Cost-Cutting To Avoid Layoffs. Safe Business Happy Employees!

Layoffs often become the first solution to cost-cutting and keeping the business afloat. However, layoffs are not coming without their own cost.

They could result in severance payouts, risking litigation, and lower morale and productivity. Even if the business does improve, you’ll still have to pay to hire and train new staff.

It’s no secret that the economy has been struggling in recent years. As businesses worry about a recession, layoffs are becoming more common heading into 2023.

Although layoff is inevitable, it’s preferable to find ways to cut costs without firing employees.

Today´s article discusses cost-cutting alternatives to avoid layoffs in 2023. Let’s take a look!


Reduce Working Hours

The first cost-cutting alternative to avoid layoffs is reducing the employee working hours. You can introduce them to shorter workdays (Ex: six hours per day instead of eight) or a shorter workweek (Ex: four days a week instead of five). 

This strategy is a great option to consider if you have non-exempt (hourly) employees. However, it’s not a good option if you have salaried employees.

Reducing their working hours may make them lose their exempt status. For this reason, you need to check their employment contract to ensure the employer has the authority to implement the changes.

Start by asking if any employees would voluntarily reduce their working hours. Remind them this isn´t performance-based, and there’s a good chance this measure is only temporary.

Tell them how to balance working hours that benefit them and the business. You will find that some workers will like the idea of spending less time at work, especially if they have other responsibilities.


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Provide Early Retirement Options

Offering a severance and early retirement option to older workers or employees near retirement is the next cost-cutting alternative to help your business stay afloat.

In addition, this option has less impact on employee morale. You may offer an early retirement package if employees are eligible.

This offer encourages them to leave their position in exchange for certain benefits. The benefit could be a severance payment and the retention of health care insurance and other coverage for a set period.

Depending on the specifics of your offer, you may have to pay more upfront for this choice. Nonetheless, it could save money over time without forcing anybody out of a job. 


Hiring Freeze

The last thing you can do for cost-cutting alternatives to avoid layoffs is a hiring freeze. A hiring freeze can help cut overall business costs for a given period.

Implementing this strategy by allowing non-essential positions to go unfilled until the business sees signs of returning to its normal operations. 

Moreover, it is the best strategy since you can optimize the existing workforce. You can start by cross-training your workers.

Through cross-training, other workers can be prepared to take over a role should the person responsible for it leave the company.

When employees receive cross-training, they become more invested in their work. Workers can enhance their skills and learn new ones while also getting the chance to work on projects they might not. 


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In a nutshell, planning various cost-cutting alternatives to avoid layoffs during the financial crisis. By following this cost-cutting strategy, you have shown your will to avoid layoffs.

On the other hand, the steps above cannot avoid mass layoffs for some businesses. In this case, you have to plan carefully to implement the layoffs. 

You should carefully consider the selection process and criteria that will be used to determine which employees will be laid off.

Furthermore, you need to document their business reasons for the decision. Lastly, lean on your legal counsel to ensure that you do not violate any laws.

Tell them you have considered all possible alternatives to layoffs. They may not remember what actions you took, but they will remember how they were treated.


If you’re looking for ways to recruit and start your retention strategy for your top talents in today’s competitive labor market, Elabram System is here to help.

With our 20+ years of experience, we provide advice and facilitate you to transform how the workplace operates, engage employees, improve performance, and draw up compensation and benefit plans.

Schedule a consultation call with us now!

AUTHOR: Sibil Aina
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