Best Practices to Avert Layoffs

Companies may lay off employees for various reasons, such as budget cuts, restructuring, mergers and acquisitions, changes in business strategy, and economic downturns. However, as inflation squeezes budgets, and interest rates continue to hike, organizations must focus on improving operational efficiency to stay afloat. 

Layoffs can significantly impact employees, the company, and the surrounding community. It can lead to financial hardship, job insecurity, reduced morale, decreased productivity, and a loss of trust in management. But, there are specific legal guidelines when conducting layoffs, such as complying with provincial and federal laws, providing adequate notice, and avoiding discrimination.

It’s essential to communicate transparently and empathetically during layoffs. Companies should have a clear plan for communicating with employees, explaining the reasons for the layoffs, offering support, and providing information about available resources to those impacted.

Ultimately, an organization should prepare to manage the aftermath of layoffs, support remaining employees, assess the impact on business operations, and manage public relations. At this point, they must rebuild their workforce, recruit and train new employees, offer professional development opportunities, and re-establish organizational morale.

Alternatives to consider during downturns

Reduced work hours

To manage costs, companies may temporarily reduce the number of weekly days or hours or implement a rotating schedule where employees take turns working fewer hours.

Voluntary time off

Employees may have the alternative of taking time off, which helps the employer to manage staffing levels during slow business periods, or get more flexibility in managing their work-life balance. In some cases, employees can use the time to recharge, pursue personal interests, or take care of family needs while maintaining job security.

Hiring freeze

An organization can utilize this cost-cutting measure in suspending recruitment and hiring activities for an unspecified period. For example, if there’s a concern about budget constraints, business slowdowns, or other financial challenges facing the organization, a hiring freeze helps lower labour costs and eliminates harsh measures that could affect employees.

Salary reductions

A salary reduction may be temporary or permanent, applied across the organization, or targeted to specific employees or departments. It often could include a percentage less in pay or a brief suspension of bonuses or other incentives. The main objective is to slash overheads so the business continues to operate. 


An employer may implement an unpaid leave of absence due to budget constraints, business slowdowns, or other unforeseen circumstances. Employees typically maintain their benefits during leave, and may be eligible for unemployment benefits. Furloughing holds permanent jobs while the organization weathers a temporary financial setback.

Early retirement 

As a resort, employers may encourage older employees to retire earlier than they might have otherwise, and offer them voluntary early retirement incentives. These packages offer financial stimuli like lump sum payments, increased pension benefits, or continued health insurance coverage.

Job sharing 

There’s also the option of job sharing, a flexible work arrangement in which two or more employees share the responsibilities of one full-time position. Each employee works part-time, and the job duties and salary are divided equally. Job sharing can be an effective way to retain the services of the most valuable employees.


By training employees in multiple roles or tasks, they can develop new skills and become more versatile, increasing their value to the organization and potentially leading to new career opportunities. Cross-training can also help ensure business continuity during staff absences or turnover,  and reduce the need for layoffs during change or transition.

Economic changes, advanced tools, and fierce competition can compel companies to reform. But before contemplating a layoff, an employer should carefully analyze their workforce. But, again, it’s also important to note that each potential alternative has varied challenges and considerations, and companies should carefully weigh their options before taking any drastic action.

Jennifer M Williams | Editor-in-Chief 



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