You need a methodical approach to determine which employees to let go.



Webster’s Dictionary defines dilemma as “a choice between two undesirable alternatives.” Our struggling national economy is now dictating these dilemmas to every profit-making business. How many good employees can you afford to keep and still survive in today’s market?

Employees must produce enough income to meet your payroll, but they also must produce enough profit for you and your family to survive. After all, profit is your only paycheck!

Far too many contractors across the country allow their compassion for long-time, loyal employees to avoid making crucial layoffs. Compassion for your employees is admirable and understandable, but the undesirable alternative is for your company to “bite the dust.”

Each of you have specific situations that present heartbreaking financial options for your company and your employees. We will look at some of these situations and offer some practical options to consider. The goal is for you and your employees to find a workable solution and maintain a mutual respect no matter what decision you make.

Layoffs for smaller contractors

Only one type of contractor does not have to face a payroll dilemma - the do-it-yourselfer or “pickup-truck” contractor who has no employees.

For the small family-owned company with five to 10 jobsites or service tech employees and a reasonably small office staff, this dilemma is quite real. If this describes your company, analyze the problem(s), prepare a written list of feasible options and schedule a one-on-one meeting with all employees involved. Explain your dilemma, ask what their primary concerns are and if they have possible solutions.

1. Were employees aware of your financial difficulties?
2. Could they survive with a layoff and unemployment benefits? Would they come back if needed?
3. Could they perform other respons-ibilities within a different position in your company? Would training help?
4. Do they have access to another employer or do you have knowledge of an available job?
5. Would they prefer part-time work or a shorter work week? Would flex-time hours help?
6. Would the virtual office concept relieve your overhead?

In a small family-owned company, most of your employees are close friends and possibly relatives. Their first question is, “Why me?” Depending on the age of your company, seniority will be the assumed order of layoffs, especially by those employees who have it. But their ability and productivity may not be the most vital traits for your company’s survival.

If yours is a traditional, first-generation company started from nothing by you and your spouse, you remember how to “bite the bullet.” By making some of these prudent business decisions, you will not have to worry about starting all over again.

There are many critical items to take care of in today’s business. List these items on a detailed time study with the required amount of time, the frequency and the person responsible for completing the task. If you don’t already have this defined scope of work for each individual, you will be surprised once you do.

Corporate layoffs

In larger companies with 50 to 100 employees, many of the same personal relationships exist, especially when the original founder is still running the business. With second-, third- or fourth-generation companies, seniority is generally the most difficult dilemma. If this describes your company, you should already have a written and posted chain of command, written job descriptions, detailed scope of work and documented performance records to justify your decisions on which employees to let go.

Depending on memory alone for layoff decisions will result in the same predicament many contractors face with yearly reviews to adjust wages, bonuses or promotions. The employee clearly remembers every single profit-producing act that he or she performed during the entire year. However, the contractor can recall every costly mistake, poor decision or lack of effort by that employee that affected bottom-line profits.

A written and posted chain of command assures that each employee answers to only one boss. This eliminates getting orders from one person (a senior employee or a relative) and then criticism or discipline from another. A signed, written and posted chain of command is imperative to operate a large corporation, but it is extremely vital to determine who will be laid off to survive. It doesn’t cost a cent and cannot hurt anyone. Lack of it ranks near the top as one of the causes of turnover among productive employees.

Once top management executives determine that a layoff is necessary, they must meet with their management team to choose the best of their undesirable options. One-on-one meetings with each department manager will help decide what to do with their teams. You should help managers prepare to meet with their teams. If you attend these sessions, ask direct questions but do not interfere in your manager’s presentation.

Senior employees, relatives and personal friends may be working for that department head and would expect your sympathetic approach to their circumstances. That is why this is called a payroll dilemma.

Most of these concerns also may occur at large corporations with divisions in different cities. Generally, the top management people have little or no personal relationship with their employees. This includes some members of the management team who were hired by other management employees.

Union contractors

Signatory union contractors have two different layoff dilemmas. The majority of their hands-on workforce pay union dues to a local union to keep them employed with signatory contractors. They may only work one or two days or for the entire year with any one contractor. A layoff to these workers simply means being “sent back to hall.” They call it “the bench.”

The majority of these craftsmen seldom build a close personal relationship with the contractor. However, personal relationships between union officials, union members and signatory contractors have greatly improved with the adoption of the UA’s Standard for Excellence, which includes the motto “Now we are one!”

The layoff dilemma for signatory contractors comes into play with employees who have become “company men” - indentured apprentices, foremen and the entire management team, including office staff. Their approach to selecting the best options for those layoffs is parallel to what open-shop contractors face.

You will be pleasantly surprised by the value-engineering concepts you receive from your valued employees. Remember to tell them how much you appreciate their efforts to keep your company competitive.

Some contractors fear their employees will slow down to delay any layoffs when you discuss the possibility. If they slow down, lay them off, which will create more work for your diligent workforce. Don’t delay, do it now!

 My intent is not to scare any contractor about impending layoffs, but to simply remind you of the possibility. Being prepared even if nothing goes wrong is always good business.

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