Is Furlough the Way to Go During a Crisis? – Apex Benefits

Is Furlough the Way to Go During a Crisis?

Two people discussing finances

Two people discussing finances

Two people discussing finances

Many companies are being faced with the tough choice of whether to furlough or lay off employees. What does an employee furlough really mean? And what are some other cost-saving measures you can put in place to avoid layoffs?

As employers continue to work through cost-saving decisions, Brooke Salazar, J.D., Apex HR consultant, encourages workplace leaders to be as transparent as possible.

“Employees are craving leadership in these uncertain times. Often, even a message from leadership to communicate that the answers are unknown is better than silence. To keep your employees productive, you must keep them engaged, which is impossible if you are not communicating or are afraid to communicate that leadership does not have all the answers,” Salazar said. “It’s like the old adage, ‘they won’t remember what you did, but they’ll never forget how you made them feel.’ Make sure your employees feel supported and valuable. Sometimes that means being vulnerable and admitting that you don’t have all the answers yet.”

No matter what course of action you need to take as a leader, it is important to be mindful of the people your decisions affect. Even if you are not planning to furlough your employees, keeping constant communication such as weekly video messages to let everyone know the current state of the company can help reduce the amount of anxiety felt by employees.

Katherine Bryant, Apex compensation consultant, emphasizes the importance of knowing and understanding more than just where and how your dollars are spent.

“Now more than ever, it’s incredibly important to invest dollars in programs, people and technology where you get the biggest return,” Bryant said. “Likewise, the ability to identify underutilized programs, benefits, utilities and facility expenses will help avoid potentially unnecessary cuts to other areas, including staff cuts.”

Amanda Schiavo writes about strategies companies can use to help make employee layoffs a last resort in an article for Employee Benefits News. She suggests reevaluating the company budget to identify areas where funds are not being used while employees are working from home, such as travel allowances. Cutting the budget where things are no longer necessary could help avoid making cuts to employees. In this same article, Bhushan Sethi, PwC’s global people and organization leader, suggests thinking of creative ways beyond payroll, salary and benefits – with alternatives like compressed work schedules, job sharing and sabbaticals – to make layoffs a last resort.

If you do have to make the tough decision to furlough employees, it could ultimately end up saving money and helping your organization to resume business once this is all over. According to an article from The Balance Careers website, “The goal of an employee furlough is to save money for the company or organization by lowering employee salary expenses.” With a furlough, your company would not be getting rid of employees.

Talk to your employees. They may also be willing to take a cut in pay if it means hours stay the same or it translates into avoiding layoffs.

For more information on employer cost-savings strategies, check out the Apex cost saving strategy resource page.

For additional resources and the current status of the COVID-19 pandemic, visit the Apex COVID-19 resource page.

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