Considering layoffs? Instead, lead with purpose by exploring every alternative

A test of a company’s commitment to leading with purpose is during a crisis. And with the COVID-19 virus threatening people’s health, livelihoods and the global economy, we are facing that crisis now.

As last week’s unemployment filings show, business leaders are facing an incredibly difficult choice: keep their people, or keep their business afloat. PwC’s latest COVID-19 CFO Pulse Survey found more cutbacks are likely: 44% of executive respondents anticipate staffing changes in the form of furloughs due to low or slow demand over the next month. An additional 16% expect layoffs. 

For many small and midsize businesses, there is no alternative to letting people go. But many larger companies have options. As PwC’s US Chair and Senior Partner Tim Ryan wrote last week, the business community must do what it can to keep people employed so they can continue to participate in the economy and its rebound. Not only is this the best way for the business community to help in the crisis, but I believe it’s also a meaningful way for leaders to live their purpose and do right by all their stakeholders: shareholders, employees, customers, service providers and their communities. 

There are numerous strategies companies can take to cut labor costs while keeping people employed. Here’s a look at three creative options.

Give your people options to choose what works best for their situation.

Furloughs, four-day workweeks, shiftwork — there’s a whole range of measures you can take to reduce hours. Rather than picking a direction unilaterally, however, consider giving your people the option to volunteer for a reduced work week, compressed work schedule or unpaid sabbatical. 

You might be surprised at who opts in. Many employees are suddenly coping with a range of unusual stressors, from trying to work remotely to homeschooling children to caring for sick or vulnerable relatives. They may even be sick themselves. And that’s on top of a hyper-paced work culture where the risk of burnout is high and only half of companies are addressing unmanageable workloads. 

In short, you likely have people who want or need a break and would welcome the opportunity to choose flexibility and wellness over salary right now. Others may be part of the rising number of dual-income families, where their partner is working long hours in a critical role, such as healthcare or warehousing, so the employee needs more flexibility to take on additional family responsibilities. And unless you ask, you won’t know, as there’s no logistical way for large organizations to know every employee's individual situation. So, give your employees a way to voice their needs and preferences.

Recognize where you’ll have spikes in demand and consider redeployment.

Many companies suddenly need to ramp up certain areas of their business, such as tech support, customer service or claims functions in insurance firms. Others are grappling with the closure of off-shoring capabilities in places like India — where the entire country is on lockdown for three weeks — and they need people who can replace that support.

Whatever the areas of demand are for your business, consider shifting people there instead of laying them off. While not every employee will have the right transferable skills, many could be redeployed, helping you maintain business continuity and easing the workload for exhausted employees who may be working long hours.

Revisit your incentive models.

For many organizations, this crisis has abruptly shifted both the nature of work and the skills needed. For instance, in some companies, supply chain management is now a more valuable skill than sales and distribution, and people who understand cash flow and liquidity management may now be more essential than folks like relationship managers whose jobs revolve around in-person contact. 

Given the shifting value of skills and roles, it may make sense to redistribute compensation. Consider this: Are your fixed salaries and bonus pools set up to reflect value creation? In many large organizations, pay is still based on tenure and level rather than value. The current crisis provides an opportunity to revamp that — and to lay the groundwork for a redesigned compensation model once the crisis subsides and hiring begins again. 

Many business leaders have long talked about the importance of leading with purpose — of promoting corporate social responsibility, diversity and inclusion, and doing right by their communities. This crisis can be a test of our commitment to that. None of us want to look back in two years' time and say we didn’t live our purpose, that in our rush to cut costs in the short-term, we made decisions that hurt people and our communities and escalated the economic recession. 

While it’s unfortunate that some businesses will have no choice but to resort to layoffs, many large organizations have alternatives. We have a responsibility to explore all of them.