While 2020 proved an incredibly difficult time for many small business owners, increases in virus cases and hospitalizations are rendering the beginning of 2021 very difficult as well. That said, small businesses are facing some incredibly hard choices. For many, it comes down to shutting their doors or cutting back significantly. Among the major cutbacks to try and stop the bleeding, laying off and/or furloughing workers. This can be an incredibly tough thing for a business owner, especially as employees are facing difficulties during this pandemic. And without knowing exactly what is going to happen or when they will be able to bring workers back, business owners and staff alike are having a difficult time, to say the least. Tensions rise, business is affected and inevitably things can turn bad rather quickly. So what can an owner do, how can they furlough a worker and make the situation more manageable for all involved? In this article, we look at some strategies for navigating a highly trying climate in which you may have to furlough employees.
Have a plan in place
For those businesses that are looking at potentially having to shut down again or that are operating at a severely reduced capacity, laying off and furloughing workers might be the only choice you have. While no one likes to hear the word "furlough," worse yet is the phrase "closed permanently." There may be no other options available to you as a small business owner looking to keep your company alive.
In a situation in which you are still operating but doing so at a limited capacity, you could plan for an on-off furlough. For example, rather than send staff home for a four-month-long furlough, you might opt for a week-on-week-off plan in which they do return to work through on an intermittent basis. In this way, there is a less overall disruption to the business, and it becomes a somewhat more financially viable option for both the business and the workers involved.
Always be honest and above board
No one has lived through anything like this before. We are all anxious and nervous about what exactly is to come in the first half of 2021. That said, you must be honest and open with your staff about what exactly is going on, what steps you're considering, and how this will consequently impact them and their employment with the company.
If you do decide to furlough employees, emphasize that it is not due to any type of performance issues or mismanagement of the business, but a very unfortunate circumstance of the pandemic. You also want to reassure them that you've explored all possible options and as a matter of fact, will continue to do so so that you can get staff working normal hours again as soon as possible.
If your staff knows that you are considering several other cost-cutting alternatives to make any furlough as short as possible, they will likely respond better. Keep in mind, many workers are just as nervous as the owner about the fate of the business. This in tandem with fears regarding their financial future makes for a turbulent time for many people.
Explain what will happen as far as benefits
Healthcare is a top concern for people across the country right now. In the event of a furlough or future furlough, people are going to be concerned about their relevant healthcare benefits. You have to be clear about what benefits will still be there, what might have to be scaled back and what they may lose in the event of a furlough.
With many small businesses, they will suspend play during a furlough, but the health insurance coverage will remain in place. If you can at all manage to work it out in this way, it will be a huge relief to those furloughed workers.
Explain that there are to be no work-related calls during a furlough
When an employee does get furloughed, they must refrain from work-related calls, texts, and emails. Perhaps they are used to communicating with certain company clients regularly. During a furlough, this will, unfortunately, have to cease, as if they continue to operate as such, it could open the business up to tricky legal issues.
As the company owner, you need to state in no uncertain terms that when on furlough an employee is not to do anything related to work on behalf of the company.
Maintain communication and provide what support you can
What we saw during 2020 was that workers were nervous, depressed, anxious, and downright scared. They had no idea what lay ahead and no clue about the fate of their jobs. The more successful businesses were the ones in which the leaders and managers kept in touch. They kept those lines of communication open and while they could not address direct work issues, they did offer support in other ways.
Employers' roles in this new climate are different. They have to show more empathy than ever before and in some cases provide psychological support to furloughed and laid off staff. Regular check-ins can be incredibly helpful in a situation like this, thereby demonstrating that you do genuinely care about your employees' welfare. Your staff wants to know that even though they may not be 'there," they do still matter to the company in the long run. And make certain to personally communicate with each employee versus issuing mass communications.
First Union Lending is here to help. We want to see small businesses make it through this challenging time which is why we offer fast and flexible financing options to get you additional working capital exactly when you need it—not weeks or months from now. Some clients have the cash in their accounts in as little as two days. If you are looking for small business financing, call today!