I have a feeling that in the next weeks or months many churches could be discussing the potential for laying off staff in order to reduce personnel expenses and the budget. That's understandable since personnel budgets typically consume around half of the overall budget in most churches. At Fairhaven, personnel costs run 56% of the total.
Before considering downsizing staff, I hope you will first do all you can to reduce operating costs. We found that section of the budget to be fertile ground, so if you haven't read my post on that topic, check it out. Since reductions in force don't always yield the dollars that organizations think they will, I want to offer a list of considerations to help you turn over every rock possible, before you make the decision to hand out pink slips. Termination meetings are painful for everyone involved, and a church executive's nightmare, so I know you want to do everything you can to avoid one. Here goes:
1. Consider reducing hours instead of personnel. Squeezing a handful of positions' hours might create enough resources to offset the need to loose a staff member. Or reduce all positions or all non-exempt positions by some margin. Many staff members would rather make minor concessions spread equally across the board than to see a staff member let go.
2. Freeze existing salaries. Most churches are considering a salary freeze for 2009 given the economic downturn and the potential impact on giving. It won't surprise anyone, especially in light of daily announcements of layoffs. Again, many staff members would willingly forgo a raise rather than see the a team member dismissed. In one church, staff members were given several extra days off next year to be used at their discretion as at least some compensation in light of frozen salaries. Of course, salary increase promises must be honored, especially in view of any employment or contractual agreement.
3. Don't fill vacant positions. Obviously one way to reduce personnel costs is to suspend hiring. Clerical, custodial, and ministry support positions (i.e. technology) are some that might be covered through volunteers, at least in the short run.
4. Ask for furloughs. Consider asking employees if any would be willing to take an unpaid furlough for an agreed-upon length of time during a period when ministry is slow. You might be surprised at some who would welcome the break perhaps to care for children, aging parents, or just because the extra income is not a necessity.
5. Shift staff around. Move employees from jobs slated for downsizing to open positions. This assumes you can provide training to give the employee a reasonable chance for success. It helps keep talented people on board, provides the longevity that creates stability within the organization, and retains the potential for expansion if the environment changes in the future.
6. Use job sharing. Allowing two part-time employees to share a full-time position potentially reduces benefit costs and thus, personnel costs. I've done this for both clerical and accounting positions with great success. Additionally, if a position must be cut, inquire as to whether another employee would be willing to share their position, allowing the affected employee to at least retain a part-time position. In today's workforce, flexibility is a prime motivator, and so sharing a position can be very attractive.
7. “Lend” your employees out. Inquire as to whether another local church might be willing to share an employee as a means of cutting costs. We are currently sharing one of our graphic designers with a church a mile away. It allows this person to reach full-time hours, and allows both churches to have the benefits of a talented designer.The same could work for an accountant or treasurer, or a custodian.
8. Restrict overtime. Overtime is mandatory for hourly and non-exempt workers who exceed 40 hours in a week, so manage employees schedules carefully to avoid those extra costs.
Having worked for General Electric's Aircraft Engine Group for 14 years, I understand the trauma that layoffs cause. GE was notorious for RIF's. Layoffs create fear, which is toxic to any organization. Being creative in trying to identify any solution that can mitigate the need for reducing staff is well worth the effort. Perhaps one of these suggestions might work for you.