The research shows that flexible alternatives to job cuts are the most cost-effective, least disruptive, productivity sustaining way to reduce labor expenses in recession. Flexible downsizing, in the form of salary/schedule reductions, adding unpaid vacation days, furloughs/sabbaticals and job sharing, not only saves money, but prepares an employer to respond when the economy turns around. But you don’t have to tell that to Paul Levy, the CEO of Boston’s Beth Israel Deaconess Medical Center. The hospitals 8,000 staff members overwhelmingly supported a broad range of flexible alternatives so people could keep their jobs.
But how do managers and employees begin to create these alternative flexible solutions? As I mentioned in an interview on Public Radio International’s The Takeaway, here some possible first steps:
For managers, like Beth Israel’s Paul Levy, who want to initiate the conversation:
- Estimate how much money you need to save, and don’t have any preconceived ideas about how you want to achieve that goal.
- Go to your team and explain the situation being as transparent and upfront as possible. Communication is the key in successful downsizing—research shows it lowers the level of stress, improves job satisfaction, increases the desire to stay at company, and sustains performance levels.
- Ask for ideas and proposals that could include reduced salaries/schedules, furloughs, sabbaticals, job sharing, and additional unpaid vacation days.
- See how close you get to your cost savings goal with the proposals you receive.
- If voluntary efforts aren’t enough, you could institute across the board salary/schedule cuts, additional unpaid vacation days, and furlough/sabbaticals that effect everyone equally including YOU—it’s important that managers share the pain and participate.
- You may still need to cut jobs, but you’ve minimized the number of layoffs needed.
- Keep reevaluating the market and economic situation, being sure to restore time and wages as soon as you can so you don’t lose people.
For employees who want to initiate the conversation:
- If you get a sense that layoffs may be necessary, mention the flexible alternatives for reducing labor costs because chances your boss hasn’t thought about salary/schedule reductions, adding unpaid vacation days, furloughs/sabbaticals or job sharing. By making your manager aware the potential options, you are inserting them into decision-making process early on rather than later when the decision to cut jobs has already been made. Why is this important? Many managers are responding to my explanation of the benefits of flexible downsizing versus job cuts by saying, “I never thought of that.” Help your manager think of it as early as possible.
- Then follow the same process you would if you were proposing a flex plan for personal reasons. Only in this case you are leading with the business needs—reducing labor costs.
- Create a plan, either individually or with a group, that outlines the flexibility you are proposing—cut salary/benefits from x%, take four week furlough during a slow time of the year, add 6 unpaid vacation days to the calendar—whatever your plan looks like. Emphasize the costs the plan would save—salary and even benefits if you don’t’ need them. Also, outline how you will continue to get the job done and contribute your experience and knowledge to helping the business recover.
- Then after your plan is approved and implemented, sit down with your manager to review periodically. As the market recovers make sure he or she knows it’s time to renegotiate your flex plan to restore some of the lost income and time, assuming that is what you want.
Let’s get the manager and employee conversations started and create some innovative, cost-effective flexible alternatives to reduce labor expenses and minimize job cuts. It is a win-win for everyone. Do you have any suggestions for starting the flexible labor cost savings conversation in your workplace as a way to manage through the recession while minimizing layoffs?