Sales were down during the winter of 1995 in Chicago. After a busy third and fourth quarter, the prepared foods department expected a slow period in January, but in the past, sales usually bounced back after a few weeks. Not this time.
Department Manager Allen Seidner was worried. He didn't want to wait for the owners of Oak Street Market to come to him about his labor expenses. To bring labor under control, he decided to eliminate two staff positions.
In his daily shift-change meetings in the kitchen, Seidner asked for feedback: Should he decide whom to lay off based on seniority or performance?
His staff had another idea. A few days later, his shift leaders came to him with a proposal. The full-timers, who made up three-quarters of the department, were willing to cut their hours. But they didn't want the part-timers to lose income. How many hours would each full-time employee have to give up so that no one would need to be laid off?
Seidner calculated that cutting four hours a week per full-time staffer would bring sales and labor into balance.
Perhaps it was due to the motivated staff, or perhaps it would have happened anyway, but in less than a month, prepared foods sales grew to the point where all the cut hours could be restored.
That was almost 15 years ago. Oak Street Market was later acquired by Whole Foods Market. Seidner is now a partner at Good Earth Natural and Organic Foods in Fairfax, Calif. Reflecting back on the hour-cutting experience, Seidner says, "It was a huge opportunity to have a coming together instead of a coming apart."
Our current recession offers moving examples of employees making sacrifices to save co-workers' jobs. Nurses at Beth Israel Deaconess Medical Center in Boston volunteered to give up their pay increases. Professors on furlough at Clemson University set up a donation fund to help their lower-paid staff cope with reduced incomes. The Sacramento Bee staff agreed to take pay cuts on a sliding scale to save jobs, with no cuts for those making less than $25,000.
According to a survey by insurance provider MetLife, 50 percent of Americans say they are only one month—or two paychecks—or less away from not being able to meet their financial obligations if they were to lose their jobs. So if you are thinking about layoffs, consider these alternatives first:
- Hiring freeze—lowering labor hours by attrition. This may not work in times of high unemployment when people are scared to leave jobs. But it's an easy place to start, especially if your staff is cross-trained enough to fill in where needed.
- Pay freeze—no raises, either across the board or for higher-paid positions.
- Hours cuts—while equal cuts may be perceived as fair, consider the needs of the whole store. It takes as long to write checks or enter prices in the point-of-sale system for small deliveries as big ones, but it takes less time to unload and stock smaller deliveries. On the other hand, you don't want to sacrifice customer service or store cleanliness.
- Furloughs—asking staff to take a week or more off without pay. Check your state laws to see if employees can collect unemployment benefits during a furlough.
- Benefits cuts—asking employees to pay a larger percentage of medical insurance premiums.
- Pay cuts—across the board or for the higher-paid positions first.
Before making a decision and then informing your employees of your strategy, try enlisting their help in boosting sales and controlling expenses. You'll increase their loyalty and you may get some good ideas. Your employees can be your partners in facing hard times.
Carolee Colter is the principal of Community Consulting Group. Contact her at [email protected]