The COVID-19 crisis is taking a toll on the global economy.
Millions of people are already out of work, and others are facing uncertainty. Small businesses, on the other hand, are struggling to stay afloat while seeking ways to support their employees.
The current situation doesn't have to lead to layoffs, though, as there are several measures you can take to protect your staff and cut costs.
COVID-19 and the Workplace
Companies worldwide are facing uncharted waters following the spread of the novel coronavirus. The Economic Policy Institute estimates that approximately 3 million Americans will lose their jobs by summertime, even with a moderate fiscal stimulus. The travel and hospitality industries have suffered the most. Retail businesses are shutting their doors too.
Small businesses are the engine of the economy, accounting for 99% of American companies. Many of them have already suffered unprecedented losses and are now preparing for the worst. According to Goldman Sachs, 51% of business owners say they won't be able to operate for longer than three months. Approximately 53% report that their employees don't have the ability to work remotely.
As an employer, it's important to implement short-term measures to protect your business and employees. Layoffs are not your only option. Depending on your business type and size, you may allow your team to telecommute or reduce working hours. If you only have a few employees, consider using your savings to pay their wages over the next months.
Hiring new employees is more expensive and time consuming than retaining the ones you already have. Be prepared to screen and interview potential candidates, develop onboarding programs, provide training and so on. The time and costs associated with these tasks as well as the revenue losses caused by the COVID-19 crisis could ruin your small business. Therefore, it's in your best interest to protect and retain your staff.
Implement a Telecommuting Program
Remote work arrangements may allow you to continue your operations and protect your team. Ideally, have a written policy for nonexempt employees and seek ways to manage their work. As a small-business owner, you may use manual time sheets, online timekeeping systems or collaboration tools, such as Slack, Asana, Trello and Office 365. Communicate with them in real time, ask for regular updates and track their progress.
The number of employees who work remotely has increased by nearly 160% between 2005 and 2017. Companies typically offer this option to boost team morale, reward high performers or cut office expenses. With the spread of COVID-19, this measure allows your employees to maintain social distancing. The only exceptions are the hospitality, transportation, tourism and other industries where remote work isn't feasible.
Develop and implement a telecommuting program according to your business needs. Ensure your employees have access to the tools and technologies needed for the job, including laptops, voicemail and online productivity tools. Be clear about your expectations, set deadlines and hold team meetings via Skype or other videoconferencing platforms. Consider starting each day with a brief call to delegate tasks and address any questions your team may have.
Make it clear that telecommuting is just a temporary work arrangement. Provide all instructions and requests in writing. If your team members prefer to use their own laptops and other devices, let them know about the cybersecurity risks involved. You may give them access to a virtual private network, cloud storage and anti-malware software to protect their work and ensure data security.
Consider Reducing Working Hours
Approximately 75% of small businesses report a decline in sales due to the global pandemic, according to Goldman Sachs. If that's your case, consider reducing working hours to cut costs without losing your employees. With this option, your staff may be eligible for partial unemployment benefits. Texas-based employers, for example, may enroll in the Shared Work Program and reduce normal weekly work hours by 10% to 40% so their staff can receive unemployment benefits.
A similar program is Iowa’s Voluntary Shared Work Program. In normal circumstances, laid-off employees would receive up to $548 per week for 26 weeks or less. Iowa’s Voluntary Shared Work Program, by comparison, allows them to receive partial unemployment benefits equal to the percent of their work-hour reduction.
If, say, you reduce the working hours by 40%, this program will partially replace your employees' lost earnings. To qualify, employers must cut the working hours by 20% to 50% and demonstrate that the reduction is in lieu of layoffs, among other conditions.
This may come as a surprise, but a shorter work week might actually help your business and boost team morale. According to Ohio University, Americans spend more time at work than the Germans, English and French. In fact, the average employee is productive for less than three hours during a typical workday. Sweden and other countries that implemented six-hour workdays experienced an increase in productivity and lower absenteeism.
Reach Out to the Small Business Administration
Small-business owners with a small number of employees may be able to use their personal savings to pay wages, at least for a couple of months. However, this may not be an option for those who are new in business or have large teams. In this case, it's worth considering external funding.
The Small Business Administration, for example, is offering low-interest loans to small companies and nonprofits affected by the COVID-19 crisis. This financing option is available in all U.S. states and territories.
If you qualify, you may borrow up to $10,000 with an interest rate of 3.75% or less (for nonprofit organizations). The funds can be used to pay wages, accounts payable, utility bills and other expenses.
How to Handle Layoffs
Many businesses are forced to lay off employees as a result of the COVID-19 pandemic. On the positive side, layoffs don't have to be permanent. If you're planning to resume your business activities within a few months, consider placing your staff on temporary leave for up to 120 calendar days. Anything longer than that is considered an indefinite layoff.
If you choose this option, your team members will still be eligible for unemployment benefits and may feel that they still matter to the company. Let them know that your decision is temporary and has nothing to do with their work performance. It's just a way to keep your small business afloat so they have a place to which they can return.
The current situation raises a lot of uncertainty and concerns. Therefore, it's wiser to not create a contractual obligation to bring your team back. Be honest about it, address their concerns and show them how to apply for unemployment benefits if they need your help.
Inform your employees that business emails, phone calls and work-related projects are not authorized during this period. If they do any of these things, you might end up dealing with legal claims of unpaid work. However, you can still keep in touch with them and show your support. They will likely understand what your business is going through and be next to you when things return to normal.