Is your company going through some difficulties in this turbulent market? The need to implement cost cutting measures is real; however, resorting to layoffs may not be the way to go.

Layoffs may be detrimental to your company

While layoffs seem to aid in reducing expenses in the short term, there are numerous material disadvantages of retrenching staff—lowered employee engagement and morale to name a few. The employees who were not laid off may start to panic about their job security, stirring up feelings of distrust towards your management.

Moreover, layoffs may potentially be damaging to your brand image. A tech company made headlines in 2022 for carrying out multiple rounds of retrenchments in the face of slower revenue growth. Such negative media publicity can impact customer support for your brand as well as talents considering to join your company in the future.

When market conditions improve, your company will have to incur more costs in recruiting and training new employees—as they do not possess the institutional knowledge your current employees have. Hence, besides being potentially detrimental to your company’s reputation, this short-term cost cutting measure may prove to be expensive in the long run.

Singapore’s Ministry of Manpower (MOM) has reiterated in the Tripartite Advisory on Managing Excess Manpower that responsible retrenchment must be the last resort. Instead of laying off your employees, consider the following alternatives.

Several alternatives to layoffs

The first alternative is to revisit your company’s Profit and Loss statements. There may be some areas where your company can save on costs such as your company’s international travel budget. Your company can also consider downsizing your office space if a portion of your workforce can work remotely.

Downsizing your office space can help to reduce rental, utility and maintenance costs. The same goes for other fixed assets such as company vehicles, office furniture, and equipment—if your company does not utilise some of these assets, sell them off.

Furthermore, if there are some structural changes taking place in your company, another alternative is to redeploy employees to alternative areas of work. Your company can also provide these employees with the necessary reskilling, training and development opportunities so that they can perform well in their new roles. This is a win-win situation for your employees who will appreciate being retained and equipped with new skillsets and competencies.

The third alternative is to implement flexible work arrangements, which is a win-win solution for both your company and your full-time employees. MOM in particular promotes this as a way to optimise manpower resources when your company undergoes cyclical troughs and peaks in manpower demands. Under such arrangements, your employees are assured that they will still continue to receive a stable monthly income.

Besides flexible work schedules, your company can consider implementing adjustments to work arrangements like part-time work or a shorter work week—with corresponding wage cuts. If business conditions are still deteriorating despite your best efforts, your company may have to put employees on unpaid leave for a limited period of time. Even though these measures may have some financial impact on your employees, it may be better than retrenching them outright.

Lastly, do not forget about your customers during this time of difficulty. Focus on providing them with the best possible service. This will help to build customer loyalty and ensure that your company weathers the storm. The storm will be over sooner than you think—and your company can then consider expanding your workforce!

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