By Tom Dorr, director of the Center for Economic Vitality
Kay Johnson has been successfully growing her company since 1999. That is until 2008, when the economy turned and she, like many employers, has struggled to survive. Kay’s sales were off over 25 percent and she was cutting costs and hording cash. Her 14 dedicated employees have helped her grow her business from a local supplier to a regional provider of construction materials over the past eight years. She has been a client of the Center for Economic Vitality (CEV) during these challenging times and began looking for support on how to maintain sales, cut costs, manage cash flow and keep her employees. The CEV has helped many businesses with expense reduction strategies, cash flow management, and managing sales during these tight times. The CEV uses many tools and strategies to help businesses like Kay’s. One of these tools is Shared Work administered by Employment Security Department.
Kay had invested in recruiting and training a talented workforce. Despite the company’s reduction in sales and profits, Kay wanted to retain her workers as best she could. It was only two years ago, she was struggling to find qualified workers. However, she also knew she needed to cut costs including laying off staff for her company to survive. Kay was torn on what to do as many of her staff had become like family to her and they were one of the keys to her success. It wasn’t until the CEV introduced her to a program called Shared Work, did she find a workable alternative to layoffs.
Shared Work, a state program of Employment Security Department (ESD) since 1983, supports businesses with alternatives to laying off employees. Shared Work offers employers flexibility to retain staff at reduced hours without layoffs. An employer can reduce workers hours 10 to 50 percent and qualified workers can receive partial unemployment benefits to replace a portion of their lost wages. Eligible companies can be large corporations to small single-person operations. Participating employees must be full-time and paid hourly. They must be eligible for regular unemployment benefits and be able to work all hours offered by the business.
Fluctuations in business can now be managed with a new tool – Shared Work, which improves businesses’ chances of survival. Businesses apply to ESD for a one-year shared work plan. Companies can reapply for new plan after their plan expires for up to four years depending on the circumstances. In short, Shared Work allows employers to vary the amount of hours their workers work, even on a week-to-week basis, reduce their payroll costs and maintain their workers.
Kay’s company applied for Shared Work and qualified 12 of her employees. As she implemented the program with her employees, she communicated her commitment to keeping their team together and participating in the program was an alternative to laying off four to six employees. The employees embraced the program and supported Kay’s decision. The CEV supported Kay by helping her manage the fluctuations in her sales and production. Key performance indicators were developed that determined the staffing needs of the company on a weekly and sometimes daily basis. Work schedules were now driven by these key performance indicators instead of guess work or insufficient information. Profitability was restored after eight weeks on Shared Work and the company continues to weather very difficult times. Today, Kay’s company is still on Shared Work, but they are only reducing their hours 10 to 20 percent as sales and profits improve. The bottom line is that Shared Work combined with business advising has helped save Kay’s company and kept her talented workforce intact.
“There are well over 100 Whatcom County employers with nearly 1,200 employees participating in the Shared Work Program,” said C.J. Seitz, northwest area director for the Employment Security Department. “It has helped these businesses survive the recession and keep valued workers on the job.” If you are interested in finding out more about Shared Work, please call 800-752-2500 or visit www.esd.wa.gov/business.
To learn more about business advising services including implementing a Shared Work program, cash flow management and general problem solving in these challenging times, call the Center for Economic Vitality at Western Washington University at (360) 733-4014 or visit www.cevforbusiness.com.
For more than 24 years, the Center for Economic Vitality at Western Washington University’s College of Business and Economics has helped to shape the economic future of our region one business at a time. The CEV provides free, confidential counseling and technical assistance combined with business intelligence research services to business owners and managers throughout Whatcom County, as well as economic gardening services to all Small Business Development Centers and underserved Economic Development Councils throughout Washington State.