With few exceptions, businesses have been negatively impacted by the COVID19 pandemic. Some are getting loans through the Paycheck Protection Program (PPP), while others are waiting for more money to be added to the pool. Even if you get a loan, with social distancing and uncertainty about when people will be returning to work, most companies are feeling continued pressure to cut costs.
For many, layoffs are a last resort. We don’t want to let go of the teams we’ve worked so hard to build. We want to help people keep their jobs whenever possible. There are ways you can lower staffing costs without resorting to permanent layoffs.
Salary Reductions
One way to save on payroll costs is to reduce salaries of all employees, or of your leadership team. For instance, Gravity Payments announced that employees took a fifty percent pay cut so that they could stay in business and everyone can keep their jobs. Some founders and CEOs including Ambika Singh and Amy Nelson are reducing their salaries, or going without.
Decreased Hours
If some roles are less necessary given the drop in business, consider moving people to part time until things pick up. If the whole company has less to do, you can decrease hours across the board. Talk to your benefits provider – most are being flexible so that even people working fewer hours will continue to qualify for medical benefits. Your employees may be eligible for partial unemployment while working part time.
Furloughs (Temporary Layoffs)
Until now, most American businesses were not familiar with the concept of furloughing workers. A furlough, also known as a temporary layoff, is a way to keep employees on your payroll while asking them not to work for a period of time. For instance, you could furlough an employee or team if they don’t have work to do while you’re waiting for business to pick up, or funding to come through. In most cases, furloughed employees are still eligible for health benefits.
401k Match
A generous 401k match or contribution can add up. Your 401k plan is designed to offer employees long term security so that they can retire comfortably. However, under today’s circumstances people might willingly forego the match in order to preserve their jobs. Remember these are temporary measures and you can always increase your contribution again in the future.
Healthcare Benefits
Medical, dental, and vision benefits make up a high percent of payroll costs. Many employers contribute a large portion of the cost to cover the employee as well as spouse and dependents. It may be possible for you to reduce your contribution. This is something to consider as a last resort, if it means the difference between staying in business or having to close down your company.
* Check with your plan administrator before making changes to your benefits or 401k plan since plan requirements may vary.
These are important decisions, each with its own ramifications so don’t make them alone. Rely on your leadership team and seek help from your finance, HR, and legal partners.
If you need support with workforce planning, managing anxiety, team engagement, or remote work during COVID19 contact us for a free consultation – info@reverbpeople.com.
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