Creative Cost Cuts May Help Avoid Layoffs


Just yesterday I wrote about how a growing number of companies, especially startups, are having to consider laying off employees simply to stay in business.


With no one certain how long the current poor economic conditions will last, companies may cut ranks, only to find they need to staff up again within a relatively short period. Recruiting and hiring new employees is a bigger expense than maintaining existing ones. And there's always the risk that some potential hires may be put off by your prior layoffs.


Companies may be able to postpone or avoid staffing cuts by putting off PC upgrades or otherwise slicing expenditures on gear. Those are the kinds of actions that tech executives responding to recent spending surveys are taking. But more of them are mentioning staff reductions as well, of both temporary and permanent workers.


Before resorting to layoffs, TechRepublic's John McKee suggests tech managers must ask themselves: Is this the only choice or the right choice? A little out-of-the-box thinking may be all that's needed to realize the answer is "no," he writes.


Some companies have turned to strategies like job sharing, finding that at least some employees are willing to work less so coworkers can remain on staff. Other options include letting workers take on new roles so they offer more value to the company. You won't know if employees are willing to take these kinds of actions unless you ask, writes McKee. Employees also may be able to contribute ideas of their own for reducing payroll, if you only ask them.


McKee also suggests completely shutting down at least some offices to eliminate rent, which is typically one of the largest line-item expenses for any company. Telecommuting no longer seems as radical as it once did, simply because more of us do it on at least a part-time basis. Would it really be that difficult for most knowledge workers to make the move to working at home full-time? (I know in my case, the answer is no.)


Companies may find they enjoy benefits other than reduced expenses by allowing employees to telecommute, as IT Business Edge blogger Carl Weinschenk wrote in August.


McKee's third and final suggestion is for companies to apply harder ROI analyses to discretionary expenses such as marketing. Larger companies can learn from their smaller peers, who are used to making do with less and thus are pretty darned good at it, he writes.