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THE technology industry is volatile and subject to the vagaries of the market. With the recession set to hit the global economy at the end of 2023, businesses around the world, from small startups to large corporations, are already taking countermeasures to combat it. Ironically, the most commonly used countermeasure is large-scale layoffs.
Recently, Microsoft announces 10,000 job cuts, affecting nearly 5% of its global workforce, as part of the “downsizing” measures the company is taking. This was soon followed by a similar announcement from Google’s parent company, Alphabet. CEO Sundar Pichai commented on downsizingclaiming that the company had “hired for a different economic reality” than the one it faces today.
During periods of economic difficulties, maintaining a stable and employed workforce is important for businesses. That’s why many companies are looking for alternatives to layoffs as a method to get through these difficult times. Let’s explore what some of these potential alternatives might be.
A substitute for layoffs is to recruit fewer people each month in the first place. Companies could limit the pace of new hires and focus on retaining their current employees. This is one of the factors that they can adapt to rather than reduce their current staff.
At the height of the pandemic, companies like Amazon, Meta, and Microsoft hired and dramatically increased their employee base. In contrast, Apple has been hiring at a more modest rate compared to its peers, adding just 17,000 new hires between 2020 and 2022. Now that uncertain times are ahead, we are seeing the consequences of overhiring in the form of massive layoffs. On the other hand, Apple avoided using layoffs as a tool to deal with these dire circumstances.
The implementation of a hiring freeze is an additional alternative to the dismissal of current employees. This is to temporarily halt all new hires until the company’s financial situation improves. By doing so, businesses can reduce expenses while retaining current staff.
Another reason why Apple does not lay off its employees like its counterparts is that it implemented a hiring freeze in November 2022 to prepare for the turbulent times ahead. It’s unclear when the freeze will be lifted, with sources even saying it could last until September 2023.
Reduce working hours
Reducing the number of hours a worker works each week is one such option that can prove beneficial. This allows businesses to retain staff while reducing expenses. Employees who are able to keep their jobs but with fewer hours worked can also benefit, freeing up more time for other activities.
Cutting hours, not workers, is the right for forward-looking business leaders to institute Today. 73 companies in the UK conducted an experiment with a four day work week. The results showed that managers and employees generally described being more or just as productive during a shortened week. A shorter workweek allows employees to spend more time with friends and family and focus on their hobbies or part-time businesses they wish to cultivate.
Voluntary departure or leave
Offering voluntary unpaid leave is another substitute for the permanent dismissal of workers. Although this reduces the number of employees, it also gives them the opportunity to return to their position later. This is beneficial to both employer and employee as it allows workers to take a short break while companies save money.
Alternatively, companies can also implement a voluntary departure program. This allows employees to voluntarily leave the organization in exchange for severance pay. This can be an effective strategy to reduce the workforce while treating affected workers with fairness and compassion. Coca-Cola offered voluntary severance packages to 4,000 employees in North America, and that included major incentives like at least one year salary plus 20% increase.
Focus on employee retention
The best way to avoid layoffs is to reduce employee turnover. A high turnover rate can lead to a constant need to fill available positions, which can be costly and time-consuming. Businesses can reduce the number of vacancies and the need to hire and train new employees by placing more emphasis on employee retention and take steps to improve it. Employers can focus on retaining their current employees by offering competitive salary packages, flexible work hours, and career advancement opportunities.
When to lay off employees?
It is crucial to remember that firing employees should only be used as a last resort. Moreover, when layoffs are unavoidable, the company must handle the situation with transparency and empathy. It is vital to avoid dismissals for the wrong reasons or for the wrong reasons. The recent Layoffs on Twitter are a prime example of wrongful dismissal, with employees either being notified by email that they have been terminated or being found out after discovering that they no longer have access to their work laptops or communication channels.
Layoffs are not always the best option and can often be detrimental to the organization as a whole. Businesses can maintain a stable workforce while controlling expenses and adapting to market changes by considering possible alternatives to layoffs. Employers need to be aware of their options and consider them carefully while putting the interests of their staff first.