2009 Small Business Guide
small business
Avoiding small business layoffs

Combining employees
Kiefel also explored sharing employees with another company whose business cycle runs counter to Wheat Ridge -- Wheat Ridge is busiest in summer, and the other company's busy time is in the winter. By working at both companies, employees' income would remain fairly steady. However, that didn't occur because of business conditions at the other company.

Some companies offer or mandate unpaid vacations or sabbaticals, which can help the organization get through a particularly tight time. However, you need to think through the length of time employees could be gone, notes Brian Drum, president and chief executive officer of Drum Associates, an executive search firm in New York. If they're away too long, the business may change so much that it becomes difficult to reintegrate them.

And, any plan of action that reduces employees' incomes will be tough on those whose budgets already are stretched. Some may feel forced to look for other jobs.

One way to cut costs with less impact on lower-income workers is to suspend bonuses and freeze salaries. However, Zickerman and some experts advocate retaining bonus programs as a way of keeping employees' attention focused on the bottom line.

Another option is to discontinue a 401(k) match, if you're making it, Zickerman notes. Of course, you'll want to encourage employees to continue contributing to their retirement and re-establish the match as soon as possible.

When developing plans to cut payroll costs, you want to keep some, but not too much, flexibility, Conerly says. "It's hard to have one plan that fits everyone, but it's an administrative nightmare to have ten plans."

Pulling together
Green River Cabins, a manufacturer of log cabins, took a slightly different approach when sales began declining last year. "We had to modify the business first, and then the labor," says Dean Garritson, its president.

Until late 2008, the 16-person company manufactured log cabins. Employees worked four ten-hour days, Monday through Thursday, in the Green River factory in Campobello, S.C.

That schedule worked well when orders were rolling in. When they dropped, Garritson knew the company would have to broaden its lines of business in order to preserve sales and keep employees busy. For example, he began accepting some of the requests the company had always received to add a deck to one of its newly assembled cabins. Previously, the company had not pursued these.

The new work has presented both opportunities and challenges. Employees know Garritson is striving to keep them on the payroll. However, the work has changed. No longer is it all done on a schedule at the factory. Employees travel to their customers' locations and often work throughout the week and weekend, depending on the weather. It hasn't always been easy, but "everyone is working," he notes.

That alone can boost in morale. When employees sense everyone is working together, they're more likely to offer ideas and insight that can further save expenses or boost sales. "A crisis can bring a company together or tear it apart," Boswell notes. "The leaders have a lot to do with which way it goes."

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