Bosses Offer Alternatives to Layoffs in Recession

Some of the nation’s small business owners who are surviving the rough economy haven’t handed out a single pink slip. From hiring career coaches to energy conservation, these entrepreneurs employed innovative techniques to keep business healthy without shrinking it.

Abraham Pollin, owner of the Washington Wizards NBA team, did not want his company to be another small business that laid employees off when the going got tough.

The 85-year-old owner of Washington Sports and Entertainment, which also owns the Wizard’s home arena called the Verizon Center, instead implemented a slew of swift actions to combat the recession. The company reduced overtime work across the board, put a hiring freeze on event staff positions and trimmed costs through energy conservation and switching to a new phone system.

“Any short-term gains that we might get in laying off staff is simply not an option for me. We’ve made it through tough times before and we’ll make it through this time as well,” said Pollin who, since buying the basketball team in 1964, has maintained a healthy track record fostering job security. More than 30% of his full-time staff has been with the company since 1994, while 40% of part-time workers have stayed on since 1999.

“Growing up in Washington, my parents always instilled in me the importance of good family values and loyalty. So extending those values into business practices was natural for me,” Pollin said.

Pollin is not alone among small business owners who say cutting personnel is like laying off close friends. So, many are finding other ways to save money in these tough economic times, choosing to maintain their payrolls rather than add to the nation’s unemployment rate.

In the face of the slowing economy, Davy Hartman Campbell, chief executive and founder of Fulfillment Plus, said keeping all 18 employees on the payroll was priority No. 1.

“Based on economic fears, I already had a plan to control expenses,” said Campbell, who runs her ten-year-old digital printing and database business out of Kansas City. “I made a list of what to do and layoffs were at the bottom of that list.”

Campbell called a meeting in January, shortly after noticing business was taking a hit, and told her employees that they would have to start pooling resources to score business wins. She hired a career coach to come in and talk about how workers could better communicate and work together.

“We’re now more attuned to everything that’s going on here. We had the attitude of ‘OK, we’re going to beat this,’” Campbell said. Employee-resource pools now share workloads and specialties to free up time for them to win and manage more accounts.

Campbell also changed her company’s health plan, which ultimately saved money and meanwhile did not raise employee contributions. She also held off on making any machinery purchases for the year.

Jon Rutenberg, president of Computer Consultants Corporation in Washington, said the best way to avoid layoffs is to have an effective management system for revenue, in both good and bad times.

“You don’t have to staff up for a big crunch then lay off people in bad times,” Rutenberg said. What is more effective, he added, is always having a core group of loyal people who know the company well so that the company can quickly respond in down times.

Rutenberg, who runs a software training company, manages his money by using a lot of part-time workers for short-term projects, then puts his full-time workers on long-term projects that require specialty skills and, as a result, bring in more money.

“This reduces the pressure to have full-time employees with idle days,” he said.

With eight employees, Rutenberg said he keeps costs low by bringing in automation whenever possible, allowing for greater specialization and yields of those higher prices for his consultants.

They recently transitioned to an online business registration form and customer relationship manager program. That meant Rutenberg now had another employee’s time and energy to use in tasks that garner greater revenue.

The flexibility among his workers is something he sees as key in both up and down times.

“I hire people with a portfolio of skills rather than folks who can only do clerical,” Rutenberg said. “Everyone’s in the [assembly] line.”