Cost-effective alternatives to layoffs – 4 examples

There can be various reasons behind the need to part with an employee. Some concern individual and negative situations – they relate to improper performance of duties, lack of fit in the team or dissatisfaction with working conditions. A completely different group of causes involves the internal conditions of the company (e.g., overstaffing of the department with the number of duties) or external ones (the economic situation, as was the case, for example, in the COVID-19 pandemic).

Usually, their effect is a decision by the management to reduce the workforce. Still, more and more companies are beginning to consider different approaches to maintain organizational stability without negative consequences for employees. Here are 4 of the most popular and cost-effective alternatives to layoffs.

Why are companies looking for alternatives to layoffs?

The decision to part ways with an employee – especially if the cooperation was going well and the employer is satisfied with the results – never comes easily. For this reason, superiors usually look for ways to keep the person in the company, such as by offering a higher salary or new models of cooperation.

The situation becomes much more difficult when the decision to dismiss comes out of the employer’s side due to an unstable internal or economic situation (which does not go unnoticed) – that is, it is not related to the employee himself and often affects groups, not individuals. However, keeping in mind that it is mainly employees who work every day for the success of the organization, modern companies should look for alternatives to layoffs to ensure that downsizing is not needed.

Alternatives to layoffs – possible solutions

Firing an employee is a last resort – there is usually no turning back from such a decision, and you never know what consequences (for both the person and the company) it may lead to. So if you are very keen on keeping an employee at the company despite internal problems, you should consider what other options are available to you. Below are the most popular alternatives to layoffs that you may encounter in economic reality.

1. Redeployment – change of position

The decision to temporarily reassign a particular employee to another position – both within the department and the company itself – is the primary alternative to dismissal. This strategy makes it possible to take advantage of an employee’s current potential and keep his or her experience and skills within the organization, while at the same time ensuring that the company adapts to new market conditions and requirements.

The employee is thus allowed to continue employment with the company, and on top of that – new challenges and opportunities for development. This way, both parties can enjoy the benefits of such a situation.

2. Reorganization of tasks and responsibilities

This strategy involves reallocating duties, changing responsibilities, and redefining employees’ roles to increase efficiency and make optimal use of resources. Reorganization of tasks and responsibilities can include various aspects, such as reviewing and restructuring jobs, adjusting hierarchical lines, redefining responsibilities, and even changing the structure of teams.

By analyzing and reviewing the responsibilities of each job, areas of duplication of work, underutilized skills, or suboptimal segregation of duties can be identified. Improving this process leads to increased productivity and efficiency throughout the company – and reduces costs in other areas, preventing any job cuts.

3. Investment in employee development

Perhaps at this point, you are not able to keep the employee in his or her current position but see gaps in other areas. Talk to the employee about whether he or she would like to try his or her hand in a new area, learn new skills, or encounter different challenges.

If you provide an investment on your part in the development of such a person and match the new role to the potential you see in him or her and his or her expressed desires, you can assume that you will succeed in keeping the employee in question at the company. At the same time, in this way, you will help him adapt to the changing labor market and increase his value both now for your organization and in the future.

4. Temporary reduction in working hours

The last strategy is the most drastic of all those mentioned, but it can also bring positive results. This is because reducing working hours (changing full-time to 1/2 or 3/4) allows you to reduce the employment costs incurred, while it gives the employee a chance to look for additional work (to maintain the current standard of living) in the acquired free time.

In this way, both parties can be satisfied, and you do not lose staff and can return to the previous employment model once the domestic or economic situation stabilizes. Of course, such a decision requires a serious discussion with the employee about whether such conditions will be suitable for him.

Alternatives to layoffs – summary

The alternatives to layoffs outlined above are ways to prevent drastic staff reductions – in the quest to build a stable organization that can adapt to changing market conditions, it is worth taking a close look at these innovative solutions.

This is because it is often the case that downsizing seems to be the easiest and quickest way to find savings, but its effects can be very serious – and savings can be implemented in other processes within the company as well. However, before deciding to implement one or more of the practices mentioned above, it is important to conduct an in-depth analysis and consult with the management team to find the most appropriate solution for the company.

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