Brand building strategies for handling the coronavirus recession

Many businesses are now scrambling to implement working-from-home procedures, cutting worker hours, and reducing their workforces, whether temporarily or permanently. Economists are now predicting a short but deep recession, with a drop in US economic output of $1.5 trillion, 7% unemployment, and 5 million Americans out-of-work.

How a company pivots during a crisis significantly impacts its customer engagement, profitability, and employer brand.

Take the example of Southwest after 9/11. Air traffic had dropped dramatically, and most airlines laid off significant numbers of employees.  Southwest was the exception.  Instead of downsizing, it refocused its slack workforce on making process improvements. When the market improved, Southwest did not have to rehire its former workforce or hire new employees –it had a ready, trained, appreciative workforce with the ability to help the company quickly expand into new markets. Its competitors, on the other hand, struggled with staffing, training and operations issues.

Let’s review alternatives to reductions in force.

  • Remote work. Based on my experience and empirical evidence, most companies can have 25% to 45% (and even 100% if it is a software company) of its workforce work remotely. Keeping operations working to serve clients while the competition struggles with the transition may go a long way to building outstanding client relationships and finding new clients. Click here to learn more about setting up a remote work environment that keeps workers focused, productive and feeling part of the team.
  • The Southwest Airlines 9/11 Model. Southwest was able to quickly recover after the travel market rebounded after 9/11 because it reassigned its workforce to making process improvements rather than laying them off. The coronavirus precaution for social distancing will make this strategy more difficult for some companies, but look for areas to reassign teams of employees to make process improvements or reduce work backlogs without violating the social distancing guidelines. Some of this work may be done remotely with the substantial uses of digital technology. Ask your managers and employees for suggestions and how to achieve it.
  • Partial reduction in hours. For some companies in hospitality, travel, oil, and real estate, a reduction in hours can be a strategy to serve the reduced need of customers while hanging on to precious, trained workers and providing them with income for food and housing. Many restaurants facing government orders have closed dine-in eating and switched to a take-out and they are rationing these precious work hours to their staffs. Remember, under the Fair Labor Standards Act (FLSA), the pay of exempt employees cannot be cut in a week when the exempt employee worked part of the week. Another option for exempt employees is to change work hours on a forward-looking basis, at the next pay period, without violating FLSA, as long as the exempt worker reduced pay is more than $684 a week. However, this should be longer than two-weeks and not intermittent. Before taking this step, remember to also check with state and local laws, which may have more restrictions.
  • Temporary layoffs—keep employees on healthcare benefits. If your business does need a furlough due to mandatory government shutdowns or a total collapse in your industry, I encourage you to follow the example of the Minneapolis Convention Center, which had to comply with the governor’s order to close. It laid-off its workers, encouraged them to file for unemployment, and kept them on full health care benefits. This thoughtful action is allowed under some health care benefit plans. Be sure to check with your health care provider. It is also permitted under Consolidated Omnibus Budget Reconciliation Act (COBRA), which also requires the option for laid-off workers and dependents to continue health care benefits in the event of a permanent reduction in force. Also, look into allowing employees to take vacation time, paid time off, and sick time during such periods.

If a reduction in force is necessary, remember these guidelines of The Worker Adjustment and Retraining notification (WARN) Act:

  • Employers must provide written notice at least 60 calendar days in advance of covered plant closings and mass layoffs. A WARN notice is required when a business with 100 or more full-time workers (not counting workers who have less than six months on the job and workers who work fewer than 20 hours per week) is laying off at least 50 people at a single site of employment. Or the business employs 100 or more workers who work at least a combined 4,000 hours per week, and is a private for-profit business, a private non-profit organization, or quasi-public entity separately organized from regular government. This warning is also required for employees who are terminated or laid off for more than six months or who have their hours reduced 50% or more in any six-month period as a result of the plant closing or mass layoff. Pay may be offered in lieu of notice.
  • Less than six-month exception: Note If the layoff is for less than six months, the WARN Act is not triggered.
  • WARN Act “Unforeseeable Business Exception. There is also an “unforeseeable business exception” in the WARN Act. It is not clear if the circumstances around the Coronavirus will trigger the WARN Act, especially if the reduction in force will be for less than six months and if regulators consider the Coronavirus an unforeseen event.

The coronavirus presents the US a national crisis that requires putting the public interest and safety first, including the safety of your clients, suppliers, and employees. As a business, how you react during this crisis will greatly determine the loyalty of your customers and employees.

Watch my social media posts, blogs, and podcasts for future updates.

Victor Assad is the CEO of Victor Assad Strategic Human Resources Consulting  and managing partner of InnovationOne. He works with companies to improve their recruiting, HR operations, and develop extraordinary leaders, teams, and cultures of innovation. His new book is Hack Recruiting: the Best of Empirical Research, Method and Process, and Digitization. Subscribe to his weekly blogs at www.VictorHRConsultant.com. 

 

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