Businesses Get Creative To Avoid Layoffs

Sometimes, the U.S. Department of Labor cranks out statistics no one wants to read.

The current stunner: Unemployment in the U.S. was at 8.9 percent in the spring of 2009, with 5.7 million jobs lost since December of 2007.

When huge corporations announce big cuts, they get the lion's share of media coverage, but the super-tight economy is also hammering small business owners as well.

"Business is the worst I've ever seen," said Jim Boehm, who co-owns a heating and air conditioning company. The small business employs 10 and has been in his St. Paul, Minn., family for 45 years.

Boehm, however, has avoided layoffs by exercising flexibility in scheduling. He says when things got rough over the past several months, everyone went on a four-day work week. They sacrificed a day of pay to stay employed -- and retain their health coverage.

That way, Boehm says, his crews stay busy, and his customers who need help get it. Minnesota’s winters can be brutally cold, but summers aren’t exactly a picnic when it’s 100 degrees and the air is on the fritz.

"People don't like to suffer," he said.

"Our people have been here 30 years," Boehm added, stressing that creativity was needed to keep his employees. Boehm says since his business is a 24/7 affair, not many young people want to go into the field of residential installations and repair.

"There's no place to get people," he said, even with the unemployment rolls so high. "Kids don’t want to work weekends."

Strategies For Cutting Costs

Dennis Roach is a human resources director at a slightly bigger company in suburban St. Paul. His firm, Dey Appliance Parts, employs 126 people in seven states in the Midwest.

He says he was forced to trim the staff by 13 earlier this year, saving about 3 to 4 percent on the bottom line.

"We were employee-heavy," Roach said. "It was a decision that could have been made a long time ago."

Avoiding further cutbacks -- and watching the bottom line -- is Roach’s responsibility right now. The company's strategy to stay trim is fairly simple.

"We froze all wages and we cut out overtime," he said. "We're giving out reviews, but we’re not raising wages."

Shorter hours, wage freezes, no overtime. They're three common responses to the current crisis, but there are further steps a small business can adopt when faced with layoffs.

According to Daniel Kerher, who writes for Business.com, other strategies include:

Allowing certain employees to telecommute to save on office space, phones and computers.

Reducing company pension plan contributions and increasing the employees' portion of health insurance premiums.

Freezing new hiring and reducing staff via attrition.

If some employees have less to do, redistributing responsibilities throughout the business and providing retraining if necessary.

Considering across-the-board pay cuts.

When economic conditions improve, Roach says that keeping the bottom line stable will make it easier to give current employees more hours rather than hiring a new person.

"If things get good, we would offer overtime again," Roach said. But he makes no promises. In fact, he says brutal honesty is the best thing an employee can hear these days.

“When we’re giving reviews, we tell them the bottom line is that, 'You should be thankful that you have a job,'" he said. "And they all agree, 100 percent."