As you deal with the impact of the COVID-19 crisis on your business, you may need to make some hard decisions to stay operational. Letting go of staff may seem like the easiest way to cut costs. While it may be the only option in certain cases, it can be bad for your business in the long run and should be the last resort.
When you lay off staff, you lose qualified and experienced employees you have a good working relationship with. It is also demoralizing for the workers who stay on. Plus, the costs you’ll save today will become expenses tomorrow when you recruit and train new employees.
Before you decide to let go of staff, you may want to explore other alternatives for cutting costs.
Explore government relief programs
Reduce work hours or wages
Instead of firing employees, you could offer part-time work to your full-time staff to save costs. Another option besides reducing work hours is to reduce wages. Do away with overtime and impose a small salary cut across the board. Be fair and cut wages from top down, including your own pay. Not only is it the right thing to do but it’ll also improve your employee retention in the long term.
Unless the employment contract allows it, you cannot change work hours or wages of your staff without their consent. Even if the employment contract permits doing so, it is a good practice to discuss such changes with your staff before implementing them. Most employees would prefer to work fewer hours or at reduced salaries than lose their job altogether. You may want to let them know that such changes are only temporary till the current crisis tides over.
You can restructure your business to make optimum use of your human resources. Instead of letting go of an entire department that is no longer viable, you can redistribute the staff in areas with more work.
If it suits your business, you could also make use of the federal government’s Work-Sharing Program. It is a three-party agreement between employers, employees and the government of Canada. This program provides Employment Insurance benefits to employees who consent to a reduced work schedule and to share available work till the time business improves.
The government has added temporary special measures to the Work-Sharing program for businesses affected by COVID-19. These measures will be in effect from March 15, 2020, to March 14, 2021, and are not limited to a specific sector or industry.
Sell equipment and assets you don’t need
Substitute assets that are too expensive with cheaper options. Sell outdated machinery, fancy devices and assets that you don’t use or those which you can lease instead. Not only will it cut unnecessary expenditure, it will also save you storage costs.
Opt for a virtual office and switch to remote work permanently
If working from home has worked well for your business during this lockdown, it may be a good idea to consider doing so permanently. A virtual office will save you a vast amount of money. You won’t have to spend monthly on rent, utilities, hardware, office supplies, maintenance and repairs, and cleaning. You’ll have more capital to invest in your business and in your staff. It’ll also save your employees the money spent on commuting, among other expenditures.
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