A variety of HR issues can surface when a company is growing or shrinking. Below, we provide some guidelines for managing these types of transitions.
A Growing Business:
- Maintaining company culture. Businesses often struggle with maintaining their company culture during rapid growth. Think about what makes your company a great place to work and how you can continue to be an employer of choice as your company grows. For instance, if you're the only manager employees have ever known, consider how communication and other interactions with employees may change as you hire supervisors to manage your staff. Make sure all supervisors understand your company culture and manage employees in a way that reflects your culture.
- Integrating acquired employees. When you acquire employees from another employer, it can be a tough transition for them. To help make the process smoother, take steps to familiarize new employees with your company culture and norms, and integrate them into existing teams and projects. Check in with acquired employees frequently to see how they are doing.
- Hiring the right people. When you need to fill open roles quickly, it can be tempting to take hiring shortcuts. But, a bad hiring decision can be costly. Before posting your job opening, clearly identify the job-related criteria that you will use to vet candidates and make your decision. Give careful consideration to employment applications, resumes, interviews, references, and background checks, where applicable. Ideally, you will have several strong candidates with many of the skills, knowledge, and attributes you seek. While there is no such thing as the perfect applicant, your job is to determine the best fit for the open position. If you have difficulty filling a position, you may need to reevaluate your criteria. While there may not be an exact match for the skills you need, there may be good candidates with related skills and on-the-job training that could fill in any gaps.
- Managing compliance with additional laws. Coverage under many federal, state, and local employment laws often depends on the number of employees an employer has. As you hire more employees, you may be covered by more of these laws. Be sure to understand all of the requirements that apply to your business and implement effective policies, practices, and training that comply with these laws.
A Shrinking Business:
- Maintaining employee morale. During difficult financial times, focus on employee morale to help limit turnover and ensure productivity doesn't suffer. Where appropriate, be straightforward with employees about the difficult situation the company is facing and what steps it's taking to turn things around. In some business settings, employers may even want to ask employees for ideas to help improve business and reduce costs. Additionally, consider some low-cost, morale-boosting measures, such as relaxed dress codes, flexible work schedules, and training and development opportunities.
- Considering cost-cutting measures. Here are some ways to help your company weather the storm and better position itself for when business stabilizes:
- Cut non-essential spending. Look for ways to cut costs, such as eliminating or reducing business travel or identifying other non-essential purchases you can put off.
- Reduce work hours for non-exempt employees. Because non-exempt employees are only entitled to pay for hours worked, reducing their hours and/or restricting overtime can save the company money in hourly wages. Keep in mind that your state may allow employees to collect unemployment benefits if their hours drop below a certain point.
- Offer unpaid time off. Offering more unpaid time off may be attractive to some employees, particularly those who want to do some extended traveling, work on a personal project, or go back to school. This option is typically best for employees who do not have any accrued paid time off available and for those who would like to take an extended voluntary leave of absence.
- Reduce pay. Pay cuts are difficult for employees, especially those living paycheck to paycheck, but they can be easier to accept if employees feel it's a shared sacrifice. For this reason, many companies apply pay cuts across the board. If your company has traditionally offered regular merit or cost of living increases, pay freezes may also be an option. Note: For employees who are classified as exempt from overtime, salary reductions must reflect long-term business needs. Employers are prohibited from reducing exempt employees' salaries based on short-term, day-to-day, or week-to-week operating requirements of the business.
- Implement a furlough. During a furlough, employees are placed on mandatory unpaid leave—either in increments of a full workday or a full workweek. Furloughs may be a good option for short-term or seasonal declines in business. Keep in mind that depending on the state, the length of the furlough, and the employee's work history, a furloughed employee may be eligible for unemployment benefits. Also, employees who are exempt from overtime must generally receive their full salary if they work any part of the workweek. For this reason, employers typically furlough exempt employees only in increments of full workweeks.
- Permit job sharing. With job sharing, two employees work a reduced schedule in a job that normally would be filled by one full-time employee. Many states have adopted shared-work programs to provide employers with an alternative to layoffs. Under these programs, the employer temporarily reduces the hours of a group of employees, and the affected employees collect partial unemployment benefits.
- Reduce workforce. While layoffs are a tough decision, be sure to keep all associated costs and impacts in mind. For instance, there may be direct costs, such as severance payouts and increased unemployment insurance rates, and indirect costs, such as lower morale and productivity declines and potential disparate impact on certain protected classes of employees, which could result in discrimination claims. Layoffs may also leave the company shorthanded when business improves. Conduct a full cost-benefit analysis to determine whether a reduction in force makes sense for your business, and consult legal counsel before you implement a reduction in force.
During times of transition, it's especially important to consider the impact on employees, company culture, and operations.