Many businesses are struggling in this harsh economic climate, and orders are down as non-essential companies remain closed in many regions. Even if you are still trading but are experiencing a downturn in business, you may be wondering what the best strategy is to deal with your employees. You, and they, will no doubt be worried about how their wages are going to be met in the short term, and what will happen over the next few quarters. Here we will look at the best way to assess the situation and formulate a plan to help see everyone through this difficult time.
Make a Financial Assessment
The first step in this process is to make as detailed as possible a financial assessment. This is good advice to do periodically anyway, even when things are going well. Still, we need an up to date and accurate picture on where the company’s reserves currently sit. If you look initially at cash reserves, as this is all you can rely on, amounts due on the balance sheet cannot be on in difficult times as we don’t know for sure if they will be paid on time. This can then allow you to know how long it would be before you run out of funds if you made no other changes. But we don’t want to let this happen simply.
Consider Alternative Revenue Source
If you are unable to work to your regular business model, then maybe your resources and workforce can be put to use in some other capacity, check out these distilleries making hand sanitizer in response to the COVID 19 pandemic. Don’t just wait to be put out of business, do everything you can to stay in business. Otherwise, we’re going to have to face the difficult decision of lowering our staffing levels.
Check Each Employee’s Contract
It’s essential to be aware of the terms and conditions you had offered everyone when they started with you, as now is when this could be critical. If we are making the tough call on who to keep and who to let go, it may be a good idea to be aware of employees who are on temporary and fixed-term contracts. This is never a pleasant procedure, but if someone is on one of these contracts, it will be much less expensive in terms of compensation to choose them to be the one to be let go.
Consult a Lawyer
Be sure when you do let someone go that the decision is legal, and the process is watertight. If an employee feels aggrieved, then there is always the possibility that they may take compensatory action to claim wrongful dismissal. They can cite all sorts of things that you are responsible for, from the obvious, such as lost earnings to more surprising assertions such as blaming you for their downwards spiral into alcoholism. For these reasons, it’s a crucial step to talk to a competent employment attorney to be sure you are treating everyone correctly and keeping to proper procedure.
Consider Short Working
Laying staff off is not the only option. Many contracts allow the possibility of short working, where you keep an employee on but reduce their hours due to diminished income. This can allow you to keep good people on and show good faith during the tough times and then offer them full employment when the market allows. If people are due to be laid off or taken out of the workforce for health reasons out of their control such as the current health crisis. There are ways of them receiving help and you can point them in the direction of quality advice such as how COVID-19 is impacting disability claims.
Keep People Informed
It’s essential to keep everyone informed of the situation, especially when considering redundancies. Not only because it’s the right thing to do, but you need to maintain morale for the workers who are going to be staying on. If your people have seen that you have been open and honest with them throughout, they should hopefully remember this and keep on side with helping the business return to a healthy state.
How to Dismiss People
Have a thorough and detailed exit interview. Always tell people in person and be able to tell them why they are being laid off. If possible, offer to keep them in mind should business return to normal, and you might be able to offer their job back.
Check out my guide on how to start your business right with tons of useful tips I learned by successfully starting, building, and selling multiple companies.