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Layoff? Is there an Alternative?
Don't Dive When the Pool Is Empty.

We see the following types of comments every day now:

"There is nothing in the economic tea leaves that suggest  someone is going to be hiring. This is a broad-based  economic slump. From pharma to industrial to housing to  telecommunications, every aspect of this economy is in a  free-fall," said Richard Yamarone, director of economic  research for Argus Research in New York. "There is no safe  haven."

There are alternatives to dumping people, euphemistically called downsizing. True, your product may not be in high demand as the world careens toward economic doldrums with no ocean current and no wind to fill the sails, but that does not mean that the crew must walk the plank to lighten the vessel for whatever wind may come along. I am sure that many companies are giving those who are being laid off, severance pay, promises of rehiring, attempts to find alternative positions. But as times get worse, such niceties are not going to be available - no money for severance, no hopes for a turnaround in the near future, no jobs out there to be had. But all too often, there are alternatives which are just not attempted before the "best" solution in the short run and the worst for the long, becomes the norm across the board. With a number of the following, you can survive the downs without going out. Spend some money for expertise  to find alternative approaches, attempt some social innovation, expand in new directions rather than contracting, reduce remuneration and time worked while providing a stable base for continuing, find new uses for your products, rent or share space, outsource at lower cost certain processes while going in new directions, find new markets available in the declining economy, basically save and support your talent. Below are some of the moves to consider before becoming just another of the casualties, or before adding to a cycle of the unemployed and nonviable commercial entities in an ever worsening downturn. We will come out of it. History has shown us that. The question being, how can you best hold it together until it does, no matter how long it takes?  

Very seldom can all of these things be accomplished by you. It needs to be done by someone whose profession or outlook can provide the unencumbered view to assess the true situation faced by the company. Very often, the board is in panic and the view of the horizon is rather limited when incomes start to fall, and obligations become due. In such cases, you need someone who has nothing to lose but is known to be able to see things from a fresh perspective relative to your particular sector or situation.  Many buggy whip manufactures went out of business with the advent of the automobile. How did some survive as companies, some of which are operating even today while presumably not producing the old product?

1. Find the hidden talent in your midst. Find out what those surrounding you do best, or have talents not currently utilized, and find other new niches in which to use this talent, go in another direction, add on or improve what you are already doing.

2. Hire someone to take a look at your system and find ways of cutting out the unnecessary, do something cheaper while retaining quality, redesign for efficiency, cut out unnecessary storage of parts or finished product thereby reducing the space needed to operate and releasing rent, or taxes paid on property. In general, wise contraction can pay very large dividends.

3. Look at what others are doing who appear to be surviving. What is the secret? Is it only the area of the economy they are in, or is it certain practices which has allowed them to survive and perhaps even prosper while all around are in collapse. Utilize the manpower you currently have to do the research, ask the questions, do the testing which will be needed to determine what and how it would benefit your particular situation.

4. Reduce office space by figuring out how significant parts of the work can be done at home through the computer and other communications systems.

2. If necessary, bring in someone who can effectively harness the new approach. This does not have to engender a huge outlay in terms of salary if trade off, on done on spec until a noticeable return, or provide increases in remuneration based on specific benchmarks. Outside investment or loans can be garnered.

1. Do a product analysis. There may be different uses for your product which have not been previously utilized or perhaps even seen. Find other uses for your product which through small changes in design or production can generate additional value in a declining market. There may be a ready market for a slightly altered product.

2. Examine the market. There may be a demographic which is missing in your current marketing which can be targeted with minimal advertising.

3. Find new markets for your present product as the ecoonomy shifts. Stay abreast of the shifts taking place to identify these new opportunities. As parts of the economy crumble, other directions will be taken all of which will provide for new opportunities. If you are down to the bone with your previous system, you will be unable to take advantage of the new opportunities, or to even recognize them when they appear.

4. Hire someone to assess possible new markets in a deepening recession for a product your setup can handle

5. Find other uses for your product, which through small changes in design or production can generate additional value in a declining market.

1. Identify areas of the economy which will be needed no matter what, and can be entered into at first in a small way with minimum retooling and retraining.
 Any population has a basic set of needs regardless of the lack of spending and cutbacks. Can your company provide some of those needs?

2. Find out what retraining groups, classes are available for whatever shift or innovation in production which might take place. Much retraining material is already on the web. It needs to be found and adapted to your particular industry.

3. Identify new delivery systems which can provide cheaper access to current or new markets.

4. Research the possibilities of new ways and materials for cheaper, faster retooling. Paying someone to search for new and faster ways to retool may be the wisest money you can spend.

1. Handle outsourcing from others who are trying to reduce costs, by utilizing the equipment, routines and expertise available to you.

2. Outsource certain portions of your own production to those who can do something better or cheaper or faster, leaving you free to pursue other avenues of production, marketing, or explore new approaches.

3. In many cases, even without going in new directions, a company is doing something which others would be willing to pay to have done on an outsourced basis.

4. What other types of things can you do to provide new sources of income? In many instances, companies are doing certain lines of work for its own production or advancement which could be monetized and provided to others.

1. Find out what grants, either governmental at different levels or foundations, are available for what you are capable of doing.   There is money available even in the worst of times and the basic problem is locating it and successfully presenting a case. See Finding Money and Jobs the Right Way for a list of grant databases which include both individual and commercial grants available.

2. Hire someone to identify all of the possible sources from government, nonprofit, loans, grants, benefits which  can be obtained for any new direction or even for support of the current processes at work in the company. There are sources which probably could have been tapped previously but there was no need to even look for them. This can be done through consultancy and be based on results (success in finding or procuring these resources), relieving you of all the in-house costs and uncertainty.

1. Think of yourself as a start-up with the difference being that you already have a large part of the necessary infrastructure and talent available to you.

1. Reduce salaries with promise to make it up when economy turns around.

2. Do not lay off those who will be needed once there is improvement - they may not be available when you need them.

3. Reduce hours, but help keep the economy running. Resist the impulse to reduce crucial benefits which are needed.

4. If there is a shift to a new product, ask for volunteer work with minimum support from those who are no longer needed. This must be very short period of time, after which they are either placed on full pay, whatever that is, or let go with minimal support as suggested above.

5. Provide more social amenities in the work place or somewhere nearby for which people have been paying out of their own pocket. A sitting service, a day school or other social service where a modest outlay can save big time for individual workers whose pay and hours are being cut.

6. Basically set yourself up as a social service agency for your workers such as it has not been before, and if done in cooperation with another local company, may cost far less than doing it alone.

7. Set up self sufficiency classes for those who will need them.

8. If staff has been fully paid for certain types of jobs which are being handled through commission in other companies or in the economy in general, switch to a commission base with bigger bonuses for sales, prizes, etc which will be significantly lower than full time pay for possibly higher return. Or pay on the basis of piece work instead of salary while retaining the social benefits. Just be sure that this is done, not to make you more money, but to keep the company afloat, and the employees secure and employed during the difficult period. To ensure that this is the case, provide a contract which will give some incentive of  
remuneration once the economy turns around.

9. Help locate social service support for those laid off, or provide a basic subsistence level even if not covered by company insurance plans, which is based on what is needed offset by what they can obtain from other sources, their savings, support by family groups. In many cases, if  the analysis is done well, the amounts paid out will be relatively small, but it will save the image of the company, will help those affected weather the storm and be capable of returning once things are better or a new branch of the company takes off.

1. Without buyout, are there two or more groups which if  combined could provide economies of scale principally in delivery, transport, advertising, etc., or SRATC where producing more of the same product can produce lower costs per unit?
2. Identify other products which can be produced on an assembly line similar to yours, a product in demand which can be produced along side of your present product, or while using a different line but sharing the rest of the same facilities.

1.  Become more self sufficient as a company with an initial investment in materials and expertise which can pay off even in the short and long term.

2. Find ways in which you can redefine your work, reduce taxable income, release property into different forms of safekeeping in order to cut down on taxes, utilities, upkeep, repairs, etc. How can you do more with less, and at a lower cost.

3. Can your facilities be redesigned cheaply to accommodate another group which can share the cost of the facilities, or give you additional income.

1. Give funds to social welfare nonprofits in your town to help them cope with the new influx of people in desperate straights.

In situations like these, many people guard their money and retract while the best position may be to take the risks necessary to go in new directions which might save the company. People are keeping their hand closed when trying to get it out of the cookie jar. Put your own money into any analysis or shift since there is a likely possibility that you will lose it anyway, or have it severely devalued if you hold onto it.

If there is any one point which is made again and again above, it is the hiring of outside analysis. Normally, it is difficult to assess ones own structure and how it effects and is effected by the environment, particularly when all of the rules are changing. This need not be costly. If possible, put money into escrow and pay on the basis of agreed upon results.But reap the possible short and long term benefits of an outside perspective.