Sequestration: HR Actions to Consider

The Washington, DC market has been particularly focused on the impact of pending sequestration outcomes. In October, I participated on a panel  addressing preparations for sequestration and our conversation then included topics like triggers of the WARN Act (Worker Adjustment and Retraining Notification),  ensuring you have a budget prepared that takes into account program losses, determining the impact on employee compensation and benefits,  and conducting scenario based planning to mitigate your risk.

You may have moved forward with some of these actions and now need to ensure your risk is mitigated to the largest extent possible and that you are focusing on key  employee retention and engagement. I strongly encourage all executives to have conversations with their employees that share the possibility of how program cuts may affect your organization and their jobs. These conversations go a long way in building trust—even if we are uncertain about the answers.  People are much better at taking the ‘what’ when they know the ‘why’.

Having said that, you may find the actions below helpful as we approach the strong potential of program cuts and their impact:

• Ensure you are controlling the message and not the client
• Determine the potential impact of salaries on all employees
• Identify key personnel and execute a retention plan [have you considered subbing out employees out to colleagues to get you through a period of uncertainty?  contingent retention bonuses, etc.]
• Communicate your bench strategy: How will employees be compensated? Can they leverage their PTO? Will you issue partial or full furloughs—if so, which employees will be impacted?
• Map out the impact on employee benefits that a reduction in work schedule  can trigger
• Consider enforcement of non-competes and policy reviews of those whose hours will be reduced or eliminated
• Review employment offers, employment contracts, commission plans for potential conflicts
• Communicate what you DO know
• If a layoff cannot be avoided, consider using Rapid Response (available through the Department of Labor at no additional cost) as a resource.  http://www.doleta.gov/layoff/employers.cfm

We encourage executives to work in partnership with their human resource (HR) team in executing a workforce impact plan. The HR team can assemble transition packages if necessary that include information on how to apply for unemployment insurance benefits and the resources available through Rapid Response. Rapid Response is designed for two major purposes: 1) to help growing companies access an available pool of skilled workers from other companies that are downsizing or who have been trained in the skills your company needs to be competitive and 2) to respond to layoffs and plant closings by quickly coordinating services and providing immediate aid to companies and their affected employees.