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Managing employees during tough times

As a small business owner, you will be faced with difficult choices during difficult times like an economic downturn or a decrease in demand for your product or service. In order to stay competitive, you must streamline operations and offer creative responses to external threats. It is critical to encourage innovation and make the kinds of changes that are necessary to ensure that your business succeeds today and in the future.

When times are tough, business owners often resort to layoffs as a cost-saving measure. However, laying off employees can damage your business and impair its ability to succeed in the long term. Layoffs incur direct costs, including severance pay, administration fees and legal fees, which immediately affect your bottom line. There are also less tangible costs like the skills, knowledge and experience that are lost when an employee is let go.

In the face of layoffs, employees often experience lower morale and productivity, higher levels of absenteeism and job-related stress, and a loss of faith in the business. Your best employees may start looking for other opportunities. And, when business does improve, the costs of finding and training new employees can be very high.

Innovative cost-cutting and restructuring measures can help you reposition your business and define how business will be conducted in the future, without the need to let valuable employees go.

Think long term

Use recognition and rewards

Rewarding employees can be a challenge in times of fiscal restraint. Here are some smart ways to recognize employees, while keeping costs low:

Maintain a positive work environment

Although avoiding layoffs during hard times can be a challenge, the benefits to your business in the long term are significant.

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