Protect Your People
Vega here: this is a timely and important guest post by our dear colleague Megan (MR) Rolfe of Blue Swallow Consulting, and co-written with Mala. I hope you find it as insightful as I do.
Well, friends, here we are. We made it halfway through 2026. Among the multitude of truly heart-wrenching challenges faced in recent years, many of our clients saw their economic forecasts change for the worse. Some for the much, much worse. Even if some organizations believe they can weather this year, we don’t know anyone who is certain about 2027 or beyond. For everyone, fundraising continues to be an urgent priority.
As you contend with your own financial pressures and face difficult decisions, we ask you to commit to protect your people. When we say “protect your people,” we don’t mean don’t make the hard calls. We mean weigh all financial impacts for how they land on staff, and do all you can to make pay cuts and layoffs a last resort.
Here are some ways you can try to live out that commitment.
Level 1: Prepare
If you are feeling any kind of economic pressure, level 1 is where to start. The first step you can take is assessing where you are and potential courses of action if your situation changes:
Review your cash position and burn rate. Understand your current financial position and the financial thresholds necessary to keep going and for how long. What is your cash on hand? How many months of expenses are in your operating reserve or emergency fund? And if you don’t have an operating reserve, is building a reserve possible?
Determine what level of transparency is appropriate for your team. We believe more transparency is always better, as it engages staff in solutions and positions them to make data-informed decisions with shared knowledge. However, it may not make sense to share everything with everybody on the team. Organizational economic insecurity creates intensifying levels of staff anxiety, and the role of leaders is to set staff up for decisions they can feasibly weigh in on. Consider what information you want to relay and how you want to relay it, and how you might help staff have space to absorb information and be equipped to show up well through uncertainty (e.g., reminders about any coaching or employee assistance programs you offer, office hours for space to express concerns, etc.).
Assess what you might do in the event of a sudden or steady drop in funding. Take the time to plan now when the stakes are lower and everyone is feeling more rooted, secure, and able to give their best thinking. For example, you can draw up a protocol that explains how you will start executing specific actions at specific times (e.g., when our cash flow drops below 6 months in the bank, 3 months in the bank, 2 months, etc.). You can share this plan with staff and put into place an alert system to notify staff where you are at or nearing those markers.
Reground yourself in your strategy and structure.
Revisit strategic planning and confirm your core programs. Assess your staffing structure and confirm the structure aligns with your core work. If not, are there ways to reassign/rescope the work of current staff to meet the organization’s core programmatic needs? Or is there a way for staff to continue that work separate from the organization - perhaps with seed money from your organization - or under another organization where there is greater strategic alignment? What connections or resources can you provide to support any transitions?
Consider whether any function could be more cost effective if shared or restructured. For example, if you are fiscally sponsored, would your costs be less under a different fiscal sponsor? If you work with finance consultants, would your costs be less if you shifted some finance duties in-house?
Explore whether there are organizations you could merge with. Often these are organizations you are already in partnership with, but you can also ask Board members or other trusted advisors for their guidance.
Establish severance protocols and what commitments you want to make to staff if a reduction in force is necessary. This might include things like as much advance notice as possible, continuation of benefits (e.g., COBRA), and career coaching. Approach severance with the full staff in mind, ensuring all job levels have access to severance and it is fairly distributed.
The second step you can take is no new expenses. This can include:
No new hires. If staff are feeling overcapacity and need support, identify whether temporary, part-time help is feasible, or work out how to reduce the workload.
Limit overtime. Review time records and payroll - who is working longer hours and accruing overtime? Revisit goals and adjust workloads to reduce the need for overtime.
Pause all plans to buy any new systems, like that nifty new project management tracker or a round of laptops. Sometimes you may feel that the cost is worth it; say, it’d be better to have faster, less buggy laptops than spend the money on constant repair. The point here is to pause before immediately making the expense.
Along with no new expenses, you can also diligently seek to reduce current costs. This means reviewing your organizational expenses to see where costs are adding up outside of the personnel line:
Reconsider all travel. Can the staff retreat be virtual? Can staff travel be only on an approval basis? Which staff absolutely must attend certain events? What events can be in free or less-fancy spaces?
Audit your subscriptions and scale back anything not being used, like extra Zoom accounts or that platform no one logs into anymore.
Look at health insurance satisfaction and utilization. Health insurance is already a significant expense for organizations, and this past year in particular it shot up for everyone (thanks, Congress). Try to maintain the current plan if you can, especially if your staff favor it, but see if there are parts you can plan to scale back on if they are less utilized. If you are in an open-enrollment period, get a cost comparison between brokers.
Reduce your vacation liability. If your organization pays out accrued, unused vacation upon termination, encourage staff, especially senior leaders, to take their time off to reduce the financial liability the organization is holding.
Set a monetary cap on what staff can expense without secondary approval, or if it’s outside of pre-agreed upon budgets.
Consider going remote. If your organization is not already remote, you may want to look into whether it’s possible to scale back to a smaller office space or transition to working fully remotely. This kind of transition has a huge effect on organizational culture and of course should not be made lightly, but at least looking into the costs will reassure you that you’ve considered your options.
Some of these things might feel like small potatoes, but they add up. Say you have 10 staff and your annual retreat typically costs $20,000 for travel, lodging, and meals. If you cut that, that might be one more month of payroll for 1-2 staff. That’s not nothing! The goal here is to know you’ve done your due diligence to scale back what you can and build a longer runway for staff to retain their employment. It also cues to staff that your mindset is one of care and vigilance.
Level 2: Get Serious
If things are feeling more urgent, now is the time to make more serious shifts, while still doing whatever you can to not touch take-home pay. Instead, consider:
Serious
Survey your team. Whether through one-on-ones, all staff or team meetings, or an anonymous survey, explore staff suggestions for reductions. How would they trim a certain percentage off their project budgets? Where do they need the most help and what could they do without?
Pause remote office stipends (note: these may be subject to state requirements)
Pause professional development funds and any extras, like celebratory events (and instead of pooling for a gift card, try a round of appreciations for someone at the next staff meeting)
Cut fringe benefits, such as life insurance, that are above and beyond the most essential benefits
More Serious
Pause any promotions
Freeze any planned wage increases, such as tenure-based raises or cost of living adjustments
Reduce or pause the employer contribution to retirement
You want to give as much notice as possible and take care as you broach these cuts. They can be detrimental to morale and may pose challenges for retaining strong teammates. However, the goal continues to be to protect paychecks. And remember, this isn't a forever reset, but it is a survival reset.
Level 3: Make Hard Calls
This is where absolutely no one wants to be. But if you are here, we know you have done everything in your power to not be here. We see you, and we are sorry.
Below are some ideas to consider before formally engaging in layoffs, including potential pathways for pay cuts. When you are making the hard calls around cutting pay, it's important not to recreate what Vega Mala Consulting calls "The Tyranny of the Cause" - that is a toxic work environment where loyalty and commitment are measured by how much each person sacrifices.
Consider using the Money Matters Discussion Guide Baselines or Privilege & Access Check for opening up some self reflection around our individual, collective, and comparative past and current economic realities.
You can:
First consider whether a plan for backpay is feasible for any pay cuts. You’ll want to let staff know about the plan for this, if there is one, or if you can’t promise this.
Invite staff to take a voluntary pay cut (while, of course, still meeting state and federal wage requirements). Some staff may be able to take temporary cuts. They may be facing less economic hardship than others or have access to more monetary resources outside of their compensation.
Invite staff to voluntarily reduce hours (and, of course, workload). This could mean their hourly pay rate is the same, but rather than be at 100% time for 40 hours, a worker could go to 90% time at 36 hours, or 80% time at 32 hours.
Note: Depending on the state the worker is based, they may also be eligible for unemployment benefits when their hours are reduced through no fault of their own. Typically this must be a significant reduction, but this could be a potential option. If staff file for unemployment benefits, do not contest them.
Request senior leadership or those at the highest paid levels take a pay cut first. If you determine pay cuts are necessary, aim for an equitable approach, where those who already earn the most are the most impacted and those who earn the least are the least impacted.
Explore voluntary resignation for any staff who may wish to leave by choice. Some staff may already be planning to leave, and a severance package could support them in moving up their exit.
Our ask is that in all the arduous, unenviable decisions that you are faced with in the months ahead, let the very last thing you do be cutting wages. Of course accountability still matters, getting the work done is absolutely critical now, and we want teams that are cohesive, hearty, resilient, and doing their best work together. And the emphasis is on together. We need each other. We need to stay in this as long as we can. Please protect your people.
p.s Check out the Headwinds and Tailwinds of Uncertainty section of our Journey to a Thriving Wage guide for other ideas on how to approach tough economic forecasts.