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Reducing Personnel Costs and Helping Workers Have Work-life Balance

by Sarah McAdams

For some companies, layoffs will be inevitable. If your company is part of that “some,” of course you’ll do everything you can before conceding that a workforce reduction is the only option. Just make sure that “everything” includes exploring a potential work-life balance solution. That’s right, even in this bleak economy when every day another company announces bankruptcy or massive job cuts, you can still help employees find more flexibility.

Because here’s the thing: Study after study has shown that workers (especially Boomers and those with young children) are looking for more flexibility. And what’s one of the top things they say would achieve that? Part-time work. (Will some workers in their 50s and 60s change their priorities considering the sorry state of retirement funds? Sure. But certainly they would agree that some work is better than no work.)

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Cutting work hours — or creating job-share opportunities — can help you achieve every CEO’s top goal these days: cutting costs. But there are also long- term bottom-line benefits to going this route, says David Wentworth, a research analyst at the Institute for Corporate Productivity.

“Layoffs are tough to do, painful for all employees — not just those affected — and rarely accomplish any financial or organizational improvements,” Wentworth says. “A study of companies that downsized over the past 20 years found that companies that did not downsize outperformed those that did both in the short term and the long term. For companies that realized short-term financial gains from downsizing saw them wiped out further down the road.”

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Ask employees to volunteer for reduced hours
If cutting hours instead of entire jobs is an option, make it part of the overall discussion with employees — and there must be open and honest discussion, Wentworth says. “Companies need to be frank with employees when times are tough,” he says. “Discuss the company’s current situation, where the company is headed, and what is being done to make it through. Job-sharing and flex-work should be discussed as alternatives to layoffs as a way to elicit volunteers. Many workers will opt for these opportunities if they know that they exist.”

They also might help come up with other cost-cutting ideas. Case in point: Northwest Airlines was able to save about $190 million in 2006 by implementing more than 400 different employee suggestions.

Regardless, there is big-picture business value to a company that tries to work with employees instead of just blindly announcing a large-scale workforce reduction. A study of 200 companies that were in the running for Fortune magazine’s “100 Best Companies to Work For” found that companies that downsized as little as 0.5 percent of their workforce saw turnover increase 2.6 percent after the layoffs.

“Often a company’s biggest asset is its brand. Serial layoffs can do irreparable damage to a company’s reputation,” Wentworth says. “Making an effort to avoid layoffs as well as being transparent and up-front with workers when they are inevitable can go a long way toward softening the blow and keeping morale up among surviving workers.”

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