Alternatives To Layoffs

The research study split the companies surveyed into those that had and those that had not conducted layoffs over the last 12 months. It tabulated the number of companies that either considered or implemented the 10 types of cost-cutting measures a company can take to reduce compensation costs. As Table 2-3 shows, in every case a greater percentage of those companies that conducted layoffs also implemented or considered initiating cost-cutting measures.

Table 2-3: Cost-Cutting Measures in Conjunction with Layoffs

Cost-Cutting Measures Considered or Implemented	Layoffs Experienced in the Past 12 Months
	Yes	No
Voluntary severance package offered to Employees	34%	11%
Early retirement package offered to employees	20%	15%
Shorter workweek for all employees	25%	12%
Mandatory across-the-board pay cut	20%	4%
Offer of stock options in lieu of pay	13%	4%
Perquisites reduction (e.g., expense accounts, clubs, etc.)	37%	18%
Elimination/reduction company contribution to 401(k) plan	12%	4%
Reduction/suspension of annual pay increases	57%	30%
Reduction/suspension of bonuses and incentive pay	55%	29%
Hiring freeze	63%	43%

The most popular cost-cutting methods for companies laying off employees were hiring freezes (63 percent), reduction/suspension of annual pay increases (57 percent), and reduction/suspension of bonuses and incentive pay (55 percent). The relatively high consideration of these cost-cutting measures means that companies involved in layoffs looked carefully at all options before moving forward. They considered and weighed a wide range of combinations rather than pursuing only one option.

Alternative work arrangements are a means to offer partial employment opportunities to employees for partial compensation. These include job sharing, temporary assignments, or restructuring work arrangements from regular employment to contract arrangements.

Alternative work arrangements are a way to cut costs and at the same time keep mission-critical skills that the newest hires, the first to be laid off, often possess. The reshuffling of work assignments inherent in such arrangements is a departure from the past and demonstrates the desire of organizations to find ways to retain the best people.

Companies that experienced layoffs within the last 12 months are more likely to have offered alternative work arrangements (Table 2-4). The experience of respondents in the survey differs with each alternative. Offsite Net workers—a new approach to work—are considered or used by fewer than 10 percent of companies in contrast to temporary assignments, which are used and considered by more than 33 percent of companies that have conducted layoffs in the last 12 months.

Table 2-4: Alternative Work Arrangements in Conjunction with Layoffs

Cost-Cutting Measures Considered or Implemented	Layoffs Experienced in the Past 12 Months
	Yes	No
Job/skill sharing	24%	19%
Contracting	24%	18%
Offsite Net workers	8%	6%
Temporary assignments	34%	22%