Companies are looking for ways to cut costs. When is it clear a staff reduction is the right answer?

There are obvious reasons for companies to avoid cutting staff — such as the morale of the “survivors” and the possibility of being understaffed once business picks up — so it’s crucial to weigh every available option.

Here are five cost-cutting possibilities employers might consider before deciding on a layoff:

1. Hiring freeze – In some cases, companies can get the savings they need simply by deciding to stop hiring new people for a certain period of time.
2. Pay reduction – Two thirds of workers say they’re willing to take a 5% pay cut to save jobs at their companies, according to a recent poll by NBC and the Wall Street Journal.
3. Reduced hours/furlough – Of course, employees may not be happy about losing pay, but it will be easier to swallow if it means some time off. Shortening the week or establishing a set of unpaid leaves may help a company through short-term struggles without having to let people go.
4. Axing non-performers – Depending on the number of jobs that must be cut, some companies may find that instead of downsizing across the board, they may be able to terminate sub-par workers without hiring replacements.
5. Internal transfers – Companies might discover some departments that are overstaffed and others that need more manpower. In those situations, internal transfers can sometimes be used to create a more efficient organization.

Tags: layoff alternatives, staffing