May 15, 2009

We have a veritable series going on about what in the past we have called "How NOT To Fire People". The idea being that, yes, you need to slash costs; and, yes, payroll takes up most of your costs; and, yes, it's best not to cut back on marketing during a recession; but, no, you really don't want to lay off any of your employees, because it will hurt the morale of your remaining employees and will leave you in a bad position when the economy finally does start moving again, and also because, frankly, you got into running your own business not just for reasons of cold, hard business sense (not that there's anything wrong with that) but also so that you could be a conscientious, benevolent manager, and you just don't want to fire anyone, and that's that.

And so we have reported on various alternatives: ways to cut your payroll expenses without going full bore and downsizing (all offered with the caveat that, at some point, you truly may have to do what you have to do). Last time we gave a broad overview. Today, we offer a more specific one: the slimmed-down workweek.

The New York Times has the goods. It cites one employer that has been faced with revenue problems--as it happens, it's a nonprofit that used to rely in part on the generosity of one Bernard Madoff--which has responded by cutting several employees' workweeks to 24 hours (e.g., three days), while cutting pay a corresponding 40%. A nice side point to this is that the employees have been able to make some of that up in state unemployment benefits that are specifically designed for when workers reduce your hours due to economic circumstances (as opposed to personal performance--Jerry Kalish blogged a bit about these sorts of benefits last week).

One of the affected employees believes that her new workweek, "even with its quirky rhythms, is highly preferable to a layoff," the Times reports. And the manager explains his thinking thusly: "Our business relies on people, and without them we don’t really have anything to offer. It was also shaped by an understanding there is going to be an upside to this downturn and we wanted to be better situated for the future when the economy does turn around and we need a full staff.” The set-up is, in other words, the closest they will get to win-win given the circumstances.

One further note of caution, should you be considering such a move: the 24-hour week seems to be the ideal. Much less than that, of course, and you've more than halved your worker's salary, at which point it may indeed make more sense just to go all the way. But any more than that, and you're barely saving money, plus you're not giving your employees the opportunity, should they desire it, to pursue additional employment.


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