Recession Slump…Helping Employees During the Crunch

Salary Freezes

A highly used alternative to the dreaded layoff is salary freezes. Even President Obama froze the salaries of some top White house staff. Motorola has decided, in an effort to curb losses, to freeze salaries, pension plans, matching 401k contributions, and require top executive paycuts. Motorola's example demonstrates that reductions in several different places can help the big picture tremendously. Understandably, not every organization has the flexibility to cut certain costs. What to do in that case?

The Four Day Work-Week

Instead of the traditional five day work week, some organizations are switching to a four day work week for a certain period of time. For instance, some higher education institutions are known to stay open Monday-Thursday during the summer months as summer enrollment is significantly lower than during the prime semesters of fall, winter, and spring. Making such a switch helps the organization with energy conservation. For an employee, this one additional day off can make a major difference in regards to household duties. For example, Brooke Stile, a student at Brevard Community College, pointed out that due to the four day work week schedule at her school she is able to take care of things she would normally have to rush on Saturdays to do. Also, she is able to save money on child care, enrolling her son for 4 days instead of 5. Stile is now considering switching to a 4 day work schedule all year round.

Extended Unpaid Holidays/Voluntary Unpaid Vacation Time

Dell Inc. uses unpaid holidays in addition to some unavoidable layoffs. The second largest computer-making company is preparing for a downturn in computer demands as the recession will more than likely slow the need for new computers. As many human resources professionals know, unpaid holidays can be challenging to establish. Special care must be given to make sure the organization does not violate any laws, particularly the FLSA (Fair Labor Standards Act). Consulting an employment law office first would be wise before instituting any unpaid holiday requirements to ensure legal accuracy.

Flexible Working

Flexible working includes a wide variety of options, such as:
• Flexible scheduling for key hours - Allowing employees to pick or create their own work schedule while requiring peak hours to be worked.
• Telecommuting - Working from home a few days during the week/month
• Teleworking - Performing all duties of the job directly from home

As discussed in an earlier Astronology article, telecommuting/teleworking offers many benefits including energy conservation and lower utility costs. It also lowers absenteeism, encourages employee engagement, and increases retention rates.

To Adjust, or Not Adjust...That is the Question!

According to a New York Times article, employees may agree to these adjustments only for a temporary basis. Truman Bewley, an economics professor at Yale University stated, "These are feel-good, temporary measures." Professor Bewley has done studies on what happens to wages during a recession. "If the sacrifices look as though they are going to continue for many months...some workers will grow frustrated, want their full compensation back and may well prefer a layoff that creates a new permanence." Not everyone shares this opinion however. Maurice Guidice the owner of web design firm Hot Studio says, "In 2000, it was like ‘cut the heads... this time it's different. Our number 1 priority is to keep people employed and to do that we're going to bank the money and keep it for when we need it. I know some people are super bummed, but they understand we're trying to keep the work force intact."

When considering alternative solutions to reducing costs in a recession, there are an abundance of options. All of these options, or some combination of them, can give an organization the boost it needs in order to ride the rough and perhaps deadly currents of this recession. The key is to find what works for your organization. To determine whether some of these options are viable, why not involve the employees? An informal team meeting or an employee survey can solicit employees' opinions and ideas on how to help the organization to survive with their employee base intact. Employee involvement will also help in garnering employee appreciation, respect, and cooperation for whatever decision is made for business survival.