Rethinking Layoffs: Creative Solutions in Times of Uncertainty

Israel Work@War is in week 4.

Amid talks of downsizing and layoffs, many organizations find themselves grappling with a radically altered landscape that has thrown their Q4 plans into disarray. While human capital often becomes the quickest line item to cut, this short-sighted strategy misses the bigger picture. We’re not navigating a fleeting emergency or another episode of pandemic turmoil. Adopting such a mindset squanders the opportunity to pivot—rather than backtrack—to new operational norms in our organizations, economies, and workspaces.

In this transformed reality, people aren’t reverting to their pre-crisis lifestyles; children are adapting to new educational formats; families are learning to cope with a sense of loss and uncertainty. In parallel, the world continues to function, innovate, and produce. Now is the time to evolve our work environments, leverage the crisis for growth, and build resilience for a new era of employment.

So, before you resort to short-term solutions like furloughs or layoffs, pause. Don’t ask what to do in this moment as if it’s merely a transient phase. Ask instead who you want to become in this unfolding chapter and explore alternative cost-saving measures that can fortify your organization through the crisis.

Leading by Example: Managerial to Collective Cuts

In leadership, it is actions, not just words, that resonate most powerfully. This includes what you say and do as well as what you don’t say and don’t do. During these times of crisis social media is rife with critiques of management teams that publicly donate to help the victims of the terror attacks while simultaneously cutting staff salaries and prohibiting employee volunteering during work hours. Touting your “employer brand” or priding yourself on workplace culture rings hollow if leadership doesn’t embody the lofty ideals displayed on corporate value posters.

If your organization is affected financially by the war and cutbacks are on the horizon, let the belt-tightening start at the top. Begin with discretionary elements of managerial compensation—such as bonuses and stock options—before touching employee base salaries. Even if contracts or agreements stipulate bonus payouts for the current year, these should be forfeited before asking employees to sacrifice their earnings. Continue this principle through a tiered approach to salary adjustments: the higher the pay grade, the larger the cut. Implementing these measures sends a message of solidarity and shared sacrifice that resonates far deeper than any corporate slogan ever could.

Transparent Leadership: Crisis Co-Creation

Fostering an open and genuine dialogue with your employees should be the natural progression after leadership has set the example. Expose the organizational challenges at hand and invite your team to collaborate on solutions. True engagement—whether it originates from the gut or the heart—begins with transparent leadership and evolves through partnership. This applies universally, whether your team is remote or field-based like in retail settings.

You may discover employees who are willing, even eager, to take time off during these times of crisis, care for family, volunteer, further their education, or explore alternative revenue streams. Providing the security of a job awaiting their return can be a win-win for both parties. Options like financing training for furloughed employees or retaining them at part-time salaries in exchange for self-directed upskilling, could also emerge.

Open up the floor to employee suggestions, and you might be flooded with cost-cutting insights that were off your radar. Those on the front lines often have the keenest view of waste, inefficiencies, and untapped opportunities. You may realize that reducing physical office space in favor of a more hybrid work model could substantially cut real estate and operating expenses. Or perhaps you’re allocating funds towards perks that employees don’t genuinely value, offering another avenue for financial prudence. And if, after all these measures, layoffs are still unavoidable, your team will know you left no stone unturned.

Collective Sacrifice: Salary Strategy with Staff Input

War is one of those scenarios in which a collective sense of purpose may lead employees to voluntarily propose across-the-board wage reductions as a means to preserve everyone’s job. Such communal gestures offer alternatives to layoffs and could involve delaying scheduled salary increases, or instituting temporary pay cuts with the promise of future restoration and potential increases upon achieving specific milestones by the end of 2024. This aligns everyone’s focus on organizational goals for the upcoming year.

Consider, for instance, a target to reduce salary expenses by 20%. One option is to redistribute work hours, enabling all employees to work, albeit less. If business activity has slowed down uniformly, you might reduce everyone’s schedule to four workdays a week with corresponding pay adjustments. If workload reductions are uneven across departments, tasks can be reassigned. Employees whose roles have diminished could take on duties from other areas, enabling everyone to work at 80% capacity. Such strategies not only conserve financial resources but also maintain a cohesive workforce, primed for full-throttle operation once circumstances improve.

Upside of Downtime: Skill-Building and Partnerships

In lieu of layoffs, consider “employee exchanges” as a resourceful alternative, especially in knowledge-intensive industries. Even in a turbulent business landscape, there are organizations urgently seeking talent due to rapid expansion, staff relocations, or other unforeseen variables. Facilitate temporary assignments for your employees with these firms. Creative accounting solutions between companies can ensure that workers remain on your payroll while contributing elsewhere. Such initiatives offer dual benefits: immediate cost savings and employee development, as these “exchanged” employees acquire new skills and return with fresh perspectives.

Moreover, perhaps it’s time to pivot from a mindset of reduction to one of strategic investment. Instead of contracting, seize this moment to amplify efforts particularly in areas that align with your long-term strategy. Now may be the perfect time to double down on the skill sets and projects that constitute your competitive edge. What can you do to further engage your employees in higher-value tasks or prepare them for future roles? This is an opportune moment for specialized training, infrastructural overhauls, and implementing new tools that have been on the back burner.

The market’s wartime volatility is also a breeding ground for cost-effective collaborations. Freelance AI experts, usually out of budget reach, may now be available to integrate cutting-edge technologies into your workflow. Content creators and photographers could revamp your digital presence in preparation for the ‘next normal.’ Even technologists, who might typically be beyond your financial reach, can now be consulted to help digitize your product offerings or optimize internal processes through automation.

The old adage, “nothing is more permanent than the temporary,” resonates deeply in this age of unprecedented challenges and opportunities. The choices we make today will not only have immediate repercussions but will also sculpt the foundational bedrock of our organizational culture, laying the groundwork for how we navigate future obstacles and opportunities. These decisions should not be knee-jerk reactions to adverse conditions; they should be thoughtful, deliberate actions that align with the overarching vision of the organization you’re striving to build. By instilling a culture of collective sacrifice, transparent leadership, and adaptive resilience, we set the stage for an organization not just capable of weathering the war but poised to seize the winds of change for other changes and advances on the horizon. Let’s not merely survive this terrible war; let’s build on it for organizational transformation, emerging on the other side more resilient, adaptive, and harmoniously aligned towards collective success.

United we Stand