Workweek.

            Hope this helps, you have to make the most important do that you can stay open and survive.

            Good luck, LUCKIEST
            1 of 1 people found this helpful
            • Re: Layoffs versus pay and hour reductions
              Lighthouse24 Ranger

              There's not an answer that's always right or wrong for this. It depends a lot on the age, skills, goals, and commitment of the employees involved, your state's unemployment insurance, the local job market, the benefits you offer, and many other factors.

              A major risk in reducing hours or pay is that you may lose your best employee -- because he/she is the most likely to seek and find a better job elsewhere. So you could still end up with two employees after all was said and done, but perhaps not the two you'd prefer. If that's a possible risk, then it may be better to make the decision yourself now rather than allowing it to just "happen" as a result of pay cuts.

              Of course, a layoff can have a negative impact on you, on the remaining two employees, on the family of the one who is being let go, and even on your store's revenue (especially if customers liked the person you laid off or if he/she performed a key role that other employees can't do as well). It most states, laying someone off can also cause a small business' unemployment tax rate to take a huge jump (so you may not reduce your overall costs by as much as you thought you would).

              Again, it's a very difficult decision, but those are at least a few things to consider when making it. Good luck.
                • Re: Layoffs versus pay and hour reductions
                  clnshirtz Wayfarer
                  Thanks to all of you for great answers. Am leaning right now towards cutting all hours and providing the view that we are all in this together.
                    • Re: Layoffs versus pay and hour reductions
                      Lighthouse24 Ranger
                      You're welcome! As I said, there's no right or wrong answer. Given your decision to cut back hours, may I make the following suggestion? Talk to all three employees together, at once, and make it clear that (a) the cutback is a temporary measure, (b) you are doing it to ensure that there will be no layoffs, and (c) they are not to discuss it (or anything else about your business situation) with or in front of customers or suppliers.

                      The reason is this: If customers think you're tanking and the doors may close tomorrow, it can scare them away and actually make matters worse. Also, if you have a good employee that one of your customers or suppliers would want to "steal" for his/her own business, overhearing your employees discuss the cutback or other problems may prompt that person to make your good employee an offer on the spot.

                      Good luck. I hope your business is thriving again soon.
                  • Re: Layoffs versus pay and hour reductions
                    B0NJ0UR Newbie
                    There is another option to keep all three of your employees. Please call me if it worth it to your business and to your employees. I have had the pleasure to help many companies like yourself at no cost to find resolutions for very similar situations as yours. It's a win for your business (as you may still need production to continue); it's a win for your employees (if they are the true assets you want to keep). Don't forget that laying off may effect your UI rating % in the long run when your former employees start to make UI claims.

                    -Crystal
                    1 of 1 people found this helpful