Pay Cut, Layoffs and Furlough- Doing It the Way It Won’t Break Your Organization

Posted May 8, 2020 by Nkechi Kalu at 1:42 AM

Various forces are transforming the way work is done- Automation, Artificial intelligence, and globalization. These have caused organizations to have a rethink on human resources strategy making changes that are affecting the workforce howbeit painfully.

The recent pandemic of COVID19 is the latest disruption in the economies of nations and this has affected both big organizations and small businesses causing them to resort to restructuring, layoffs, pay-cut, termination, and furlough. These are trying times and organizations must do something in other to remain in business and profitable. There can be a better and more acceptable way of dealing with layoffs, pay cuts, and furlough. Here are some of the approaches and considerations companies can adopt to ensure they deal with the situation in a manner it won’t have a huge negative impact on the organization especially with regards to losing talents.

While this is not exhaustive, these factors can be a guide for the small businesses that may not have a HR professional in reaching a decision on which employees to retain.

1. Multiple Skillset: An employee with multiple skillsets would be considered for retention. While layoffs may be inevitable, different functions of the business would be operational even though in a reduced capacity, this staff skills can be applied in several functions to keep operations going.
2. Job Classification: The part-time or casual workforce is usually the first set of employees to be considered for layoff. Although they are important to the company, the obligations to them are usually less than the full-time employees due to the terms of the contract.
3.  Education: The level of education of employees is a major consideration for retention. The business world is more globalized, therefore people with a certain educational qualification will be required to do business with different clients and customers.
4. Experience: This is very relevant to organizations especially with ones that technical skills are required to function. Experienced staff who understands the business and technicalities of its operations are another set of people to be considered for retention.
5. Performance: Past performance of every employee should also be evaluated while offering pay-cut, furlough, or layoffs.

It can pose a huge challenge to layoff employees especially when they are good staff, loyal, and have been a part of the growth of the organization. One ought to apply objective and subjective criteria, communicate effectively, and ensure due process and labor laws guiding the state and terms of the contract are duly considered to avoid legal action hinged on wrongful termination.