Our Company Policy? No Layoffs. Ever.

Last Updated Aug 19, 2010 1:32 PM EDT

By Julia Billen, CEO, Warmly Yours, Long Grove, Ill.
I run a radiant heating products company -- we're closely linked to the remodeling and new construction sector, which showed signs of trouble even before the economy collapsed. My finance consultants told me I was going to lose a lot of money in 2008 -- in the many millions -- and that if I wanted to avoid bankruptcy I needed to start cutting costs by slashing my workforce.

I told them I wasn't going to fire a single one of my 60 employees. I'd watched my father-in-law deteriorate after getting fired at just 44, and I never wanted to put someone else through that. Sure, the numbers were bad, but there was no sense in focusing solely on the negative.

I knew we could make it through if I could just keep the company moving. To do that, I needed to keep my employees thinking positively.

Fighting fear with hope
When the banking sector collapsed in October 2008, it certainly hit us, but not as hard as it did other companies. I'm a naturally optimistic person, but the situation tested me -- I was as scared as you could possibly imagine. I knew I couldn't show that fear to our employees, so I made it clear that we still had work to do.

Before the slowdown it took a lot to get fired from Warmly Yours -- we work hard to help people do work they're qualified to do -- but reinforcing that commitment became even more important given the state of the economy. The news was full of stories about massive layoffs and companies going bankrupt. So I promised our employees that we were going to get through this together. And I made a public pledge: There would be no layoffs at Warmly Yours.

Making that promise was in line with my longstanding aversion to firing people. Still, I really was scared about what that commitment could mean for the company.

Trimming the fat
Since I'd made the pledge to avoid layoffs, I went back to our budget with a vengeance. I looked at every additional expense in the budget in terms of a quarter person, a half person or a full person: If I could save $30,000 or $40,000 by cutting something out of the budget, that was a person I didn't need to fire.

For example, changing our payroll company saved $80,000 a year -- that's two salaries right there. We also restructured our IT, getting rid of our expensive CRM software and switching to writing our own code. That had the combined benefit of keeping employees busy, allowing us to develop software that was more customizable to our needs and trimming the budget -- goodbye, $30,000 per year licensing fee.

Other changes we made helped keep people's spirits up. For instance, by switching our benefits provider in 2009, we were able to offer improved benefits at the same cost. We couldn't give our employees a raise last year, but they did get better benefits -- that was very well received.

Choosing growth
The most important thing we did was to prove to our employees that we had a strategy to get through this recession; we weren't just going to roll over and play dead. Before the recession, we'd planned on expanding into new markets involved with snow melting and deicing -- sidewalks, driveways, roofs, etc. We'd done a test study in 2008 showing that we could make money in these markets, but expanding at a time when the sector was entering freefall was risky at best.

I could have put the expansion on hold in order to stick with our core focus of indoor projects, but there was no doubt in my mind that that approach would eventually lead to layoffs. Successfully expanding into new markets wouldn't necessarily add a ton of money to the bottom line -- but it would show our people that we were moving toward success.

So I applied for a $500,000 SBA loan to help with the expansion. A lot of people thought I was crazy to take on so much debt when things looked so bleak in the housing sector. But I really think it made a difference in keeping our employees feeling positive about the company's direction. We went through the application process for the loan -- our marketing team got all focused, as did our sales team -- and it took their minds off of the crazy stuff that was happening elsewhere in the world. Instead, they were thinking about growing the business.

I'm happy to report that to date I have never laid off a single employee. Some people have left to pursue other jobs, and a few of them have even come back. And while the expansion has helped our bottom line, it has done more to position us for future growth.

We're not out of the woods yet, and I continue to look for ways to cut our budget. But though we were down to $5 million in sales in the U.S. in 2009 (close to $1 million in Canada), we're on track for 2% growth in the U.S. (and 42% in Canada) as of July.

Julia Billen grew up on the wrong side of the tracks in Baltimore. Her childhood and her spirit of independence -- as well as her time spent dressed as her high school's mascot -- helped prepare her to tackle the challenging radiant heating market.
-- As told to Peter McDougall