Alternatives to layoffs in technology: maintaining a stable workforce

by Ana Lopez

Opinions of contributing entrepreneurs are their own.

The tech industry is volatile and subject to the vagaries of the market. With the recession expected to hit the global economy in late 2023, companies everywhere from small startups to large corporations are already taking countermeasures to combat it. Ironically, the most commonly used countermeasure is large-scale layoffs.

Recent, Microsoft announced 10,000 job cuts, which affects nearly 5% of the global workforce, as part of the company’s “staff reduction” measures. This was soon followed by a similar announcement from Google’s parent company, Alphabet. CEO Sundar Pichai commented on the cutssaying the company had “hired for a different economic reality” than what it faces today.

Related: ‘Fake work’ was ‘exposed’ by layoffs at Google and Meta, says former PayPal executive

In times of economic hardship, it is important for companies to maintain a stable and employed workforce. This is why many companies are looking for alternatives to layoffs as a method of getting through these challenging times. Let’s see what some of these possible alternatives could be.

Reduce hiring

A substitute for layoffs is to hire fewer people each month in the first place. Companies can limit the pace of new hires and focus on retaining their current employees. This is one of the factors they can adapt to instead of reducing their current workforce.

Related: Ex-Google employee documents the day she was fired amid mass layoffs: ‘A really bad game of Russian roulette’

During the height of the pandemic, companies like Amazon, Meta, and Microsoft have significantly expanded and hired their workforces. In contrast, Apple was hiring at a more modest rate compared to its peers, with only 17,000 new recruits between 2020 and 2022. With uncertain times ahead, we are seeing the repercussions of overhiring in the form of mass layoffs. On the other hand, Apple has avoided using layoffs as a tool to deal with these dire circumstances.

Job freeze

Setting a hiring freeze is an additional alternative to firing current employees. This means that all new hires will be temporarily suspended until the company’s financial situation improves. In this way, companies can cut costs while retaining their current staff.

Another reason why Apple doesn’t fire its employees like its counterparts is that introduced a hiring freeze in November 2022 in preparation for the turbulent times ahead. There is no news on when the freeze will be lifted, with sources even saying it could be as late as September 2023.

Reducing working hours

Reducing the number of hours an employee works per week is one such option that can prove to be beneficial. This allows companies to keep their staff and at the same time save on expenses. Employees who can keep their jobs but work fewer hours can also benefit, freeing up more time for other activities.

Reducing hours, not employees, is the right thing to do future-oriented business leaders Today. 73 companies in the UK conducted an experiment with a four-day work week. The results showed that managers and employees generally described being more or equally productive in a shorter week. A shorter work week gives employees more time to spend with their friends and family and focuses on any hobbies or part-time ventures they want to cultivate.

Voluntary separation or departure

Offering voluntary unpaid leave is another substitute for permanently laying off employees. While this reduces the number of employees, it also gives them the opportunity to return to their position later. This is beneficial to the employer and the employee because it allows employees to take a short break while companies save money.

Alternatively, companies can also implement a voluntary segregation program. This allows employees to voluntarily leave the organization in exchange for severance pay. This can be a successful strategy for reducing headcount while still treating affected employees with fairness and compassion. Coca-Cola offered voluntary severance packages to 4,000 employees in North America, and it included a number of key incentives such as at least an annual salary plus a surcharge of 20%.

Attention to employee retention

The most optimal way to avoid layoffs is to reduce staff turnover. High turnover can lead to a constant need to fill available positions, which can be costly and time consuming. Companies can reduce the number of open positions and the need to hire and train new employees by putting more emphasis on employee retention and take measures to improve it. Employers can focus on retaining their current workforce by offering them competitive pay packages, flexible work schedules and advancement opportunities.

When to fire employees?

It is crucial to remember that firing employees should only be used as a last resort. In addition, when layoffs are unavoidable, the company must handle the situation transparently and empathetically. It is vital to avoid bad layoffs or for the wrong reasons. The recent Twitter layoffs are a good example of a bad layoff, where employees are notified by email that they have been fired or find out after discovering that they no longer have access to their work laptops or communication channels.

Layoffs are not always the best option and can often be detrimental to the organization as a whole. Companies can maintain a permanent workforce while controlling costs and adapting to market changes by considering possible alternatives to layoffs. Employers should be aware of their options and weigh them carefully, with the best interests of their staff at the forefront.

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