Commentary: Cost-saving measures for businesses short of layoffs

Job-sharing, time off, salary cuts among measures to take first

The economy continues to struggle and employers are still confronted with an increasing number of tough decisions. Recent reports state the jobless rate in the Western U.S. now tops 10 percent and is at its highest since 1983. In California, the jobless rate soared to a record 11.5 percent last month.

With negative reports cluttering the headlines, how can we keep businesses afloat in an unstable marketplace? How do we stay ahead of the competition?

One of the greatest areas of concern for many companies is how to avoid a layoff. Successful business owners know the critical role employees hold in their organization. When it comes to ensuring the company's survival, determined leaders will do everything they can to avoid losing valuable employees.

Below are a few strategies that can be implemented to help organizations trim costs:

Reduce travel expenditures. Try to minimize non-essential travel. Offering gas mileage reimbursement may help trim travel costs over flying. A cost-effective option for traveling is videoconferencing, which still allows for face-to-face communication at a minimal price.

Cut back on company perks. While no one wants to give up a company car or health club membership, it's much better to let go of those luxuries than to lose a job. Freezing benefits like 401(k) matching, child care and discontinuing free beverages may result in a significant savings. Management can even let employees select the perk they can do without. Some perks could be earned back by employees as part of an incentive program.

Try job sharing. This arrangement involves two employees working part-time to cover one full-time position. Employers can reduce headcount without interrupting productivity and service. In addition, employees can enjoy more work-life balance.

Supplement pay freezes with paid time off. Many companies are putting a temporary halt on pay increases to help reduce costs. Employers can help boost morale by substituting with paid time off until the company can afford to provide monetary increases again.

Minimize work hours. In order to avoid overtime costs, decrease the number of hours employees work. While you need to make sure you are following federal guidelines to ensure minimum requirements are met, there's no reason you can't put a halt on extra hours worked. Some employees may also be willing to voluntarily work fewer hours, including four-day work weeks, to avoid losing their jobs entirely.

Reduce salaries. It makes a big statement when management takes a cut in their salaries first. Trimming salaries should be made across the board both to avoid having a disparate impact on any particular protected class within the work force and to diminish backlash from employees when only a few are affected.

Offer early retirement or voluntary layoffs. With the growing number of the work force approaching retirement age, employees within this group may be interested in early retirement. In addition, many employees may be willing to take a temporary leave of absence until the company is able to bounce back. Providing incentives for employees who choose either option may help enhance the deal.

While downsizing may be inevitable for some organizations, there are alternatives that have proven to be effective. When executed sooner rather than later, these cost-cutting measures can help save jobs and the business.


Tom Brassil is a district manager in San Francisco for Administaff, the nation's leading professional employer organization (PEO), serving as a full-service human resources department that provides small and medium-sized businesses with administrative relief, big-company benefits, reduced liabilities and a systematic way to improve productivity. The company operates 50 sales offices in 23 major markets. For more information about Administaff, call 800-465-3800 or visit

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