Let’s take a closer look at personnel issues related to the pandemic. NSCA offers a few simple financial tools and creative approaches to navigate otherwise impossible choices. Your staff members are the people who will allow your businesses to survive – and thrive – as this crisis passes.
1. Do Everything Possible Before Cutting Staff
While personnel may be the first place to look when cutting costs, explore other line items for savings, too. Cancelled events affect expected revenue and expenses. Be sure to adjust your thinking about the expense side of each postponement or cancellation.
Another tactic to control cash flow: monitor your accounts payable aging report. Some of our vendors have already contacted us about arranging payment plans as a useful way to influence the amount of cash you expend on a daily or weekly basis. Many have offered relief to provide additional support. Without prearrangement, you shouldn’t delay payment; this will negatively impact your vendors – and they’re going through the same measures you are. Remember: Most channel partners are also small businesses that are vulnerable to slowed payment streams.
If you eventually turn to personnel expenses, the first tool to use to keep personnel costs down is to leave open positions unfilled. Vacancy savings are a real way to contain costs. This is especially useful if the budget you’ve been working from had future expenses built in for new positions. Almost everyone we’ve spoken to has employees willing to take on new assignments in the face of the current situation.
Rather than assuming they can’t pivot to a new role, let them become heroes who serve the business.
Another tool to reduce costs is to look at related benefits layered on top of your salaries and wages. If your organization contributes to employee retirement plans or health savings accounts, consider amending your plans to eliminate or reduce employer contributions. This reduces compensation, but most employees will appreciate the effort to sustain employment over the long run in exchange for temporary benefits reductions. This includes looking at other benefits as well, such as paid parking or public transportation. Do the math to see if these auxiliary benefits can provide sufficient cost savings to avoid cutting staff positions.
2. If You Must Cut Salaries, Be Compassionate and Creative
If drastic cuts in personnel expenses really do represent the only way to keep you alive, then explore ways to share the sacrifice. When facing something as all-encompassing as a global pandemic, many of us understand and expect that we’re going to have to share the burden. If handled thoughtfully, the ensuing financial hardship could boost morale.
Short of laying off individuals, you could try implementing alternative salary-saving initiatives that distribute impact more equitably. Rolling furloughs, universal part-time hours, and temporary leveling of salaries are three creative cost-saving measures that would send a powerful message about the organization’s commitment to its staff and the belief that the organization’s financial health is a shared responsibility. You and your organization should weigh these temporary measures against your own culture and core values. These options are only some among many choices and combinations available as a solution that aligns with your mission and principles. (New directives could come soon as we more information on federal support packages.)
Rolling furloughs can be implemented in several ways:
- Give all employees one week off without pay per month, staggering which employees are off at any given time. Employees receive less than their regular pay, but also receive more time off than usual. This approach doesn’t ignore the financial impact, but the time off is at least a symbolic acknowledgment that all is not normal. This would save 25% of total salaries and some portion of benefits and taxes.
- Give two weeks off to all staff once every two months, staggering which employees are out at any given time. The resulting cost savings would be the same. Many NSCA members are having staff use their full PTO now, plus offering an additional two weeks of PTO later in the year.
- Establish universal part-time hours to reduce salary expenses in an egalitarian fashion. Moving all staff to a 30-hour workweek would bring the same 25% salary reduction as the rolling furlough examples above. Play with the calculations to create the needed cost savings.
3. Exceptional People = the Heart of Your Recovery Model
We most often think of employees as exceptional workers with great skillsets. Suddenly we find ourselves surrounded with exceptional human beings. These are the people who will allow your businesses to survive and thrive as this crisis passes.
Most of the amazing work we do is the result of having wonderfully dedicated staff. For many integrators, the combined line items for staff salary and wages, along with the accompanying benefits and taxes, are the largest expense category for the organization. Because of the relative size of this expense grouping, many companies look to personnel as the first place to cut when finances tighten.
At a glance, eliminating positions reduces expenses dramatically and efficiently. You may indeed have to go there when faced with impossible choices. But this is one area where your organization can hold on to its values in powerful ways if you think creatively.
4. Financial Facts, Your Mission, Core Values, and Innovative Solutions
As leaders, you’re being asked to respond to human suffering, act as anchors to communities in crisis, and sustain your staff and organizations with few and potentially diminishing financial resources.
To survive these uncertain times, take a courageous, clear-eyed look at your current financial state and the knowable future. Where drastic measures are indicated, you can stay true to your mission while acting prudently and compassionately for the sake of your community and your organization. Your hard work and devotion are appreciated. We are all in this together – for the duration. –Chuck Wilson, NSCA Executive Director