By Jeff Sachse
Much has changed in our lives in the past 80 days. This marks the period since most of our lives seemed “normal.” We have become telecommuters. We have become home-school educators. We have become crisis managers. As entrepreneurs, we have also added several other titles that most of us never predicted … such as bankers, negotiators, or human resource professionals.
Each of these changes has been brought on by the circumstance of a global pandemic. The one question to remain after we survived those earliest days of uncertainty is which roles will remain when all of this is over.
Many of the most stressful decisions every entrepreneur faces in building their business revolve around staffing. When do I hire my first employee? How much do I need to pay? What about benefits? These and current circumstances lead to the most difficult question we must answer: What if I must let someone go? More than 40 million such conversations have occurred since March 2020 and undoubtedly more are yet to come.
Many businesses entered the earliest days of the pandemic in a panic, as few of us are experienced in shutting our doors and operations overnight. As the first weeks of stay at home orders passed, many businesses reopened under different circumstances, such as online sales, or essential business classifications. Others shifted their staff to work from home, and still others simply closed with an expectation of reopening.
The decision to downsize or transition is never an easy one to make, but it does help to come into it from an informed and strategic mindset. This is important, for example, when dealing with terminology.
Many of us may have heard the term furlough for the first time during the pandemic and wonder how it differs from other layoffs. While both represent temporary changes in work status, furlough allows for an employee to continue to accrue benefits, such as leave or health insurance where a layoff idles an employee with the loss of these benefits. Similarly, there is a difference between furlough and layoff with recall, both of which have defined durations, and indefinite layoffs which may eventually result in a termination. We have seen a mix of these tactics, along with reductions in pay or hours applied throughout the pandemic to mixed success.
As the economy gradually reopens, we are finding that the businesses that are best able to respond are those that maintained some connection with their staff, either through temporary layoffs or reductions. This was likely the most difficult decision to make due to the uncertainty of those early weeks, but it also represents the most strategic decision.
Employers entered the past several months in one of the tightest labor markets in history. It is unlikely that the layoffs and closures from the earliest days of the pandemic will change the scarcity of labor across many of the skilled areas that high-growth entrepreneurs need. Similarly, many small businessowners attribute their success to the skill and loyalty of their staff. The pandemic has tested these assumptions. Learning from them will put us in a far better position when a potential recurrence comes, or the next challenge presents itself.
We will be discussing all of these issues and more during my “Birds of a Feather” workshop – Furloughs, layoffs, and rehiring, oh my!: Tips on how to handle personnel issues, to be held during the Wisconsin Entrepreneurs’ Conference on June 4 at 1:30 p.m. I hope to see you there.
You can engage me on Linkedin or follow me @jeff_sachse on Twitter to continue the conversation!
Sachse is director of the UW-Oshkosh Center for Customized Research and Services.