Comstock's magazine 0419 - April 2019 - Page 23

will be so accommodating, and you sus- pect your best employees will walk. They probably will, so you’ll probably lose the business anyway, regardless of a pay cut. Here are some other ideas. CUT HEADCOUNT This seems worse than cutting salaries, but strategic layoffs can actually be bet- ter. You’re afraid the whole business will close, which means 10 unemployed peo- ple. So, do nothing and 10 people may eventually lose their jobs, but take action to reduce your company’s headcount, and just one or two people do instead. This employee (or employees) would be eligible for unemployment, and you should offer severance in exchange for a general release, which makes it sound like it’s not much of a cost savings. And if it’s the person in the stockroom mak- ing $15 an hour, it’s not. But if it’s a se- nior person, the cost savings can be sig- nificant — even with the severance. Of course, the exact person or persons you let go will depend on business needs. Look at your numbers. MAKE YOUR EMPLOYEES PARTNERS TOO Most small businesses don’t make the owners fabulously wealthy, but some do. This takes a tremendous amount of work. So, consider giving everyone a piece of the pie. This isn’t an absurd notion — lots of businesses offer stock options or grants in order to make each employee invested in the business’s success. In this case, you’ll have to offer a bit more than 1/100,000th of the business, but your employees might be willing to work a bit harder for a bit less money if they have the promise of a good payout eventually. Of course, depending on how your business is structured, this might be easier said than done. Consult with your attorney. One of the problems with small busi- nesses is that the owner (or in this case, the partners) are sacrificing their whole lives for the business’s success. You are willing to do anything because it’s your baby — if you succeed, you’ll reap the profits. But to your employees, it’s sim- ply a job. And they can go out and get a different job. GO WITHOUT PAY YOURSELVES Last time you gave everyone a pay cut. What if this time around you simply cut the pay for the partners? A lot. Remember, if this business succeeds, you’ll profit. Are you willing to take no salary or 50 percent of your salary until things stabilize? If you’re not willing to take this risk, you can see why your best employees would jump ship after a 20 percent pay cut. If you don’t think that you can realistically get income back up within a year, it may be time to walk away before you go into debt (or fur- ther into debt). Sit down with an expert who can look at your business plan and your financials and help you make an informed decision. Even if you do these things, your best employees may still leave, as they know that the chance of continued suc- cess isn’t great. Please wish them well. They’ve helped you so far, and they aren’t obligated to place their fortunes with yours. n Suzanne Lucas spent 10 years in corporate human resources, where she hired, fired, managed the numbers and double- checked with the lawyers. On Twitter @RealEvilHRLady. Send questions to evilhrlady@comstocksmag.com. Has your business faced this predicament? TWEET US @COMSTOCKSMAG. April 2019 | comstocksmag.com 23