Carefully consider which employees are vital to the survival of the company.

Our news media is filled with soaring unemployment percentages and items about companies laying off thousands of workers. I hope none of this is affecting you or any of your family, friends or employees.

Your personal situation will probably never make the news, but it could be catastrophic for you. Your company could run out of money - and out of business:
  • Projects that were started are now being stopped by the customer and payments are delayed. Are your billings and collectibles current?

  • Some projects that were recently awarded have been cancelled. Did you buy equipment or materials for any of those jobs?

  • Is your compassion for your employee’s personal situations delaying critical layoffs to minimize expensive overhead?
Unfortunately, these are not theoretical questions. We already have general contractors and subcontractors in most of the trades going out of business here in Florida. No one knows how long this recession and work shortage will last, but you should analyze and organize your own company’s financial stability to assure survival.

You need to be very aggressive, but not abusive, with collections for completed work, stored materials, change orders and unsettled claims. These do not become assets until they are deposited in your bank account.

Your entire management team must tighten their belts to eliminate costly waste and value-engineer every task for better efficiency and productivity. There is always a better way!

Use piecework or our 6-8-10 daily ratings to increase productivity and maintain positive morale. Discuss flex-time options with each individual employee to resolve personal needs and minimize travel expenses. Offer work-at-home opportunities (the virtual office) to your office staff.

Making The Tough Decision

Undoubtedly the very worst task you face will be laying off valuable employees. Depending on your size and number of years in business, this can become a heartbreaking nightmare. Your compassion for each of your employee’s personal hardships can interfere with your business-minded, practical, financial solvency decisions.

When there is no work and no money coming into your company, you cannot continue to pay out wages and salaries. You must carefully consider which employees are vital to continuing whatever work you have and lay off any that you cannot afford to keep.

You should keep in mind that your decisions will be carefully monitored by all of your employees. Your sound judgment will ensure they will return whenever your workload returns. You need to discuss your situation and reasoning with every employee to eliminate any doubts or false rumors.

Under normal economic situations, a layoff does not create a crisis because those employees could find another job. Today’s recession is so widespread in our construction industry that a layoff can lead to desperation. Many employees live from payday to payday and cannot survive on unemployment benefits - which are also becoming a desperate issue.

No one knows when this work shortage will end. The news media is predicting at least one to two years. Very few employees can survive financially for that long!

Naturally, all of your employees are more concerned about when their crisis will begin. Who will you lay off first and when will it be their turn? Every contractor is also struggling with these same concerns:

1. Consider cutting back wages and benefits to meet your survival budget longer. You could also cut back on work hours if you do not have critical schedules to meet. Discuss all of these options with each employee and ask for their suggestions.

2. Employees with seniority will expect to be laid off last, but you must maintain a profitable and productive work force.
  • A long-time pipe welder or backhoe operator cannot remain on a conservative payroll if they do not have other skills. Likewise with a receptionist who could not replace your accountant or expediter. You can see how our database skills inventory would promote cross-training and provide opportunities for good employees to shift into a different productive position.

  • Some employees feel you owe them something for the 10 or 20 years they have worked for you. You might feel that they owe you something for all of the years that you kept them employed.
    Neither side should owe anything because employees performed eight hours work for their eight hours wage or salary. That should have always been fair and equitable.
3. There is a tendency to lay off the highest-paid employees to cut costs. However, your highest-paid employees should be the best as well as the hardest to replace. They might be the key to your recovery!

4. With many contractors, the most heartbreaking layoffs will involve family members. In some cases, you would become involved supplementing their financial needs with personal funds rather than a company paycheck. Here again, how long will it last?
  • Of course, your other employees are expecting you to delay family layoffs, but will be resentful when they are laid off first. I hope your relative is a productive member of your team and capable of filling viable positions. You need to discuss effort and ability with any relative who is not pulling his or her load.

  • You also must justify your reasoning with your spouse, the employee’s spouse and other family members. Discussing your intentions and options before you make a layoff will help lessen family squabbles and tension that could last forever.

Hiring Them Back

When our economy recovers, you will then have to face most of these same decision-making frustrations hiring back those valuable employees. You can understand why all of your communication is so critical to assure that all those good employees are eager to come back - and that you will still have a competitive company for them to come back to.

Once again, your employees are watching you with those same two questions:
  • Who will you hire back first?
  • When will it be my turn?
In addition to your practical profit-oriented judgment, you may have legal considerations with discrimination or union contract language. Any doubtful situation should be discussed with legal counsel before you make a costly mistake.

God willing, you will never need to worry about layoffs. Our new president may resolve the struggling economy or you may just enjoy some good luck:
  • You could win the Lotto or Power Ball. (Not likely!)
  • A former customer may call for your expertise and performance.
  • Your company’s reputation and financial stability will pull you through whatever happens.
In any case, wear a smile and spread your confidence throughout your company and family. All of these people who you depend on also depend on you.