For better or for worse, one of the first moves that entrepreneurs make when they find themselves in a difficult position or situation is to reduce wages, make redundancies, or both.
But the question that arises is to whom should we make a reduction, and who should we dismiss?
Entrepreneurs in the above-mentioned hard situation rely a lot on the current situation of the market and make effortlessly arbitrary conclusions about their staff such as ‘they will not find a better job so they will stay’, ‘they will beg me to stay’ or even ‘there are people who have told me that they will work more with less’.
Yes, many employees may face difficult times when faced with a salary reduction or dismissal, but their endurance and intolerance also have limits. Will you reduce the salary for everyone or will you choose to keep only your best employees? dismiss someone or hire the best of your competitors or the market? What are the consequences for your business if someone from your staff leaves and he is a good employee who knows what he is doing, does it quickly, and does not create problems?
Choosing work is not just about the remuneration, i.e., the salary. There are other factors that have equal or even greater weight such as the prospect of advancement, security, good teams, good manners, and acknowledgement.
If in times of crisis you put your good employees in the same basket as the mediocre or even with the useless, the only sure thing is that you will be stuck with the bad guys and you will urge the good guys to leave, sooner or later. But how can you choose and evaluate which of your staff should stay, who should leave, and to who you should make changes to their terms of employment?
- Start by analyzing your tasks. For example, if you have stores, it would be stupid to lay off saleswomen to keep extra people in the accounting department. Each part of your business must be properly evaluated according to its contribution and importance to your proper functioning.
- Make it clear where you want to get your business in the future and set a plan. If your goal is only to reduce the cost of payroll start by laying off yourself. If, on the other hand, you are considering adapting to the new data, you must have a plan for the market you are operating in, act accordingly, and inform your employees about it, otherwise, you will end up constantly reducing your people, you will reduce your turnover and you will enter a vicious circle.
- Talk to the good guys. Each business has (or should have) a few ‘diamond employees’. They are the people who care about your business, do not complain all the time, and try to offer constantly. These people need to be identified and with them, you should plan your next steps. Beware of well-known traps such as suck-ups and relatives.
- Try working backwards. If you can’t identify which people you need and don’t need, besides that this is an indication that you have a problem with how you manage your business, try the following method: Evaluate each person on your staff with the impact they would have if they suddenly left your company on their own will. If you see that a departure would not bother you so much then that person is a candidate for ‘retirement’. If, on the other hand, you find that a person from your staff would create a problem with their departure then you have someone that you should probably keep, at least for the time being.
If your business is in the customer service sector (services), you need good employees and not just cheap hands. Failing to recognize the importance of employee satisfaction in your market will drive your company to high employee turnover, a bad reputation, and a lot of problems.