Issue #03

50 Alternatives
to Retrenchment

If you think you have done . , think again !

Quick Overview

Alternatives to Retrenchment

A Compilation of 50 alternative approaches company an take to cut cost while keep your staff.

Table of content

Is cutting staff the only way out?

No! These 50 alternatives can safe your staff and your business. No one know how long business will be halted. 

No one can accurately predict how long this global recession will last. One thing we are certain is company’s cashflow is drying up. Income is not coming in. Paying salary is now the largest burden.

Will the company start cutting staff? Will the company be able to survive through this recession?

It is stressful and frustrating. Tweet

If the objective is to keep the company alive long enough to sail through this tsunami of recession. Ensure company has sufficient bullet to survive and recover post crisis. Layoff staff may not be the right choice.

There are three standard phases in a recession plan.

Stage One

Find new source of income. 

Stage Two

Reduce the spending

Stage Three

Give up. Close down the business.

Which stage are you at? Some companies just jump straight to retrenchment, not taking into account Stage One (create new source of income).

Your staff— from the Directors and Management Team downwards — have contributed so much time and effort to build the business.

Instead of opt in to the default mode – just zooming on cutting staff. There are so many ways that we can keep the soldiers, aka lifeblood of a company, staff. Utilise recession plan to grow stronger during current recession. Survive through as a winner.

Here we focus on Stage 2 (COST CUTTING), but not through retrenchment.

Strategy one : Restructure Employee’s Remuneration

Need not cut staff. But salary and benefits need to be slashed. 
There are 23 ways this can be done.

Now’s the time for transparent leadership.

Let your team know about your company’s struggles, then ask for their feedback. How would they prefer you to handle the situation? Do they have any suggestions? You will be surprised how open they are to alternative than mass staff slashing. If they suggested it, there is be loyalty, and buy in on the recession plan.

Start with cutting employees’ perks that drain necessary working capital.

Cut the allowances. Dental, phone allowance, internal subscription allowance, travel allowance, not taking leave allowance. Reducing the benefits offered, only keep those that required as a matter of law.

It needs to be for ALL.

Explain the need to give everyone a salary cut across the board. Otherwise many staffs will end up damn pissed off. Make it a flat number, such as 30% or 20%, that won’t completely shatter your employees’ finances but will give your business the financial break much needed.

True leaders make sacrifices before they impose sacrifices on others. “Terrible leaders just sacrifice other people”.

Here’s where you’ll probably lose a few Management level executives who like their nice houses and fancy cars.

In addition to cutting wages of the highest-earning employees, freeze the performance bonuses, incentive trips, as part of alternatives to layoffs.

No overtime is better than no job.

Put employees on unpaid leave for 2 weeks or more alternating between 2 groups of staff.

Do it through proper discussion with the employee on a one-to-one basis. Cut the staff cost by half or more. Employees who contribute to Employee Insurance System (EIS) if agreed to go on unpaid leave can claim RM600 per month from PERKESO.

Sabbaticals is longer than conventional unpaid leave.

Some employees might welcome a sabbatical, long leaves which guarantees that the person can have his or her job back after that.

Shortening the workweek by just one day or more can cut costs significantly.

It’s nice to pay employees while they’re sick in bed with the flu, but sometimes it’s not possible.

Employers who keep employees in the workplace costs money.

People consume electricity, water, and other utilities, plus a responsibility to keep them safe. It is a good safety practice too to keep the employee away from each other to avoid bringing COVID19 to the office. Sending your workers home can cut costs without cutting manpower when you need them the most.

If you have truly toxic staff members, start trimming your staff anyway.

Sometimes you have to let some employees go. It’s not because you’re downsizing, but because those employees don’t add value to your company.

Some company consider fire the seasoned employees who cost more and opt to hire junior at lower remuneration.

In other words, they’re getting rid of valuable human capital to save money while bringing in fresh blood at lower salaries. It costs less to retain employees than to replace them. Negotiate on pay cut on instead. Freeze new hiring as an alternative to layoffs.

You’re sending some of your employees to another company for work.

This works for professional firms and back-office too. During MCO there is a high need for a position such as delivery drivers, warehouse operator, online marketing, and retail stores operators. Secondment of staff to clients or related companies who are surviving well can shift some staff cost off your company.

Employees who retire, move on, or otherwise part ways with your company of their own choice.

It can help ease your finances. It’s an excellent long-term option if you don’t want to start layoffs.

This goes hand-in-hand with the attrition angle but gives your employees a boost.

Offer an early retirement package to employees who might want to step off the corporate ladder.

Some of your employees might want to “jump ship”, but they’re waiting for a sign.

Let your staffs know that you’re experiencing cash-flow issues, so you’re willing to accept VSS who are willing to exit the company amicably.

Multitasking is the word.

Cross-training your existing employees. Move between departments during this low season might help improve their efficiency instead of laying them off.

Instead of cutting wages, you can also cut hours so that full-timers become part-timers.

It’s better to have half a job than no job at all, and your staff can look for other part-time work to fill that income gap.

Everybody love incentives. They’re a great way to encourage productivity and efficiency in the workplace.

However, when you’re bleeding in terms of money, you have to cut back somewhere. Instead of cutting jobs, cut incentives.

This is another controversial move and one that requires caution because of employment laws. However, if you can temporarily reduce these costs, your company can get back on its financial feet.

If you have to let some of your workforces go, find out more about “Employment Insurance System” (EIS).

If your employees have been contributing to EIS, they can apply for a job search allowance. You may consider to top up the difference as part of the severance package. It won’t cure the problem, but it can help your most valuable assets to further their careers.

If you need to give your employees a drastic pay cut, consider lessening the blow by offering stock options.

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Strategy Two : Create More Jobs

Retrenchment come into the picture, especially when the staff is doing nothing. These 19 ways don’t touch the salary or the staff, but will bring the work and money back to the company.

Instead of laying off employees, bring all the work in-house.

You’ll save money by not paying contractors. You’ll get more control over the work. Such as In-house Tax Preparation, negotiate with an external accountant for reviewing fee instead. Negotiate with the contractor to freeze contract or drop altogether. Delivery of online orders within local vicinity can be done by own lorries instead of outsourcing.

As the approach above, cut the outsourcing. Keep all the work under one roof so you can have better control over your costs.

Economic Stimulus Package does provide many cost-cutting measures. The tax authority allows revision of tax instalment to best reflect the financial position. HRDF provides the option to stop paying a levy for 6 months. There are so many more. Use them to your advantage.

restructure your business to make better use of your human capital.

Moving employees to different departments and assigning them new responsibilities might reveal new ways to stimulate cash flow. Such as to move sales staff in bricks and mortar store to support online sales.

Cut expenses that aren’t essential to daily operations.

Cut the decoration, flowers, non-essential repair and maintenance.

Whether your business is in essential industries such as a convenient store, clinics, restaurant, even pharmacy.

Shorten or shutting down the operation entirely for short periods can help rescue financial blood drain.

Don’t miss the opportunity to cut costs by renegotiating your contracts with vendors, suppliers, contractors, landlord, banker and other associates. The strategy is open your mouth, negotiate, businesses are open to discussion now more than ever.

How can you do things faster, less expensively, and more productively?

How can you encourage your staff to become more efficient in their jobs? What training your managers can provide inhouse now or using free online learning resources such as Coursera and Edx. Brush them up nudge them to learn skills which is good for your business. Don’t know where to start? Go for software skill that they frequently uses. Such as excel proficiency, business analysis, digital marketing, AI programming. Future proof the business and raise the skill level. To fight a war, your soldiers must be trained, skilled and in the momentum.

These days, businesses use lots of subscription plans and licenses in their daily operations.

While they’re nice to have, and can help with everything from online advertising to CRM, they’re also luxuries. Get rid of them instead of your people.

On that same note, it’s time to cut the marketing and advertising budget.

When you cut back on advertising, that doesn’t mean you can afford to stop wooing customers.

Focus instead on organic marketing: SEO, social media, value marketing.

An experience expert in business finance can help you look at your P&L statements from a fresh perspective.

He or she can provide better recession plan and solution that provides an alternative to layoffs.

Don’t burn any bridges, but discuss with vendors to explain your situation and let them know that you need to take a “sabbatical” from their services.

Instead of getting rid half of your workforce, allow yourself to narrow your operating margin.

It’s just like budgeting for a family; reduce expenses, restructure your business, do whatever’s necessary to keep your people.

The financial institution is stepping in to provide 6 months moratorium and loan at up to 3.75%.

This injection of cash can help a business avoid layoffs and recover from this low season.

Institute a policy that requires upper management to approve any spending.

Create rigid guidelines around corporate spending so you can control your costs more thoroughly.

Piles of debt can make any business owner nervous.

Negotiating with your creditors to bring your monthly obligations down.

Many businesses carry too much insurance.

Normally, it would be better to be the insured company than an underinsured one. Do note that insurance company are allowing the business to apply for 3 months suspension of insurance of premium. Utilise this to ease the cash flow.

Instead of acquiring inventory, merchandise, and other assets on credit, use barter agreements.

They’re healthy for both businesses and they free up cash flow.

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Strategy Three: Things to identify now and to do immediately post-MCO to keep the company floating.

There are many non-staff related cost to look into.

Now that you are in the momentum of cost cutting. Why just stop here. Post MCO, there are so much more you can do. To cut the cost deeper and wider.

Post MCO consider looking for a less expensive place to work. There are so many cheaper alternatives.

Your company doesn’t need fancy gadgets and outdated machinery that just collects dust in some garage.

Start selling off assets to reduce storage costs, bring in some cash flow. A junk to you, can be a great piece of equipment for some other business who is also in the journey of recovery from recession.

Instead of cutting employees, cut product or process.

If you’re experiencing a drop in demand, you don’t need excess inventory to weigh you down.

Virtual offices can be just as efficient as regular offices.

And you get to spend less money. Managers just need to change their mindset and adopt a new way to conduct a performance review.

Take away those corporate credit cards.

Let your sales team know that you’re not approving high tea afternoons or business lunches at the local steakhouse.

If you’re adopting few of the cost-cutting approaches, you’ve probably cleared up some space in your facility.

Consider subletting it to another business, you can bring in some cash flow.

Some people view M&As as some sort of corporate toxin.

But there are business owners who build mergers or acquisitions into their exit strategies. The chance to hand over the reins and to watch their empires grow into bigger things is the best kind of success.

  1. Cost-cutting is important, more importantly, is to learn how to propel the company upwards despite a global recession. To do so, Management and Employees’ ability must be enhanced.

    Yuval Noah Harari said beautifully in his book, 21 Lessons for the 21st Century: “the 2 most important skill is job automation and the ability to re-invent yourself over and over again”.

Many companies contribute to HRDF but hardly utilise them for Learning and Development. Learn from the hardship of MCO, identify learning map for management and employees. Identify the skill gap, reinvent your company to survive through this tough global recession.

Prefer to read it as pdf ?

Me too! Click the button below to download yours.


Are layoffs sometimes necessary? We’re forced to reluctantly conclude: Yes.

However, we hope that, for most businesses, that’s the last resort instead of a primary option. There are so many other ways to trim down on cost. Why cut the much needed soldiers when you are fighting a war.

If you have other alternative approaches, please do share with us. We are compiling this intending to help another business like us and their staff to survive through this hardship. If the approach you use help you survive through, your suggestion is valuable for another business.

We wish you all the best.

Stay safe and healthy.

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