Though the short-term effects of the COVID crisis have been volatile, it’s important to think long-term in your decision-making. We entered 2020 in a tight labor market, and workforce demographics haven’t changed. Though it may be difficult to envision, we will surely be in a talent crunch again once the crisis finally subsides.
How will you handle workforce reduction in a way that ensures your survival, but also preserves your employer brand and makes employees want to return to your company when you are growing again?
As long as the pandemic continues—likely into 2021—one consideration will be around safety, and ensuring you provide the processes and infrastructure needed to assure workers they are safe to return to work—in whatever capacity you determine most effective.
Another element to consider is how workforce reduction and your total rewards packages will impact your workforce re-expansion. In the 2008 financial crisis, unemployment benefits were extended to 99 weeks.
If you have lower wage employees, would laying them off risk disincentivizing them from seeking work until their eligibility runs out? Will it be harder for you to find new lower wage workers if they stay home because it’s more lucrative than your offer?
You will also want to track and document carefully as you lay off workers, so that you can address unemployment claims for any employees who might refuse your offer to return to work. This, is a place where a Odyssey Partners can reduce the burden on your organization and help to mitigate the financial impact of invalid claims.
Though the brunt of the unemployment payments and COVID Payments, tax hikes will be felt by Q1 2021, working with a Outsource Provider is a good long-term strategy for recovery and beyond. There are likely to be additional increases and a long tail for the financial impact on unemployment funds, depending on the length of the crisis and the volume of claims. Most businesses will feel the reverberations of the COVID event in their rates for the next two to three years at least.