You've Gotta Hold On To The Employees You've Got

By Marc Tracy

We've discussed before the paradox that while you probably are looking to cut payroll costs--this is, after all, where most small businesses' spending gets swallowed up the most--you are also probably looking not to fire anyone, or to minimize how many people you have to fire. Partly, of course, this is for sentimental (which is not to say unimportant!) reasons: in small businesses especially, employees can be like family, and no one wants family to get laid off, much less to do it themselves. But it's also wise business practice, especially when you remember that the recession won't last forever, and that it will be essential to burst out of the starting gate during those crucial few months when the economic tide is turning--something that will be much more difficult if your workforce is severely depleted because of recession-era spending cuts.

Recently, the New York Times informed us of an innovative way to hold on to employees but at the same time cut back on how much they work for you, and therefore how much you have to pay them: a sort of best-of-both-worlds type of deal. And a second valuable recent Times article discusses how to keep your full-time employees motivated and interested during an effectively part-time work schedule.

One article highlights work-sharing programs, a formal arrangement under which employers reduce employees' hours, usually by 20% to 40%, and concommitantly reduce their pay (while still, usually, maintaining full benefits). The state, meanwhile, picks up the slack in the form of limited unemployment checks. Employers get to keep trained workers; workers can come close to breaking even, once you factor in reduced income tax and that extra cash from the state; and the state has fewer failed businesses, completely (as opposed to partially) unemployed residents, and other drags on society and the economy. Win-win-win.

As the (genuinely fabulous) article explains, only a small fraction of eligible companies take advantage of such programs, mainly due to inertia and, simply, ignorance of them (which is partly the fault of some of the states that offer them, which have at times been coy about publicizing them). And not all states do offer them. "I frankly don’t understand why there aren’t more states that participate in this program,” says the Massachusetts Labor Secretary.

So consider this post to be our part in combating that ignorance!

Meanwhile, the chief lesson of this article is that idle hands are morale-killers. "For many employers, of course, the solution to dealing with a lull in the workload is to downsize--either permanently or temporarily," the piece observes. "But other companies want to keep their work forces at full strength in readiness for an upturn." It continues: "The challenge of filling down time isn’t small. While frenetic 80-hour workweeks can certainly take their toll, staring into an abyss of free time can also damage employee morale."

It then reports on various bosses who have done all manner of things--a listening tour, a business-related book club, and even, yes, paid time off--in order to avoid bored, thumb-twiddling employees in the office.

We'll leave you with a collection of quotes from the first article, each from different business owners or employee managers. Remember, these folks have all avoided outright downsizing by taking advantage of those state partial-employment programs.

“The alternative would have been to lay off three to seven workers, but that would mean that when things become busier, I’d run the risk of not having the trained people I need.”

“Just the ability to hang on to people in tough times and not force them out the door is good for morale."

“The great thing about this program is you’re not decimating your company. Our company is not broken. The economy is broken.”

Yet one more reason--as if the sentimental ones weren't enough--to do your darndest to hold on to employees during these admittedly difficult times.

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June 24, 2009 9:31 AM