Does Your Small Business Know the Right Way to Downsize?

No company, especially those that are smaller in size and get to know their employees on a first-hand basis, likes the idea of downsizing.

That being said, letting employees go from time to time is pretty much a reality in the business world, especially when you want to keep your business running at even or with a profit.

So, how do you properly go about letting people go so that your business does not get the reputation of being a bad place to work at?

Among the things to keep in mind:

  • Prior to letting people go, make sure you have exhausted all other possibilities so that the downsizing is in fact a last resort. Discuss with those workers about to be let go what choices they would be willing to make in order to keep their positions. Would they agree to a pay cut and/or cutting their health benefits? Would they be okay with working fewer hours if it meant trimming their pay? One way to go about this would be taking two positions down to one position, with the two impacted employees splitting the job on a part-time basis. While the odds are one or both will be unhappy with this, you will find some that believe part-time work is better than no work at all. There are a number of options to consider before the final call to downsize one or more employees;
  • Consider furlough days – In this scenario, full-time employees are required to take one or more days off during the year without pay. While there is little doubt your employees will be less than thrilled with not getting paid, it certainly does beat getting let go. The key here is to stagger the furlough days during several months or even for the year so that they are not all done at once;
  • Look at four-day, 10-hour work weeks – Some business owners may shudder at the idea of not being open one day a week, but keeping the office closed for a day cuts down on electricity and other expenses. The final savings in operating costs could make it worth your while;
  • Make sure downsizing is evenly spread out – Along with the idea of not targeting a select group of employees from a fairness stand point, eliminating an entire department is not good either. In the event you eliminate the entire public relations department, how will you communicate with the outside world in promoting your company? Think first how each and every cut will impact your company’s ability to effectively stay in business;
  • Think about the remaining employees – When you let one or more employees go, consider the impact it will have on those left behind in the office. You are likely breaking up hard-working teams, office friendships and more. Make sure that you communicate to the remaining employees why the downsizing was needed, trying to assure them at least for now that they have nothing to worry about;
  • Handle the downsizing with dignity – Lastly, letting one or more employees go should be done with as much dignity as possible. Face it, there is never an easy way to go about such a task, but you need to do it with the person or person’s well-being in mind. As someone that was once laid off via an e-mail on a Friday morning after five-and-a-half years with the company, I lost a lot of respect for that employer in a hurry. Put yourself in the worker or worker’s shoes that you are about to let go. How would you want an employer to treat you in such a case? It is not a pleasant situation, but make sure you do it the right way.
About the author

Dave Thomas writes for a variety of websites on topics such as human resources and running a small business.


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