Examining the alternatives to layoffs.

• Position: Supplement: Small Business Survival Strategies

Faced with tougher competition, changing markets and a sluggish economy, many businesses must deal with the harsh reality of downsizing.

Letting employees go to bring costs more in line with revenue is often inevitable. There are alternatives, but most require complete honesty from the employer and full co-operation from the staff.

Job sharing is perhaps the most popular alternative because it allows two people to keep working, albeit for reduced hours and less pay.

The key to implementing job sharing is to have two or more employees agree to its implementation between them.

The obvious benefit is that the employer retains valuable staff who become more flexible by learning each other's jobs.

One of the most effective alternatives to layoffs for small businesses is to encourage employees to work from their homes in order to reduce overhead. The employees receive some tax benefits in this case.

Reducing the hours of the work week is also a common alternative. But again it requires that employees agree to work fewer hours for less pay. That alternative works best when employees are authorized to respond to peak demands of the operation and to cut back during slow periods.

Permanent part-time is also an option which retains the employee's benefits and seniority. It is often used in cases where the employee has a low rate of productivity or a reduced workload.

Employees can be encouraged to take their holiday time if the work slowdown is expected to be temporary. Another cost-saving alternative is for them to take accumulated overtime as time off rather than asking the employer to pay out money.

In some cases employees will take a non-paid leave of absence if it involves no loss of...