General Options for Reducing Staffing Costs

Current Situation

Assuming we need to cut $5,000 monthly, we have some options available to us. This number could change according to projections that are still being calculated.

- rfs 16:59, 23 Feb 2005 (PST)

Thinking about Timeframes

Based on our projections, if we find a way to save enough money, how long until we expect our income has risen enough roll back our cuts? Whether or not we have an estimated time frame, we should identify the goals that would allow us to end the cutback. These goals would need to be based on a budget that is in line with our projections.

Thinking about the Costs

Each options costs us something. For instance, a layoff might raise unemployment, and require us to pay out unspent vacation days. That's the money cost. It would also require us to cover the work of the laid off person or cut programs. That's another kind of cost. For each option, we should mention its estimated costs.

The Options

(There may be more that what is listed here. Add options as they come up.)

Attrition

Attrition works like a hiring freeze. Without laying people off we wait for them to quit or reduce hours in their own time. We have a timeline that tells us when we might expect attrition. For attrition to work, the existing collective members (and volunteers) need to be able to do the work that was being done by the folks who leave.

• Clout's Store Internship ends at the end of March. Not re-upping it save $700.
• Rick goes from 28 to 20 hours in May. This saves us $475.
• Matthew's Front Desk Internship ends at the end of May. Not re-upping it save $700.
• Geiner quits sometime this summer. This saves us around $2,000.
• Marlin quits sometime around a year from now. This saves us around $1,200.

Through attrition alone (without hiring replacements) we would save in the ballpark of $5,075, but less than $2,000 is scheduled to happen before June. This means that attrition alone will not solve our problems, but measure we take now might be temporary (if we can absorb the jobs of these people into the remaining collective members as these folks quit or reduce their hours).

Wage Cuts

Current salaries are around $28,000 per month (including benefits). A reduction of $5,000 equates to around 18% of that total. I work 32 hours per week and my base pay is $1,440. That makes my hourly rate about $10.35 per hour. An 18% reduction would drop that to $8.50 -- still above minimum wage. My new base wage would be aroundy.d $1,180 and my take home would be substantially less than that. We would need to determine how much of a cut each individual can afford and take the smallest number to determine a cut that would work with everybody.

The effect of swapping jobs around

Swapping jobs between existing staff members does little to directly address the problem, but it does allow us to take certain measures we might otherwise not be able to. For instance, if Matthew is willing to swap hours but not quit and Jhasen is willing to reduce his hours but we can't afford to let him, swapping would allow us to consider moving Matthew into fill Jhasen's shoes and someone else to pick up the slack that Matthew's absence would create. (That's just an example.)

Voluntary Hours Cuts

More data is needed. We need to find out from the survey how many people are willing to sacrifice how many hours of their schedule.

We also need to plan for covering people's job functions if they reduce their hours.

After gathering voluntary hours reductions, we need to look at them as a whole. Some questions to ask:

• Does the cumulative voluntary hours cut make enough of a difference?
• If all of the voluntary hours cuts went into effect, what areas of Free Geek would need to be covered?
• Who would be left to cover those areas?

Voluntary Leaves of Absence

This would be more of a temporary cost-cutting measure than a permanent solution, but it could help. It should be noted that some of the problems with a temporary layoff do not apply to a voluntary leaves of absence since the time frame would be set by the staff person taking the leave. For shorter time frames many of those problems are also reduced. Of course, the cost saving benfefits are also less.

Layoffs

A 32 hour collective member with health care costs about $2,000 per month. A 20 hour collective member without health care costs about $1,100 per month.

If we implement anykind of layoffs we would need to study some of the impacts. (Remember to evaluate Dental Plan for each health care related question.)

Financial considerations:

• Assuming laid off workers file for unemployment, do our unemployment expenses go up? How much?
• Does Free Geek pay for health care while someone is laid off but still covered, and for how long?
• When someone leaves Free Geek with outstanding vacation days owed, we owe them that money and have a policy that states we will pay them within 12 weeks. There may be legal limitations on this and we may have to pay that person right away anyway.

Other considerations:

• Who does the work of the laid off staff member?
• When does health care end for the laid off member?
• If we drop a member from our health care plan, what affect does it have on the health care for other members?

Temporary vs. Permanent Layoffs

Permanent layoffs are fairly straightforward propositions, albeit harsh ones for the people being laid off.

A temporary layoff assumes that we believe the problem is short term in nature. This requires we predict into the future and have a time frame in mind when proposing the layoff. Temporary layoffs present some problems that ought to be considered.

• How hard or soft is the time frame? Do we tell the laid off worker that they'll be out of work for X months? Or do we tell them they're out of work until we meet certain financial goals?
• What happens if things get worse? Have we strung on the laid off person?
• What happens if things get better? At what point do consider hiring someone back? (We might find ourselves tempted to hire back too soon, leading to a rollercoaster ride for the laid off worker.)
• Imagine that a worker is doing an adequate but not exceptional job, we lay them off, things eventually get better, do we have to / want to hire them back? How does this interact with staff reviews and staff discipline policy?
• What if during the layoff period, Free Geek's direction changes enough that the temporarily laid off worker doesn't fit into the new programs as well as s/he fit into the old way we did things?

Eliminate or Restructure Some Holidays

Depending on weekends fall there are between 13 and 17 holidays on Free Geek's schedule. The average is 14.5, unless you add in closing early for Christmas Eve and New Years Eve, in which case the average is 15.5 days per year. I'll start with 15 as a round number.

Each of these days people get paid, but Free Geek isn't open. At $10.38 per hour and an average of 95.8 hours worked per day, this amounts to about $1,000.00 per vacation day. There's also a relationship between how many days we are open and how much money comes in the door (cash donations, fees, sales, stuff that get converted into scrap materials).

There are many caveats here, though so pay attention:

• On some holidays it is pointless to stay open. People will not drop much stuff off on Christmas, New Years, Thanksgiving, or Independence Day. Those holidays would be pointless to give up.

• If we're open on a holiday, we'll bring in more money that day than if we were closed. That's obvious. What's not known is if that money was simply displaced to another day or not. Probably some fraction of that money would make its way to Free Geek and by opening another day we just shift which day we get that piece of the money. Probably some other part of the money is a lost opportunity. We don't know how much money is in which category.

• We could keep our holidays as staff members, but keep Free Geek open. At this point if you are not scheduled to work on a holiday, you need to schedule your vacation for another day to take it. If we decided we wanted to keep our holidays, but open Free Geek anyway, all staff would have to schedule their time off. This is not the same as getting a vacation day, since you'd need to take the time during the same month (or thereabouts) as the holiday.

• Because of the previous scheduling issue, there are a number of staff people who actually don't take holiday time (practically speaking) anyway. Most of the folks who get Saturdays off for instance don't bother to schedule holiday hours at another time to make up for the fact that the schedule "robbed" them of their day off.

So all that leads to some pretty fuzzy math. But remaining open for some holidays would probably increase our income somehow or other.