Forums: Discussions for entrepreneurs and small business.

Happy 2009 to all of you fine folks out here under the SuN!

I am hoping for some advice and wisdom on this topic. We are generally faced with this question when determining raises and promotions, and it usually seems to be that seniority correlates to performance, so it`s never so much a dilemma.

However, as the economy turns, and our buyers trim the fat, so must we. In order to keep the production line running efficiently (there are some redundancies that we have recognized) AND profitably, we have crunched the numbers, tossed out paychecks for both CEO and COO (my husband and myself) and crunched again, and there is no way around the number 2.

The number itself bears no consequence other than to our bottom line, but what it represents is far more important. 2 lives that depend on the income to provide for their families. 2 people that have dedicated more than their time to our company. 2 people with hopes and ambitions and innovations. 2 living, breathing human beings. 2 employees that must be downsized, even if just temporarily.

Now don`t get me wrong. We have let employees go in the past. Non-performance is a clear cut case. It is never fun to fire people, unless of course, you`re the Donald, but it is a necessary evil as an employer, for the survival of your company.

This particular circumstance is an anomaly for us at GreenBeans. No clear cut reasons, or at least none pertaining to the individual employee. Just an urgent need to cut redundancies and payroll and  for the moment. We`ve examined the variables of seniority vs. performance. Both easily measured. But not clear cut. Our Wall of Fame is filled with recognition and rewards for every single employee. Some more, some less. As the old Toltec wisdom goes in the Fourth Agreement "Your best is going to change from moment to moment; it will be different when you are healthy as opposed to sick..." Some of them have been with us since the beginning, and some just a few months. All have proved to be reliable and hard working. So what`s a boss to do?

Your thoughts are greatly appreciated.

PS When I say temporarily, I am talking about 2-3 month period at which time projects slated to increase margin will produce ROI`s.

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James Lindon, Ph.D. Patent Attorney
Lindon & Lindon, LLC
Cleveland, Ohio
Patents, Trademarks, Copyrights, Pharmacy Law, Litigation
[this is not legal advice - provided for discussion only]
Intellectual Property for the Individual and Small Business: Identify, Protect, Enforce, Defend.
"Fools rush in where angels fear to tread."
http://www.LindonLaw.com

All human emotions aside, every top performing business and any business book worth its weight will tell you to take performance over anything. Seniority should mean nothing to a business, although it may mean something to you since you`re actually alive, but that`s something you`ll have to come to terms with.

Be sure to weigh their knowledge of your workings, that is a measure of performance.



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Guitar Repair - RepairMyGuitar.com - The Guitar Repair Directory

Countless surveys of human behavior show that of all the things we want, wish for and hope for, security is #1.

Perhaps if you approach the employees, explaining the survival of the fittest problem, you could keep both but reduce their salaries enough to make up the amount you need?

In today`s job market, I suspect that at the micro levels we`re at, people would rather take a drastic pay cut on a temporary level, than lose the job entirely. Maybe you could put both employees to part-time, or do a job-share?

Stan, thanks for sharing you experience, your idea of creating a matrix clicked right into our version of performance evaluations. My brother-in-law runs a home improvement company, and uses a similar style, as contractors are accustomed to the ebb and flow of contracts seasonally.

James, blunt and to the point. Although I know you are right, it is still hard to swallow. :)

Cubemonkey, I see your point. Performance rules at the end of the day, but much of that is tempered with experience, and more importantly, their ability to teach the next generation of employees. Although we have an Operations Manual, and we add a new page at nearly each Monday morning meeting, we continually emphasize the importance of our employees being able to not just learn and master the process, but develop the skills for teaching it. In the end, this have proven to be greatly beneficial as it helps not the teacher and student, and opens the door for innovation. In this respect, certain employees are immediately "off the chopping block" for their ability to do so.

Craig, as usual, you`ve hit the nail on the head. Leveling with our employees is the key. At the very least, they deserve to know the problem, and be part of the solution. Breaking them into PT shifts is really a great solution, as it will allow us to maintain payroll thresholds, keep them on board, and allow them the opportunity to supplement the income they are losing with another part time job. This also allows for an easier transition back to the full time roles when the time comes. We will address this strategy tomorrow, and I will let you all know how it works out!

Thank you guys for your pearls of wisdom, you truly represent what SuN is all about!

Well folks, it`s worked out great. All of our employees are on board. Better than that, they are ready to do whatever needs to be done to keep the boat afloat! We have worked out a PT shift schedule between 4 of our crew, balancing shifts between those who need to work more and those who gave up a shift or two. It was so amazing to watch the OPPOSITE of what I was afraid might happen. The were generous to each other, and to us.

Yay! Thanks again you guys for your help with this, you rock!

Valid points Mike. Although I am ever the optimist, I do fully recognize when the reality of a situation needs to be addressed.

To understand why these cutbacks were necessary, and moreover, temporary, is to understand the nature of our industry: Due in large part to the economy yielding a much slower consumer turnover on electronics, and because we focus on recycling these items, the flow of in and out decreased. We anticipated this decline in April of last year and began working on projects to offset this deficit.
Unfortunately the hammer fell a bit sooner than we thought, and we needed to shift focus to quick turnaround items that required less technical evaluation in order to fund our current projects and stay afloat. We also jumped the gun on certain retail launches in order to supplement. As we are now beginning to see the fruits of our labor, we are confident that we can reinstate our team members to their original positions and/or schedules by the end of this month.

Although I can relate to your analogy of performance over seniority, I temper that with (okay call them idealistic) beliefs, which in large part, is what our company is all about!

Thanks so much for your input, best of luck to you!