In consequence of Covid-19, businesses in some sectors have suffered sharp declines in volume and revenue. It requires leaders to make smart decisions in order to keep the business survive. Some employers will be left with no other options but to terminate employees due to this sharp economic downturn. Although this action can save cost for the business, it negatively impacts employees and damages company’s brand.
Before making the tough decision, it is necessary to consider all the potential alternatives and do the math on short-term and long-term. This article will suggest some additional considerations for you and your leadership team to determine the best action for your business.
- Reduce other expenses:
There are some non-essential services or activities that you could postpone or cancel such as company travel expenses, membership or subscription fees, ongoing office costs… Have a look through your expense report, you might find out some heavy expenses that are less important at the moment.
- Re-negotiate with vendors and suppliers:
During the Covid 19 crisis, it is a common practice for every business to ask their vendors/ providers for a discount. Office rental can be a huge cost for a company, you could totally reduce a certain amount of expenses every month by getting a discount on rental or changing your office location.
- Necessary change to fit in the situation:
Companies are repurposing their production lines to join the fight against COVID-19. LVMH switched from producing perfume to making hand sanitizer, Uniqlo, a fashion brand from Japan made face masks. In Singapore, luxury hotels like Shangri-La and Hilton becoming quarantine centers. Instead of cutting off everything to survive, you can react in different ways to ensure business continuity or innovative ways to generate revenue.
- Utilize your most importance resource, your employees.
Involve your leader team the company’s upcoming financial plan, seek for smart solutions and ideas. You hired smart people, ask for their valued contributions.
- Salary and allowance deductions:
While apply this action to your workforce, it is important to communicate with your employees, share your difficulties and seek for their understanding. Encourage your employees to take voluntary unpaid leave, sabbatical if they would like to do so. Reduce travel/pleasure allowance or bonus temporally. If your business is experiencing a temporary reduction in the normal level of business activity that is beyond your control, you can apply for work-sharing, which enables your team to share the available work. This will reduce working hours which reduce salary cost for the company. It may not be the best solution to reduce employee’s income. However, to be compared with being permanently terminated, at least employees can still work while still being paid part of their salary.
Tu Le is Customer Experience Manager at Cadena. Her unique professional experience stems from years of providing excellent customer support in multinational companies. In the relatively short time being with Cadena, she has become very passionate about HR practices and working with HR practitioners on a daily basis.