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7 Tips to Help Small Businesses Avoid Employee Layoffs in 2023

by Nick Schurk - November 15, 2022

It’s no secret that the economy has been struggling in recent months. As a result, small businesses have had to make tough decisions in order to stay afloat. As businesses worry about a recession, layoffs are becoming more common heading into 2023. This is a trend that is impacting many industries across the country.

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While it is difficult to predict how long this economic downturn will last, it is clear that businesses are feeling cautious and are making plans accordingly. To help you take steps to avoid laying off your employees, we asked HR managers, founders, and business leaders for their best advice. From using a mix of contractors and full-time employees to letting employees decide their workload, there are several steps that you may take to shield your business from having to lay off your employees in these uncertain times.

Here are 7 tips to help small businesses avoid layoffs in 2023.

Bring More Work In-House

We’ve cut costs significantly by bringing more tasks in-house. Where we used to outsource marketing or recruitment, we’ve looked to see where our teammates possess these skills or training potential. That way, we can both decrease the costs of these jobs while ensuring that even where the need for an employee’s role lessens, we can restructure their job to keep them on the payroll. Best yet, we’re upskilling our team, showing how much they mean to us, and helping them discover and grow new professional talents and passions.

– Ruben Gamez, Founder & CEO, SignWell

Focus on Efficiency by Automating Tasks

One step that our business has taken to avoid layoffs is to focus on efficiency. We have put a plan in place to help our employees streamline their work processes and make sure we are only doing the things that matter. We have created a system that will help us identify where we are wasting time, money, and energy. We are also working on automating some of our processes so that we can free up employees to focus on more important tasks. We have also brought in a leadership coach to help us identify the gaps in our workflow so that we can fill those gaps without hiring new people. I personally believe that if we can grow our company without adding more people, we can continue to do well even in a recession by keeping our current employees happy and avoiding layoffs.

– Shaun Connell, Founder, Writing Tips Institute

Get Your Employees Engaged in Their Work Through Recognition

I consult for numerous companies with large teams. One way that we try to minimize layoffs is by doing our best to keep workers engaged. You can do this in several ways. First, make sure that your employees feel valued. Thank people for their work and be authentic. Do it publicly, too, not just one-on-one where no one’s listening. Second, show them why their work matters.

On the B2C side, it could be that your company sells a product or service that helps millions of people live better lives. On the B2B side, it could be that your company gives small businesses a platform to become more profitable and efficient, which keeps thousands of people employed. Let your team know that there is a higher purpose to their work, and they’ll take it more seriously. Your team will be more productive, which means that you can channel that energy into things that drive more revenue and prevent layoffs.

– Dennis Consorte, Digital Marketing & Leadership Consultant for Startups, Snackable Solutions

Reduce Workload and Working Hours for Each Employee

We’ve decided to reduce each employee’s working hours to prevent such situations because there is less work and more employees, which is the primary reason for considering laying off workers. The worst part of employee layoffs is having to quickly say goodbye to devoted employees, thus it is better to be prepared in case this situation ever comes. Reducing working hours and employee responsibilities ensures that there is always a sense of urgency to complete the work and that there is never a time when a large team becomes unmanageable. By allowing employees to concentrate on the few tasks that have been given to them, fewer working hours also increases the productivity of the whole staff.

– Sally Johnson, CEO & Founder, Greenlightbooking

Look to Internal Mobility and Cross-Training

Employers are faced with making tough decisions when it comes to making decisions on layoffs. One step that progressive employers are taking to avoid layoffs is finding existing vacant roles in the organization and placing individuals whose roles are being eliminated into these roles. As the labor market continues to be extremely fickle, it’s important that employers are finding creative ways to retain talent. More employers are cross-training talent and leveraging transferable skills in new positions.

– Tawanda Johnson, HR Leader, Sporting Smiles

Cut Funded Trips to Conventions and High Profile Workshops

A great way to avoid layoffs is to actually find affordable or free online training and workshops for your team so that instead of letting employees go, you’re actually letting employees develop their skills and grow the success of your company. For example, when employees hear that layoffs are happening, they immediately lose trust in their company, they start to fear for their future and they feel powerless – and all productivity plummets. If instead, you cut costs by implementing affordable online training and workshops (as opposed to funded trips to conventions and high-profile workshops) you will be empowering your team, and in return, your team will work harder and more confidently and help improve the success of your company.

– Gabriel de la Serna, CEO and Founder, On Post

Let Employees Decide Their Workload

Yes, employees themselves are best to decide on their workload. So our company offered people the opportunity to reduce their working hours if they see it’s possible. Employees needed to take into account their ongoing projects and personal life – employees also took into account their personal financial situation. After the calculations, if an employee saw the opportunity to work 3 days per week instead of 5 days, it was done. It’s a true win-win situation.

– Liisi Kivistik, Group HRM, Speero

It can be difficult to avoid layoffs when business is slow, but there are steps that small businesses can take to prevent employees from being let go. By reducing workload and hours, looking to internal mobility and cross-training, and allowing flexible scheduling, small businesses may be able to keep their teams together and productive. In the end, it’s important to improve trust between employers and team members while empowering employees to do their best work.

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